Equities
Canada’s main stock index opened higher Wednesday as traders await the Bank of Canada’s final policy announcement of the year. Major U.S. markets were also positive after a softer-than-forecast reading on private hiring renewed optimism over the future path of interest rates.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 84.38 points, or 0.41 per cent, at 20,460.31.
In the U.S., the Dow Jones Industrial Average rose 59.17 points, or 0.16 per cent at the open, to 36,183.73.
The S&P 500 opened higher by 19.05 points, or 0.42 per cent, at 4,586.23, while the Nasdaq Composite gained 95.71 points, or 0.67 per cent, to 14,325.62 at the opening bell.
The Bank of Canada makes its rate decision later this morning, with the markets widely looking for the central bank to again hold steady. Traders will be looking for signals about future direction although markets aren’t expecting a significant dovish turn in the bank’s accompanying statement.
There is no media briefing planned after the announcement, although BoC deputy governor Toni Gravelle is scheduled to deliver the bank’s economic progress report during remarks in Windsor, Ont., on Thursday.
“It is too early for the BoC to lean too dovish at [Wednesday’s] meeting and say anything about rate cuts or their timing,” TD economist Marc Ercolao said in a recent report.
“The Bank will likely need to see inflation, especially core measures, move durably lower before they move off their bias towards rate hikes.”
He said markets have priced in the possibility of a first rate cut to take place around April, which is in line with TD forecasts.
“Rest assured, the BoC’s most aggressive rate hike campaign in over 40 years is working,” he said. “Consumers are reeling in their spending, labour markets are returning to balance, and growth is evolving in a manner consistent with inflation inching closer to the BoC’s 2-per-cent target.”
Meanwhile, in the U.S., private payrolls rose by 103,000 jobs last month, the ADP National Employment Report said. Data for October was revised lower to show 106,000 jobs added instead of 113,000 as previously reported. Economists polled by Reuters had forecast private payrolls rising 130,000.
On the corporate side, Canadian investors got results from retailer Roots before the start of trading. The clothing retailer says it earned $519,000 or a penny per share for the quarter ended Oct. 28, down from a profit of $2.2-million or five cents per share in the same quarter last year, The Canadian Press reported. Sales totalled $63.5-million for the quarter, down from $69.8-million a year earlier.
On Wall Street, Campbell Soup reported results early Wednesday morning. Excluding items, the company earned 91 US cents per share, beating analysts’ estimate of 88 US cents..
Overseas, the pan-European STOXX 600 was up 0.41 per cent by afternoon. Britain’s FTSE 100 gained 0.46 per cent. Germany’s DAX and France’s CAC 40 advanced 0.37 per cent and 0.54 per cent.
In Asia, Japan’s Nikkei rose 2.04 per cent. Hong Kong’s Hang Seng added 0.83 per cent.
Commodities
Crude prices wavered in early trading with demand concerns tempering sentiment in the wake of a downgrade on China’s outlook by ratings agency Moody’s.
The day range on Brent was US$76.83 to US$77.65 in the predawn period. The range on West Texas Intermediate was US$71.89 to US$72.60.
Earlier this week, Moody’s cut China’s AI rating to negative from stable citing lower medium-term economic growth and concerns about the property sector.
China will release preliminary trade data, including crude oil import data, on Thursday. Earlier expectations showed China’s refinery runs to have declined in November, Reuters reported.
In other commodities, spot gold rose 0.7 per cent to US$2,034.09 per ounce by early Wednesday morning. U.S. gold futures rose 0.8 per cent to US$2,051.50.
Currencies
The Canadian dollar was fairly steady ahead of the Bank of Canada’s rate decision while its U.S. counterpart pulled back slightly against a basket of currencies but remained near two-week highs.
The day range on the loonie was 73.55 US cents to 73.76 US cents in the early premarket period.
The U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.08 per cent at 103.97.
The euro, meanwhile was down 0.1 per cent against the U.S. dollar at US$1.0783, after touching a three-week low of $1.0775, according to figures from Reuters.
Britain’s pound was up 0.04 per cent at US$1.2602 early Wednesday morning.
In bonds, the yield on the U.S. 10-year note was up at 4.195 per cent ahead of the North American opening bell.
Economic news
(8:15 a.m. ET) U.S. ADP National Employment Report for November.
(8:30 a.m. ET) Canadian labour productivity for Q3.
(8:30 a.m. ET) Canada’s merchandise trade balance for October.
(8:30 a.m. ET) U.S. productivity for Q3.
(8:30 a.m. ET) U.S. goods and service trade balance for October
(10 a.m. ET) Bank of Canada’s policy announcement.
With Reuters and The Canadian Press
Terry Weber