Canada’s main stock index opened up Wednesday, extending its recent rally alongside positive global market sentiment. On Wall Street, key indexes also started higher with easing producer prices adding to recent signs of easing inflationary pressures in the U.S. economy.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index rose by 0.2 per cent.
In the U.S., the Dow Jones Industrial Average rose 79.02 points, or 0.23 per cent, at the open to 34,906.72. The S&P 500 opened higher by 9.60 points, or 0.21 per cent, at 4,505.30, while the Nasdaq Composite gained 52.89 points, or 0.38 per cent, to 14,147.27 at the opening bell.
Market sentiment was underpinned by the latest U.S. inflation figures, which suggested easing price pressures in the U.S. economy. The annual rate of U.S. inflation eased to 3.2 per cent in October, from 3.7 per cent in September. Early Wednesday, markets also got the latest reading on U.S. retail sales. In October, sales were down 0.1 per cent, slightly less than the 0.3-per-cent decline markets had been forecasting. At the same time, new figures showed U.S. producer prices fell by 0.5 per cent in October on a monthly basis, suggesting easing wholesale inflationary pressures.
“The soft set of inflation print cemented the expectation that the Fed is done hiking the interest rates,” Swissquote senior analyst Ipek Ozkardeskaya said.
“The U.S. two-year yield – which best captures the rate bets – tanked 24 basis points to 4.81 per cent. The 10-year slipped below 4.50 per cent and activity on Fed funds futures gives around 95-per-cent chance for a no rate hike in December.”
The mood was helped further by news late Tuesday that the U.S. House of Representatives had passed a bill to head off a government shutdown at week’s end. The bill now goes to Senate for approval. The U.S. federal government had been scheduled to shut down at 11:59 p.m. on Friday unless a new funding bill was passed.
In Canada, investors got retail results before the start of trading, with earnings due from grocery giants Loblaw Cos. Ltd and Metro Inc. The sector has been under scrutiny for months as consumers dealt with high food costs.
The Globe’s Susan Krashinsky reports this morning that Loblaw reported its net earnings available to common shareholders grew to $621-million or $1.95 per share in the quarter ended Oct. 7, compared to $556-million or $1.69 per share in the same period last year.
On Wall Street, shares of U.S. retailer Target jumped 17 per cent in early trading in New York after the company forecast holiday-quarter profit largely above market expectations. The company expects adjusted earnings of between US$1.90 and US$2.60 per share in the fourth quarter. The midpoint of that range topped analysts expectations of US$2.22 per share, according to LSEG data.
Elsewhere, The Globe’s Niall McGee and Andrew Willis report that Deputy Prime Minister Chrystia Freeland says that Vancouver-based Teck Resources Ltd.’s agreement to sell its coal business to a consortium led by Swiss mining and trading house Glencore PLC will be closely scrutinized by the federal government.
“This is a serious transaction,” Ms. Freeland told reporters in Toronto on Tuesday. “We are going to follow our regulatory processes carefully. The key issues that we will take into account are Canadian jobs, a Canadian headquarters, environmental concerns and the rights of Indigenous people.”
Overseas, the pan-European STOXX 600 was up 0.75 per cent by afternoon Britain’s FTSE 100 advanced 1.23 per cent. Early Wednesday morning, the index turned positive for the year after new figures showed Britain’s annual rate of inflation fell to 4.6 per cent in October from 6.7 per cent a month earlier.
Germany’s DAX and France’s CAC 40 were up 0.83 per cent and 0.64 per cent, respectively.
In Asia, Japan’s Nikkei gained 2.52 per cent after a strong handoff from Wall Street. Hong Kong’s Hang Seng was up 3.92 per cent.
Crude prices were choppy in early trading despite solid economic data out of China.
The day range on Brent was US$81.75 to US$83.04 in the early premarket period. The range on West Texas Intermediate was US$77.50 to US$78.77.
“Oil prices have bounced back over the last four trading sessions but appeared to run into a brick wall yesterday around $84 in Brent and $80 in WTI,” OANDA senior analyst Craig Erlam said.
“That’s around the October lows in WTI and perhaps a sign that traders have not become less bearish despite promising inflation data and improved prospects for an economic soft landing.”
Crude drew some early support from new economic data showing industrial output in China, one of the world’s top consumers of oil, grew in October and retail sales were up more than expected.
Later this morning, traders will get weekly inventory figures from the U.S. Energy Information Administration. Analysts polled by Reuters expect crude stocks to have risen by 1.8 million barrels.
In other commodities, spot gold was up 0.3 per cent at US$1,969.20 per ounce by early Wednesday morning, after rising nearly 1 per cent overnight. U.S. gold futures gained 0.4 per cent to US$1,973.40.
“The U.S. inflation data on Tuesday was a big positive for gold, which rallied as the dollar and U.S. yields both fell,” Mr. Erlam said.
“That came as markets fully priced out any further rate hikes from the Federal Reserve and the first rate cut by May. It’s hard to argue considering the recent progress and suddenly gold is on an upward trajectory, not far from US$2,000, and backed by better fundamentals.”
The Canadian dollar was little changed, trading around the 73-US-cent mark, supported by positive risk sentiment in broader markets.
The day range on the loonie was 72.93 US cents to 73.12 US cents in the predawn period. The Canadian dollar was up 0.71 per cent against the greenback as early Wednesday morning.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, edged higher after posting its biggest decline in a year on Tuesday in the wake of the latest U.S. inflation figures. The index was up 0.16 per cent at 104.26 by early Wednesday morning, not far from Tuesday’s two-month low of 103.98, according to figures from Reuters.
Britain’s pound was last down 0.3 per cent at US$1.2464. On Tuesday, the pound rose by 1.8 per cent against the greenback, marking its biggest one-day gain in a year, the news agency reported.
The euro eased 0.3 per cent to US$1.0848 after hitting its highest level since last summer on Wednesday.
In bonds, the yield on the U.S. 10-year note was up marginally at 4.463 per cent ahead of the North American open.
More company news
Metro Inc. reported a fourth-quarter profit of $222.2-million, up from $168.7-million in the same quarter last year as its sales rose 14 per cent. The grocer says the profit amounted to 96 cents per diluted share for the 13-week period ended Sept. 30, up from 70 cents per diluted share a year earlier when the quarter included 12 weeks. Metro says a five-week strike at 27 stores in the Greater Toronto Area during the quarter had a negative impact on its bottom line of about $27-million after taxes or 12 cents per share, while the extra week in the period had a favourable impact of $27-million net of tax or 12 cents per share. -The Canadian Press
Canadian manufacturing sales for September. (8:30 a.m. ET)
Canadian wholesale sales for September. (8:30 a.m. ET)
U.S. Producer Price Index for October (8:30 a.m. ET)
U.S. retail sales for October (8:30 a.m. ET)
With Reuters and The Canadian Press
Editor’s note: A section of this story related to Loblaw's results in the latest quarter has been updated to remove earlier revenue figures to remove a reference to the percentage change in revenue.