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Equities
Canada’s main stock index started lower Wednesday as global sentiment remains fragile. On Wall Street, key indexes were also weaker at the start of trading with inflation and interest rate concerns continuing to dominate.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 85.84 points, or 0.41 per cent, at 20,842.37.
In the U.S., the Dow Jones Industrial Average fell 93.07 points, or 0.28 per cent, at the open to 33,087.07.
The S&P 500 opened lower by 13.56 points, or 0.33 per cent, at 4,147.12, while the Nasdaq Composite dropped 27.95 points, or 0.23 per cent, to 12,147.28 at the opening bell.
“The unmistakable contrast between downbeat global growth assessments and central banks’ monetary-tightening push could be a significant headache for stock pickers,” Stephen Innes, managing partner with SPI Asset Management, said.
“With monetary policy feeding lower growth expectations, there is an elevated level of negative circulation here,” he said. “Central banks continue to surprise to the hawkish side with no end in sight until inflation moves convincingly towards its target. And while those tighter financial conditions are the obvious path toward lower inflation, they are also analogous to lower asset prices.”
On Tuesday, the World Bank cut its global growth forecast by almost a third to 2.9 per cent for this year while U.S. Treasury Secretary Janet Yellen cautioned that she expects inflation to remain high. Early Wednesday morning, the OECD also lowered its growth forecast for the year to 3 per cent from previous estimates of 4.5-per-cent growth, citing the the impact of the war in Ukraine. However, the organization also suggested that the world economy should be able to avoid the risk of ‘stagflation’.
In this country, investors got results from retailer Dollarama Inc. ahead of the start of trading.
Dollarama topped estimates for quarterly sales. The company’s total sales rose to $1.07-billion in the first quarter, from $954.3-million a year earlier, beating analysts’ average estimate of $1.05-billion, according to IBES data from Refinitiv.
On Wall Street, Campbell Soup is among the companies scheduled to release results.
Overseas, the pan-European STOXX 600 was down 0.89 per cent by midday. Britain’s FTSE 100 slid 0.53 per cent. Germany’s DAX and France’s CAC 40 fell 0.68 per cent and 1.15 per cent, respectively. European markets will get the next policy decision from the European Central Bank on Thursday morning. That central bank is seen raising rates starting in July with the markets expecting increases totaling 75 basis points in coming months.
In Asia, Japan’s Nikkei ended up 1.04 per cent after a positive handoff from Wall Street. Hong Kong’s Hang Seng jumped 2.24 per cent on gains in Chinese tech shares.
Commodities
Crude prices gained ahead of the release of the latest weekly U.S. crude inventory figures.
The day range on Brent is US$121.44 to US$120.45. The range on West Texas Intermediate is US$119.30 to US$120.45.
Later Wednesday morning, the U.S. Energy Information Administration will release its latest weekly report on crude stocks. Analysts polled by Reuters are expected to see another decline inventories, although industry figures earlier in the week suggested an increase. Gasoline and Distillates stocks are seen rising.
“The oil market is expected to remain tight as the supply side will continue to tell a story of low inventories,” OANDA senior analyst Ed Moya said in a note. “Crude oil inventories will likely post more draws as driving season and vacationing heats up. "
In other commodities, gold prices were down in early going on a bounce in U.S. Treasury yields and the U.S. dollar.
Spot gold was down 0.3 per cent at US$1,847 per ounce by early Wednesday morning, while U.S. gold futures fell 0.1 per cent to US$1,850.20.
“Gold is likely to consolidate around the US$1840-US$1870 level leading up to Friday’s [U.S.] inflation report,” Mr. Moya said.
Currencies
The Canadian dollar was weaker in early going while the euro hit its best level in seven years against the yen ahead of this week’s ECB policy decision.
The day range on the loonie is 79.62 US cents to 79.84 US cents.
There were no major Canadian economic releases on Wednesday’s calendar.
On world markets, the yen, which has fallen for 10 sessions against the euro, hit a seven-year low of 142.84 per euro in early European trading, according to figures from Reuters. The ECB policy announcement is due Thursday morning.
The euro, meanwhile, fell 0.1 per cent against a broadly stronger dollar to US$1.06885.
Britain’s pound fell 0.2 per cent against the greenback to US$1.2566.
The Australian and New Zealand dollars were both weaker, falling 0.35 per cent and 0.55 per cent against the U.S. dollar, respectively, according to Reuters.
In bonds, the yield on the benchmark U.S. 10-year note was up at 3.009 per cent in the predawn period.
More company news
Credit Suisse warned on Wednesday of a likely second-quarter loss as volatility hit its investment bank, the third quarter in a row for which Switzerland’s second-largest bank has issued a profit warning. Announcing its third consecutive quarterly profit warning, the lender said it now aims to bring cost savings forward, speeding up measures introduced as part of its reorganization in November targeting 1.0 billion-1.5 billion Swiss francs (US$1.03 billion-US$1.54 billion) in structural cost savings annually by 2024.
Campbell Soup Co raised its annual core sales forecast, encouraged by easing supply chain snarls and robust demand for its broths and sauces. The company said it expects fiscal year 2022 organic net sales to rise between 1% and 2%, compared with its prior estimate of a 1% decline to a 1% rise.
Spirit Airlines Inc said it has delayed to June 30 a shareholder meeting to vote on its proposed merger agreement with Frontier Group Holdings Inc. The change comes two days after JetBlue Airways Corp improved its buyout offer for Spirit to include a higher reverse break-up fee that would be payable in case the deal falls through due to antitrust reasons. Spirit, which had rejected JetBlue’s previous offer in May, said earlier this week it would review the improved proposal.
Economic news
Japan GDP, current account surplus and bank lending
Euro zone GDP
Germany industrial production
(10 a.m. ET) U.S. wholesale inventories for April.
With Reuters and The Canadian Press
Terry Weber