Equities
Canada’s main stock index opened little changed Wednesday while key Wall Street indexes edged higher, helped by cautious optimism over the progress of talks to raise the U.S. debt ceiling.
At 9:39 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 0.07 per cent at 20,227.07 points according to TMX Group website.
In the U.S., the Dow Jones Industrial Average rose 80.34 points, or 0.24 per cent, at the open to 33,092.48.
The S&P 500 opened higher by 12.95 points, or 0.32 per cent, at 4,122.85, while the Nasdaq Composite gained 45.53 points, or 0.37 per cent, to 12,388.58 at the opening bell.
Much of the market’s focus remains on the continued standoff over the U.S. debt ceiling and efforts to head off an historic default.
On Tuesday afternoon, U.S. President Joe Biden and House Leader Kevin McCarthy met again. Mr. McCarthy left the meeting saying the two sides remained far apart but also said “it is possible to get a deal by the end of the week.” Mr. Biden has postponed plans to visit Papua New Guinea and Australia and cut short an upcoming Asia trip so he can return to Washington amid continued talks.
“Significant uncertainty remains around the actual deadline, as Treasury cash flows could still push the deadline to late July, and that uncertainty could make it harder to reach a deal before June 1, especially if lawmakers sense the Treasury is not out of cash,” Stephen Innes, managing partner with SPI Asset Management, said.
“While we ultimately expect that Congress will raise the debt limit before Treasury is forced to delay scheduled payments, still approaching any deadline is a tactical risk for U.S. equities.”
Elsewhere, U.S. retail earnings continued with results from Target on Wednesday morning.
The retailer topped profit estimates in the latest quarter but also forecast profit below Wall Street expectations in the second quarter and estimated a drop in sales for that period, according to Reuters.
Target projected adjusted profit between US$1.30 and US$1.70 per share, below estimates of US$1.93 for the current quarter. It forecast comparable sales to decline in the low-single digits, compared to estimates of a 0.25-per-cent rise, according to Refintiv data.
A day earlier, Home Depot stock took a hit after that retailer cut its full-year sales forecast amid slowing demand.
Meanwhile, The Globe’s Alexandra Posadzki reports this morning that BCE Inc. and Telus Corp. are asking federal Industry Minister François-Philippe Champagne to help them secure a commitment from Rogers Communications Inc. that their customers will be allowed onto the expanded wireless network on Toronto’s subway system concurrently with Rogers customers. In April, Rogers announced that it had struck a deal to acquire BAI Canada Inc., the company with the sole right to develop wireless infrastructure inside Toronto Transit Commission tunnels, for an undisclosed amount.
Overseas, the pan-European STOXX 600 was down 0.04 per cent by midday. Britain’s FTSE 100 slid 0.10 per cent. Germany’s DAX gained 0.35 per cent while France’s CAC 40 slipped 0.02 per cent.
In Asia, Japan’s Nikkei gained 0.84 per cent. On Wednesday, the Nikkei topped 30,000 for the first time in over 18 months. Hong Kong’s Hang Seng finished down 2.09 per cent.
Commodities
Crude prices steadied even as new figures showed a surprise increase in U.S. stockpiles, stoking demand concerns.
The day range on Brent was US$74.10 to US$75.15 in the early premarket period. The range on West Texas Intermediate was US$70.04 to US$71.06.
“The global economic outlook has too many question marks and that is not giving energy traders a lot of confidence in buying crude,” OANDA senior analyst Ed Moya said in a report “Right now too much oil is still available and we aren’t seeing meaningful triggers to make the market tight over the short-term.”
On Tuesday afternoon, the American Petroleum Institute reported that weekly crude stockpiles rose by 3.6 million barrels. Analysts polled by Reuters were looking for a decline of about 900,000 barrels.
Further downward pressure came from the latest U.S. retail sales figures, which showed an increase of 0.4 per cent in April, short of market forecasts. As well, broader markets remain tentative amid continuing talks to raise the U.S. debt ceiling.
In other commodities, spot gold was down 0.1 per cent at US$1,986.64 per ounce by early Wednesday morning, close to a two-week low hit on Tuesday. U.S. gold futures fell 0.1 per cent to $1,991.50.
Currencies
The Canadian dollar was little changed while its U.S. counterpart advanced as concerns over the U.S. debt ceiling enhanced the greenback’s safe-haven appeal.
The day range on the loonie was 73.87 US cents to 74.32 US cents in the predawn period. The loonie has fallen nearly 1 per cent over the past five days.
“G10 currencies have traded in narrow ranges again overnight, with a slight risk-on tone following equity futures,” RBC chief currency strategist Adam Cole said.
There were no major Canadian economic releases due Wednesday.
The U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.3 per cent to 102.96, to its highest since early April, according to figures from Reuters.
It rose 0.4 per cent against the yen to a two-week peak of 136.99 and to 0.5 per cent against Britain’s pound to US$1.2422, its highest versus the British currency since April 26, Reuters reported.
In bonds, the yield on the U.S. 10-year note was lower at 3.524 per cent by early Wednesday morning.
More company news
UBS has flagged tens of billions of dollars of potential costs - and benefits - from its takeover of Credit Suisse, underscoring the high stakes involved as it prepares to complete the rescue of its struggling Swiss rival. In a regulatory presentation, UBS estimated a negative impact of US$13-billion from fair value adjustments of the combined group’s financial assets and liabilities, and a further US$4-billion in potential litigation and regulatory costs stemming from outflows. It also listed other factors, including a switch in accounting standards, that would bring the total hit to US$28.3-billion. -Reuters
Air Canada has announced a partnership with Flydubai that will offer more options for travellers headed to destinations in the Middle East, East Africa, Indian Subcontinent and Southern Asia. Mark Galardo, Air Canada’s executive vice-president for revenue and network planning, says the partnership complements the airline’s non-stop service to Dubai from Toronto and Vancouver. Under the deal, an Air Canada marketing code will be placed on nine Flydubai routes from Dubai that will give travellers the ability to travel to those markets with the issuance of a single ticket. -The Canadian Press
Economic news
(8:30 a.m. ET) Canadian construction investment for March.
(8:30 a.m. ET) Canada’s international securities transactions for March.
(8:30 a.m. ET) U.S. housing starts (and revisions) for April.
(8:30 a.m. ET) U.S. building permits (and revisions) for April.
With Reuters and The Canadian Press
Terry Weber