Equities
Canada’s main stock index rose to its best level in more than a month at Wednesday’s open helped by gains in energy and mining shares. On Wall Street, key indexes were also higher after a weaker-than-expected reading on retail sales fuelled hopes that the Federal Reserve would soon pivot away from its campaign of aggressive rate hikes.
At 9:41 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 133.4 points, or 0.65%, at 20,590.86.
In the U.S., the Nasdaq Composite gained 75.84 points, or 0.68 per cent, to 11,170.95 at the opening bell.
The Dow Jones Industrial Average rose 37.64 points, or 0.11 per cent, at the open to 33,948.49, while the S&P 500 opened higher by 11.28 points, or 0.28 per cent, at 4,002.25.
“Traders are anticipating that any bad news could be good for the market as it is unlikely that the Fed will make another U-turn to its monetary policy,” AvaTrade chief market analyst Naeem Aslam said.
“The ultra-hawkish monetary policy has left the town and it is time for a less hawkish monetary and this could continue to provide the tailwind for the risk-on rally.”
Early Wednesday, U.S. investors got a weaker-than-expected reading on holiday sales ahead of the opening bell. The U.S. Commerce Department said retail sales in December fell 1.1 per cent. Economists had been expecting a decline of about 0.9 per cent. November sales were revised to show a 1-per-cent decline for that month.
Later in the day, the Federal Reserve will release its beige book, offering a regional economic snapshot. The report is due at 2 p.m. ET.
“The Fed’s regional report card is expected to show an economy losing steam, perhaps repeating the November phrase that activity ‘was about flat or up slightly’ since the prior period,” BMO deputy chief economist Michael Gregory said.
Wednesday's analyst upgrades and downgrades
On the corporate side, Microsoft Corp said early Wednesday it would cut 10,000 jobs, the latest sign that layoffs were accelerating in the U.S. tech sector. Microsoft shares were higher just after the start of trading.
In this country, The Globe’s Stefanie Marotta reports Bank of Montreal has received the final regulatory approval required to takeover California-based Bank of the West from BNP Paribas, creating the 15th largest commercial bank in the United States. The U.S. Federal Reserve and the Office of the Comptroller of the Currency (OCC) announced Tuesday evening that the regulators had approved the US$16.3-billion deal — the largest-ever purchase of a U.S. bank by a Canadian lender.
Overseas, the pan-European STOXX 600 was up 0.41 per cent by midday. Britain’s FTSE 100 advanced 0.09 per cent. Germany’s DAX rose 0.18 per cent. France’s CAC 40 was up 0.33 per cent.
In Asia, Japan’s jumped 2.5 per cent after the Bank of Japan surprised markets by keeping ultra-low interest rates, including a bond yield cap. Traders had expected the central bank to signal that it would begin phasing out its stimulus program.
Hong Kong’s Hang Seng finished up 0.47 per cent.
Commodities
Crude prices advanced in early trading after the International Energy Agency forecast increased global demand in the wake of China’s reopening after a lengthy period of strict COVID-19 controls.
The day range on Brent is US$86.13 to US$87.43 in the early premarket period. The range on West Texas Intermediate was US$80.55 to US$81.86. Both benchmarks were up more than 1 per cent in the predawn period after hitting fresh 2023 highs around midday in Asia.
Early Tuesday, the IEA forecast that China’s reopening will boost global oil demand this year to record highs, while price cap sanctions on Russia could hold back supply.
“Two wild cards dominate the 2023 oil market outlook: Russia and China,” the Paris-based energy watchdog said in its monthly oil report.
Later in the session, markets will get the first of two weekly U.S. inventory reports with new figures from the American Petroleum Association. More official government figures follow Thursday morning from the U.S. Energy Information Administration. A Reuters poll suggests that analysts are expected to see crude stocks fall by about 1.8 million barrels.
In other commodities, gold prices were up as the U.S. dollar pulled back.
After falling in the last two sessions, spot gold rose 0.2 per cent to US$1,911.57 per ounce by early Wednesday morning, after hitting a session low of US$1,896.32 earlier. U.S. gold futures ticked up 0.2 per cent to US$1,913.60.
Currencies
The Canadian dollar was firmer while its U.S. counterpart slid against a group of world currencies and the yen fell after the Bank of Japan’s surprise decision hold steady on policy.
The day range on the loonie was 74.57 US cents to 74.90 US cents in the predawn period.
“The CAD is showing a marginal gain on the USD on the session as markets mull modest gains in global stocks on the session, slightly firmer crude oil — and broadly higher commodities overall — and yesterday’s Canadian CPI data,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, fell 0.2 per cent at 102.19.
The yen, meanwhile, saw broad losses, losing 1.7 per cent against the U.S. dollar and was headed for its worst day since the middle of last month, according to figures from Reuters.
At a two-day policy meeting, the BOJ maintained its yield control targets, set at -0.1 per cent for short-term interest rates and around 0 per cent for the 10-year yield, by a unanimous vote. It also made no change to its guidance that allows the 10-year bond yield to move 50 basis points either side of its 0-per-cent target, Reuters reported.
Elsewhere, Britain’s pound hit its highest level in more than a month against the greenback in the wake of new inflation figures. The pound was last up 0.4 per cent at US$1.2330. A new report showed that British inflation eased last month but some prices, including food and drink costs, continued to rise.
In bonds, the yield on the U.S. 10-year note was lower at 3.489 per cent by early Wednesday morning.
More company news
Montreal’s MTY Food Group Inc. is raising its quarterly dividend by 19 per cent. The company says its quarterly dividend will increase to 25 cents per share from 21 cents. The shares will have an annual yield of about 1.6 per cent based on MTY’s closing share price of $60.72 on Tuesday. -The Canadian Press
The Globe’s Irene Galea reports Rogers Communications Inc. says the Competition Bureau’s appeal of its $20-billion takeover of Shaw Communications Inc. should be dismissed, claiming the law enforcement agency overlooked key facts and wrongly interpreted the Competition Tribunal’s assessments of evidence as legal error. In documents submitted to the Federal Court of Appeal, Rogers made its case on behalf of Shaw and Videotron Ltd. in response to the written arguments submitted last week by Competition Commissioner Matthew Boswell.
United Airlines shares were higher in premarket trading after the U.S. carrier forecast at least a four-fold jump in full-year profit for this year and reported fourth-quarter earnings that topped Wall Street estimates on robust travel demand, Reuters reports. The company sees an adjusted profit of US$10 to US$12 per share for 2023, up from US$2.52 per share last year. That is well above analysts’ estimates of US$6.54 a share, according to a Refinitiv survey.
Economic news
(8:30 a.m. ET) Canadian industrial product and raw materials price indexes for December.
(8:30 a.m. ET) U.S. retail sales for December.
(10 a.m. ET) U.S. NAHB Housing Market Index for January.
(10 a.m. ET) U.S. business inventories for November.
(2 p.m. ET) U.S. Beige Book is released.
With Reuters and The Canadian Press
Terry Weber