Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index opened higher Wednesday ahead of the Bank of Canada’s latest policy decision, which is expected to see rates climb by another half percentage point. Wall Street’s main indexes also advanced in the first trading day of the month, helped by gains in Salesforce shares on the back of a positive outlook.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 128.36 points, or 0.62 per cent, at 20,857.7.
In the U.S., the Dow Jones Industrial Average rose 166.19 points, or 0.50 per cent, at the open to 33,156.31.
The S&P 500 opened higher by 17.63 points, or 0.43 per cent, at 4,149.78, while the Nasdaq Composite gained 95.50 points, or 0.79 per cent, to 12,176.89 at the opening bell.
“May is finally over, but inflation worries, the war, and high energy prices welcome the new month with us,” Swissquote senior analyst Ipek Ozkardeskaya said. “Yesterday’s meeting between Joe Biden and [Fed chair] Jerome Powell reminded investors that inflation is the policymakers’ primary concern, and both Biden and Powell will do anything in their power to fight soaring inflation.”
In this country, the Bank of Canada’s latest policy announcement is due at 10 a.m. ET. Markets are widely expecting the central bank to deliver another half percentage point rate increase.
“The only certainties in life are death and taxes, or so the idiom goes.,” Jay-Zhao Murray, FX Market Analyst with Monex Canada, said. “We think that a 50-basis point hike from the Bank of Canada on June 1 may as well be the next addition to the list, given the clear signal from BoC communications and latest economic data.”
“The rationale for the Bank’s 50-basis-point hike back in April was that the Canadian economy was ‘moving into excess demand,’” he said. “With the inflation data released after the meeting continuing to rise and surprising consensus forecasts to the upside, the economy has likely shifted further into excess demand territory.”
On the corporate side, shares of Salesforce were up roughly 12 per cent in early trading on Wall Street after the company raised its full-year adjusted profit forecast and said it didn’t see any material impact from an uncertain economic outlook.
Overseas, the pan-European STOXX 600 edged up 0.03 per cent by early afternoon. Britain’s FTSE 100 was up 0.03 per cent. Germany’s DAX and France’s CAC 40 gained 0.59 per cent and 0.44 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.65 per cent. Hong Kong’s Hang Seng fell 0.56 per cent.
Commodities
Crude prices gained in early going, buoyed by easing COVID-19 restrictions in Shanghai and a decision by EU leaders to impose a partial ban on Russian oil.
The day range on Brent is US$115.40 to US$117.86. The range on West Texas Intermediate is US$114.58 to US$116.94. Both benchmarks record a sixth straight month of gains in May.
Early this week, EU leaders agreed in principle to cut 90 per cent of oil imports from Russia by the end of this year. As well, Shanghai’s strict COVID-19 lockdown ended on Wednesday after two months, prompting expectations of firmer fuel demand from the country.
Traders are now looking ahead to Thursday’s meeting of OPEC+ members. A Wall Street Journal report suggested some producers are exploring the idea of suspending Russia’s participation in a an OPEC+ output deal.
“The next 36 hours in oil markets are looking rather tasty from a volatility point of view, despite already seeing huge overnight session ranges,” OANDA senior analyst Jeffrey Halley said.
“The OPEC+ meeting, based on the WSJ article, has now transformed from the monthly business-as-usual event to a potential structural turning point for oil markets.”
In other commodities, spot gold was last down 0.1 per cent at US$1,834.89 per ounce by early Wednesday morning, after hitting its lowest since May 19 at US$1,829.24 earlier in the session. U.S. gold futures fell 0.6 per cent to US$1,838.00.
“As I warned yesterday, the real test of gold’s resilience would be if it held firm in the face of U.S. dollar strength and rising U.S. yields again,” Mr. Halley said.
“On both counts, it failed overnight.”
Currencies
The Canadian dollar was relatively steady, trading around the 79-US-cent mark, ahead of the Bank of Canada’s rate decision while its U.S. counterpart added the to the previous session’s gains against a basket of world currencies.
The day range on the loonie is 78.90 US cents to 79.15 US cents.
The Bank of Canada makes its rate decision just after the markets open and is expected to again raise interest rates by half a percentage point.
On world markets, the U.S. dollar index, which weighs the greenback against six world currencies, rose 0.2 per cent to 101.96, extending on Tuesday’s gains.
The euro was down 0.2 per cent against the U.S. dollar, continuing to edge back from a one-month high of US$1.0787, reached on Monday, when new figures from the euro zone indicated a high inflation reading, according to figures from Reuters.
The U.S. dollar rose 0.4 per cent to 129.395 yen, having earlier touched 129.54, its highest level since May 17.
In bonds, the yield on the U.S. 10-year note was higher at 2.866 per cent in the predawn period.
More company news
Laurentian Bank of Canada reported a second-quarter profit of $59.5-million, up from $53.1-million a year ago, its most profitable quarter since 2018. The Montreal-based bank says its net income amounted to $1.34 per diluted share for the quarter ending April 30, up from $1.15 per diluted share in the same quarter a year earlier. Revenue totalled $259.6-million for the quarter compared with $249.8-million for the second quarter of 2021, an increase of 4 per cent.
CAE Inc. says its net profit attributable to shareholders soared last quarter as revenues increased even excluding ventilators sold to the Canadian government last year for people suffering from COVID-19. The Montreal-based flight and health simulation company says it earned $55.1-million or 17 cents per diluted share in the fourth quarter of its fiscal year, up from $19.8-million or seven cents per share a year earlier. Adjusted profits increased 46 per cent to $92-million or 29 cents per share, up from $63.2-million or 22 cents per share in the fourth quarter of 2021.
Delta Air Lines Inc said it expects second-quarter adjusted revenue at pre-pandemic levels due to the easing of COVID-19 curbs and bottled-up travel demand. The airline raised its operating margin outlook for the current quarter to 13%-14%, compared with its previous outlook of 12%-14%. Atlanta-based Delta expects second-quarter free cash flow of US$1.5-billion and adjusted net debt below US$20-billion, the airline said in a presentation to investors.
Economic news
(930 am ET) Canada S&P global manufacturing PMI.
(10 am ET) Bank of Canada policy announcement.
(945/10am) Manufacturing indexes released in the U.S.
(10 am ET) U.S. construction spending for April.
(10 am ET) U.S. job openings and labor turnover survey for April.
(2 pm ET) U.S. Beige book released on economic conditions.
With Reuters and The Canadian Press
Terry Weber