Equities
Canada’s main stock index opened higher Wednesday with traders awaiting the Bank of Canada’s first rate announcement of the year. Major U.S. indexes were also up in early trading with Netflix shares showing strength on the back of the streaming giant’s latest results.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 115.06 points, or 0.55 per cent, at 21,149.65.
In the U.S., the Dow Jones Industrial Average rose 69.92 points, or 0.18 per cent, at the open to 37,975.37. The S&P 500 opened higher by 23.96 points, or 0.49 per cent, at 4,888.56, while the Nasdaq Composite gained 134.67 points, or 0.87 per cent, to 15,560.61 at the opening bell.
In Canada, the Bank of Canada’s first rate decision of the year will be in the spotlight. Markets aren’t looking for the central bank to move on borrowing costs, but will be watching for hints about how soon the central bank could start cutting rates. The Bank of Canada is also scheduled to release its quarterly monetary policy report. The rate decision is due just after North American markets open.
“We’re anticipating that the bank’s tone will be similar to December’s, as inflation metrics have deteriorated in the inter-meeting period,” Benjamin Reitzes, BMO’s managing director for Canadian rates and macro strategist, said.
“Since mid-year, the BoC has also highlighted that it’s focusing on supply/demand balance, inflation expectations, wage growth and corporate pricing behaviour. Last week’s Business Outlook Survey showed little to no improvement in those metrics, with corporate pricing behaviour somewhat encouraging on the path to normalization, but still not there.”
On Wall Street, earnings remain in focus.
Shares of Netflix spiked more than 9 per cent just after the opening bell after the company easily beat Wall Street estimates for subscriber growth in the most recent quarter. Netflix reported it added 13.1 million subscribers in the three-month period, its largest fourth-quarter subscriber growth on record, handily topping projected gains of 8.97 million. That brings the total number of subscribers to 260 million.
Today, investors will get results from Tesla and IBM after the close of trading.
In Canada, Canadian National Railways reported revenue in the latest quarter of $4.47-billion, down from $4.54-billion in the same period a year earlier. On an adjusted basis, diluted earnings fell 4 per cent to $2.02 per share from $2.10 per share, and slightly beat analyst expectations of $1.99 per share, The Canadian Press reported. Shares fell more than 2 per cent just after markets opened in Toronto on Wednesday.
Overseas, the pan-European STOXX 600 gained 0.96 per cent by afternoon. Britain’s FTSE 100 added 0.33 per cent. Germany’s DAX and France’s CAC 40 were up 1.46 per cent and 0.86 per cent, respectively.
In Asia, Japan’s Nikkei ended down 0.80 per cent. Hong Kong’s Hang Seng jumped 3.56 per cent, fuelled by gains in tech shares. Early Wednesday, China’s central bank said it would cut the amount of reserves it holds for banks as part of measures aimed at supporting the country’s economy.
Commodities
Crude prices remained choppy in early trading with mixed U.S. inventory numbers raising concerns about demand while geopolitical uncertainty continues to underpin sentiment.
The day range on Brent was US$79.38 to US$80.14 in the early premarket period. The range on West Texas Intermediate was US$74.20 to US$74.99.
“It is difficult to measure ‘geopolitical risk,’ especially in the pricing of oil markets since there is no clear way to represent it,” Stephen Innes, managing partner with SPI Asset Management, said.
“Despite ongoing conflicts in Iraq and the Red Sea, oil prices have decreased significantly since an attack by Hamas on Israel.”
Late Tuesday, figures from the American Petroleum Institute showed U.S. crude stocks fell by 6.67 million barrels last week. However, gasoline inventories rose by 7.2 million barrels, raising concerns about U.S. demand.
More official U.S. government figures for the week are due later this morning.
In other commodities, gold prices were steady early Wednesday morning, recouping losses seen earlier in the session as the U.S. dollar eased.
Spot gold was unchanged at US$2,029.39 per ounce in the predawn period. U.S. gold futures rose 0.2 per cent to US$2,030.50.
Currencies
The Canadian dollar edged up, helped by improved risk sentiment in the broader markets, while its U.S. counterpart pulled back from recent highs.
The day range on the loonie was 74.19 US cents to 74.41 US cents in the early premarket period. The Canadian dollar has advanced about 0.46 per cent against the greenback over the past five days but is down roughly 1.7 per cent over the last month. Year-to-date, the loonie is down 1.47 per cent.
Elsewhere, the U.S. dollar index fell 0.54 per cent to 103.06 in predawn period. The index weighs the U.S. currency against a group of world rivals. The index touched its best level since Dec. 13 on Tuesday and is up nearly 2 per cent so far this year as traders pared bets on how soon the U.S. Federal Reserve will begin cutting rates.
The euro was up 0.43 per cent at US$1.0902. Britain’s pound gained 0.58 per cent to US$1.2760.
In bonds, the yield on the U.S. 10-year note was lower at 4.111 per cent ahead of the North American opening bell.
More company news
Boeing will hold a quality stand down Thursday at the Seattle-area location where it makes 737 aircraft, pausing production and delivery operations for a day, the company announced. During the stand down, employees will attend quality workshops and “pause, evaluate what we’re doing, how we’re doing it and make recommendations for improvement,” said Boeing Commercial Airplanes President Stan Deal. -Reuters
Online retailer eBay Inc. will cut about 1,000 jobs, or an estimated 9% of its full-time workforce, saying its number of employees and costs have exceeded how much the business is growing in a slowing economy. It marks the latest layoffs in the tech industry. CEO Jamie Iannone said in a message to employees on Tuesday that the company also will reduce how many “contracts we have within our alternate workforce over the coming months.” -Reuters
MTY Food Group Inc. says it is raising its quarterly dividend by 12 per cent. The restaurant franchisor and operator says it will now pay shareholders a quarterly dividend of 28 cents per share, up from 25 cents per share. The increase comes after MTY chief executive Eric Lefebvre says the company posted record results in the first nine months of 2023. The Canadian Press
Economic news
945 am ET: Bank of Canada policy announcement and monetary policy report. Press conference follows at 1030 am.
945 am ET: S&P global PMIs.
With Reuters and The Canadian Press
Terry Weber