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Equities

Canada’s main stock index opened down early Wednesday with commodities-linked stocks under pressure. On Wall Street, key indexes were also in the red with interest rate concerns continuing in the wake of the latest U.S. inflation and retails sales numbers.

At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 103.22 points, or 0.5%, at 20,601.57.

In the U.S., the Dow Jones Industrial Average fell 80.64 points, or 0.24 per cent, at the open to 34,008.63.

The S&P 500 opened lower by 16.63 points, or 0.40 per cent, at 4,119.50, while the Nasdaq Composite dropped 55.02 points, or 0.46 per cent, to 11,905.12 at the opening bell.

“The [U.S.] inflation report really needed to over-deliver after the red-hot labour market figures earlier in the month and it simply didn’t do it,” OANDA senior analyst Craig Erlam said.

“The trend remains positive but it may be stalling and that won’t give the Fed any encouragement to stop raising interest rates.”

He said a 25-basis-point hike at the Fed’s next meeting was never really in doubt but now markets are also looking for one in May and possibly another in June. New figures released on Tuesday showed the annual rate of inflation in the United States slowed to 6.4 per cent in January, but still came in ahead of forecasts.

“What’s more, those rate cuts that were priced in for the end of the year only a couple of weeks ago are no more,” Mr. Erlam said.

“Markets are pricing in the possibility of one but the anticipated year-end rate is now significantly higher, as is the terminal rate.”

Meanwhile, The Globe’s Mark Rendell reports that interest rate swaps, which capture market expectations about future rate decisions, have gone from pricing in two rate cuts by the Bank of Canada before the end of the year, to pricing in another rate hike in July and no rate cuts until 2024.

Early Wednesday, the U.S. Department of Commerce reported that January retail sales rose 3 per cent, better than the 2-per-cent gain economists had been forecasting.

On the corporate side, Canadian investors got the latest results from Suncor Energy after Tuesday’s closing bell. Suncor topped fourth-quarter forecasts, helped by higher crude prices and tighter supply. The Calgary, Alberta-based company reported adjusted operating earnings of $2.43-billion, or $1.81 per share, for the quarter ended Dec. 31, compared with average analysts’ estimate of $1.76 per share.

Later Wednesday afternoon, investors will get the latest quarter results from Shopify Inc. and Manulife Financial.

Barrick beat analysts’ estimates for quarterly profit. The Toronto-based miner posted adjusted earnings of 13 cents per share, while analysts on average had expected 11 cents, according to Refinitiv IBES. Barrick also authorized a new share buyback program of up to $1-billion for the next 12 months.

Elsewhere, the Canadian Real Estate Association gave latest snapshot of this country’s real estate market ahead of the opening bell. CREA said national home sales fell 3 per cent month-over-month in January. Actual sales were down 37.1 per cent from the same month a year earlier. The MLS Home Price Index declined by 1.9 per cent month-over-month and was down 12.6 per cent year-over-year.

Statistics Canada also offered a reading on December factory sales this morning. The agency said sales fell 1.5 per cent to $71-billion, marking the second consecutive month of declines. Early estimates had pointed to a 1.8-per-cent decrease for the month.

Overseas, the pan-European STOXX 600 was up 0.13 per cent by midday. Britain’s FTSE 100 gained 0.14 per cent. Germany’s DAX added 0.49 per cent while France’s CAC 40 rose 0.96 per cent.

In Asia, Japan’s Nikkei finished down 0.37 per cent. Hong Kong’s Hang Seng lost 1.43 per cent.

Commodities

Crude prices were down for a second day in early trading after new weekly inventory figures from the American Petroleum Institute showed a rise in oil stocks.

The day range on Brent was US$84.15 to US$85.46 in the predawn period. The range on West Texas Intermediate was US$77.57 to US$78.83. Both benchmarks were down more than 1 per cent ahead of the North American opening bell.

The API said U.S. crude stocks rose by a more-than-forecast 10.5 million barrels last week. Crude prices had already been under pressure after the latest U.S. inflation figures suggested continued rate hikes by the Federal Reserve, raising concerns about demand.

