U.S. stock futures were higher early Wednesday as comments from U.S. President Donald Trump that he could let a March 1 trade deadline with China “slide” helped ease market worries about relations between the two countries. Overseas, Asian markets traded higher and Europe’s biggest indexes advanced in morning trading. In this country, TSX futures were in the black with oil prices firmer and earnings from the mining and energy sector pulling focus.
“Trump saying that there could be some leeway with the March 1st trade truce deadline if the two sides were close to a deal was music to the ears of the market,” Jasper Lawler, head of research at London Capital Group, said. "Whilst there have been positive reports regarding the trade talks investors were getting nervous of the nearing deadline and no solid evidence of progress. "
However, he also noted that, for sentiment to remain positive, markets will need to see evidence of a deal in March. “However, for now markets are willing to let this pass.”
On Bay Street, earnings continue to dominate. Shares of Canada’s Teck Resources Ltd. will likely get some attention at the open after the company posted a lower-than-expected profit, hit by weak prices for heavy crude and base metals. Teck reported an adjusted profit of $500-million, or 86 cents per share in the latest quarter, from $680-million, or $1.16 per share, a year earlier. Analysts on average were expecting the company to earn 96 cents per share, according to IBES data from Refinitiv.
Elsewhere, Cenovus Energy Inc. posted a wider quarterly loss on lower production and weaker Canadian oil prices. The company’s net loss widened to $1.35-billion, or $1.10 per share, from $776-million, or 63 cents per share a year ago.
Earnings are also due Wednesday from Barrick Gold Corp. After the markets close, earnings are due from Manulife Financial and Sun Life. On Wall Street, AIG and Cisco Systems both report their latest results after the close of trading.
Overseas, trade optimism helped push key European indexes higher in morning trading with the pan-European STOXX 600 rising 0.31 per cent. The trade-sensitive DAX was up 0.12 per cent while Britain’s FTSE 100 rose 0.48 per cent and France’s CAC 40 gained 0.22 per cent.
In Asia, markets mostly finished in the black. Japan’s Nikkei added 1.34 per cent while the broader Topix rose 1.06 per cent. On mainland China, the Shanghai Composite Index ended up 1.84 per cent after starting the session lower. Hong Kong’s Hang Seng advanced 1.16 per cent.
Crude prices were higher in early going following a pledge from Saudi Arabia to cut crude exports and curb production. Both Brent and West Texas Intermediate prices were both up more than 1 per cent at last check. The day range on Brent is US$62.69 to US$63.43. The range for the day on WTI is US$53.32 to US$53.81.
Saudi Energy minister Khalid al-Falih told The Financial Times that production would fall below 10 million barrels a day in March, more than half a million barrels a day below the target set as part of earlier production curbs by OPEC and its allies.
“Crude oil prices have rallied overnight, after Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production, while U.S futures gained on a decline in domestic oil inventories,” OANDA analyst Dean Popplewell said in an early note.
“Crude has traded under pressure in recent weeks, hindered by a plethora of downside risks – Both Sino-U.S trade tensions and geopolitical uncertainty has dented the crude ‘bull’s’ faith in owning the stock.”
However, he noted crude price gains were capped by a report from the International Energy Agency indicating that "output would still likely outstrip demand this year, despite OPEC’s efforts and U.S. sanctions on Iran and Venezuela.”
For the day ahead, markets will get inventory figures from the U.S. Energy Information Administration. On Tuesday, the figures from the American Petroleum Institute showed U.S. crude stocks fell by 998,000 barrels last week. Markets had been expecting an increase of more than 2 million barrels.
Gold prices, meanwhile, edged higher helped as the U.S. dollar was relatively steady on the latest trade news but gains were also capped by increased risk appetite stemming from the same headlines. Spot gold was up 0.1 per cent to US$1,312.36 per ounce, while U.S. gold futures gained 0.1 per cent to US$1,315.3 an ounce.
“The safe-haven buying that we saw earlier in the month is now a little more fragile (after recent developments in trade talks),” ANZ analyst Daniel Hynessaid told Reuters.
In other metals, platinum dropped 0.1 per cent to US$786.00 per ounce, while silver was mostly unchanged at US$15.71.
Currencies and bonds
The Canadian dollar was little changed and trading around the mid-75-US-cent mark, supported by higher crude prices and a softer U.S. dollar. The day range on the loonie is 75.52 US cents to 75.78 US cents.
There were no major economic releases due Wednesday to offer further direction for the currency. On Thursday, markets will get a reading on December factory sales and new orders. Markets are expecting a decline of about 0.5 per cent in sales and a flat reading on orders.
In world exchange markets, hawkish signals from central banks in New Zealand and Sweden made those currencies outperformers. The New Zealand dollar jumped as much as 1.7 per cent against the greenback while the Swedish currency added about half a percent.
“The majors sit mostly in a holding pattern, as the recent sessions showed the market confirming the lower end of the ranges,” Mark McCormic, North American head of FX strategy, said. “Central bank meetings are dominating the price action, fueling support for NZD (New Zealand dollar) and SEK (Swedish Krona). The RBNZ (Reserve Bank of New Zealand) pulled a reverse RBA (Reserve Bank of Australia), shifting their stance from cuts to neutral while the RB (Riksbank) held hopes for an H2 hike.”
The U.S. dollar index, meanwhile, remained little changed at 76.712. The U.S. dollar will get a reading on January inflation just before the markets open. (The annual rate of inflation edged up to 1.6 per cent. The core rate, which excludes food and energy prices, was 2.2 per cent.)
In bonds, U.S. government debt prices were lower on the latest U.S.-China trade headlines. The yield on the U.S. 10-year note was higher at 2.686 per cent. The yield on the 30-year note was also higher at 3.025 per cent.
Stocks set to see action
Barrick Gold Corp said its quarterly loss widened due in part to an impairment charge and rise in production costs. The company, which closed on its buyout of rival Randgold Resources in early January, posted a fourth-quarter net loss of US$1.2-billion, or US$1.02 per share, compared to a net loss of US$314-million, or 27 US cents per share, in the year-ago period. Gold production fell about 6 per cent to 1.3 million ounces during the quarter. Barrick’s U.S. -listed shares were lower in premarket trading.
Dish Network Corp reported a nearly 5-per-cent drop in quarterly revenue, as the U.S. satellite TV service provider lost more-than-expected pay-TV subscribers. The company said its pay-TV business, which includes both satellite TV and streaming service Sling TV, lost a net 334,000 subscribers during the fourth quarter, more than what analysts had expected Dish to lose at 264,000, according to research firm FactSet. Net income attributable to Dish Network fell to US$337-million, or 64 US cents per share, in the fourth quarter ended Dec. 31 from US$1.39-billion, or US$2.64 per share, a year earlier when it recorded an about US$1.2-billion tax gain. Dish reported 64 US cents in diluted earnings per share for the quarter. Analysts on average had expected the company to report a profit of 67 US cents per share on revenue of US$3.28-billion, according to IBES data from Refinitiv.
Healthcare conglomerate Johnson & Johnson said it would buy privately held surgical robotics company Auris Health Inc for about US$3.4-billion in cash. The agreement also includes contingent payments of US$2.35-billion to Auris, J&J said.
T-Mobile US Inc Chief Executive John Legere is set to defend his company’s US$26-billion deal to buy rival wireless carrier Sprint Corp in Congress on Wednesday, stressing the jobs it will create and how it will benefit the construction of the next generation of wireless networks. The deal to combine the No. 3 and No. 4 U.S. wireless carriers, struck in April, was approved by both companies’ shareholders in October and has received national security clearance, but still needs approval from the Department of Justice and the Federal Communications Commission.
Britain’s departure from the European Union without a deal would doom the prospects for a Franco-German next-generation fighter jet with a rival project in Britain, the head of Airbus Defence and Space told the Handelsblatt German newspaper. Dirk Hoke told the newspaper he considered it “absolutely imperative” that the EU reach an agreement with Britain on security, defence and space given the closely interwoven ties between Europe and Britain. “I consider it extremely dangerous to develop a system like FCAS (the Franco-German fighter programme) without the British,” he said, noting that potential order quantities would rise if Britain participated, making future aircraft more competitive.
Shares of Hilton Worldwide Holdings Inc were up 3 per cent in premarket trading after the hotel operator reported a better-than-expected quarterly profit, as healthy travel demand helped it boost room prices. On an adjusted basis, the company earned 79 US cents per share in the fourth quarter ended Dec. 31, beating analysts’ estimates of 69 US cents, according to IBES data from Refinitiv.
Canadian home prices fell in January for the fourth consecutive month led by weakness in major Western Canadian cities, data showed. The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices fell 0.1 per cent last month from December 2018.
The U.S. annual rate of inflation was little changed in January, edging up to 1.6 per cent. Excluding food and energy prices, the annual rate was 2.2 per cent.
(2 p.m. ET) U.S. budget balance.
With Reuters and The Canadian Press
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