More official figures are due from the U.S. Energy Information Administration later Wednesday morning.

“The bears are in charge of the market this morning as the latest API data showed a massive 10 million barrel build in U.S. oil inventories last week, while Biden Administration announced there would be further releases from the strategic petroleum reserves of 26 million barrels earlier this week,” Swissquote senior analyst Ipek Ozkardeskaya said.

“The more official EIA data is due today, and will show a similar surprise. So, U.S. crude is certainly on its way to test the 50-day-moving-average to the downside, near US$77 per barrel.”

Spot gold was down 0.6 per cent at US$1,843.79 per ounce by early Wednesday morning, after falling to its lowest since early January on Tuesday. U.S. gold futures fell 0.7 per cent to US$1,852.40.

Currencies

The Canadian dollar was weaker while its U.S. counterpart gained against a group of world currencies amid expectations of more rate hikes by the Federal Reserve.

The day range on the loonie was 74.61 US cents to 75 US cents in the predawn period.

“The CAD is down nearly half a percent on the day against the generally firm USD,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Weak risk sentiment and generally softer commodities are headwinds for the CAD but spot remains within recent trading ranges and we expect scope for losses remains relatively limited for the moment at least.”

The U.S. dollar index, which gauges the currency against its peers, was up 0.23 per cent to 103.49 after closing roughly flat on Tuesday, according to figures from Reuters.

The euro, which hit a 10-month high earlier this month, was down 0.11 per cent at $1.073.

Japan’s yen was off by 0.18 per cent at 133.36 per dollar. It touched a six-week low earlier in the session at 133.44, Reuters reported.

In bonds, the yield on the U.S. 10-year note was lower at 3.728 per cent early Wednesday morning.

More company news

Tesla will open part of its U.S. charging network to electric vehicles (EVs) made by rivals as part of a US$7.5-billion federal program to electrify the nation’s highways to cut carbon emissions, the Biden administration said on Wednesday. Such a move could help turn Tesla into the universal filling station of the EV era - and risk eroding a competitive edge for vehicles made by the company, which has exclusive access to the biggest network of high-speed ‘superchargers’ in the United States. -Reuters

First Quantum Minerals Ltd. says it earned US$117-million in the fourth quarter of 2022, 52.6 per cent down from US$247-million in the same quarter a year earlier, due to significantly lower cash flows from operating activities, which the company attributes to working capital movements related to trade and other receivables. The company, which reports in U.S. dollars, says it earned US$1.03-billion for the full year, 24.3 per centup from US$832-million in 2021.Earnings per diluted share in the fourth quarter were 17 cents, down from 36 cents a year earlier, while earnings per diluted share for the full year were $1.49, up from $1.20 in 2021. -The Canadian Press

Bausch + Lomb Corp on Wednesday named Brent Saunders, the former chief executive officer of Allergan, as its CEO and chairman of board, marking his return to the Canadian eye-care company after nearly a decade. Saunders will join Bausch + Lomb on Feb. 16 in an advisory capacity to help with the transition, the company said. He will take helm on March 6 from Joseph Papa, who last July announced plans to step down as CEO. -Reuters

Airbnb Inc shares jumped 9% before the bell on Wednesday and were set to open at their highest since May, as investors cheered its bullish revenue forecast and tight control on costs in the face of mounting economic worries. At least 10 brokerages raised their price targets on the stock after the vacation rental firm’s fourth-quarter results beat market expectations. -Reuters

Economic news

(8:15 a.m. ET) Canadian housing starts for January.

(8:30 a.m. ET) Canadian manufacturing sales and orders for December.

(8:30 a.m. ET) Canadian wholesale trade for December.

(8:30 a.m. ET) U.S. retail sales for January.

(9 a.m. ET) Canadian existing home sales for January.

(9 a.m. ET) Canada’s MLS Home Price Index for January.

(9:15 a.m. ET) U.S. industrial production for January.

(10 a.m. ET) U.S. NAHB Housing Index for February.

(10 a.m. ET) U.S. business inventories for December.

With Reuters and The Canadian Press

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