Equities
Canada’s main stock index opened up Wednesday with energy stocks gaining on the back of higher crude prices, although weakness in materials shares tempered the advance. On Wall Street, key indexes were also positive in early trading, recouping some of the previous session’s sharp losses.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 63.46 points, or 0.32 per cent, at 19,619.61.
In the U.S., the Dow Jones Industrial Average rose 63.93 points, or 0.19 per cent, at the open to 33,682.81. The S&P 500 opened higher by 9.10 points, or 0.21 per cent, at 4,282.63, while the Nasdaq Composite gained 51.75 points, or 0.40 per cent, to 13,115.36 at the opening bell.
“The rise in the U.S. dollar, along with yields appears to speak to an expectation that sticky inflation will be sustained, keeping rates higher for longer, particularly since oil and gasoline prices appear to be showing little sign of drifting back from their recent highs,” Michael Hewson, chief market analyst with CMC Markets U.K., said in a note.
“The very prospect of stickier U.S. inflation will mean that Fed will err more towards higher US rates for longer,” he said.
On Tuesday, the rate futures market priced in a 20-per-cent chance of a Fed rate hike in November and a 38-per-cent probability of tightening in December, according to CME’s FedWatch.
In Canada, shareholders of Calgary’s Pipestone Energy Corp. will vote on a takeover proposal from privately held Strathcona Resources in an all-stock deal that would create a company with an initial market capitalization of more than $8-billion. Pipestone’s board is backing the deal but a dissident shareholder has urged shareholders to vote against the offer, saying it undervalues Pipestone.
On Wall Street, shares of Costco Wholesale turned higher in early trading, shaking off premarket weakness, after the retailer beat market forecasts for quarterly revenue and profit. Shares were up nearly 2 per cent shortly after the opening bell.
Overseas, the pan-European STOXX 600 was up 0.03 per cent by midday. Britain’s FTSE 100 down 0.13. Germany’s DAX slid 0.09 per cent while France’s CAC 40 was flat.
In Asia, Japan’s Nikkei closed up 0.18 per cent. Hong Kong’s Hang Seng gained 0.83 per cent.
Commodities
Crude prices advanced as supply concerns helped lift sentiment even as the demand picture remains uncertain in a higher-rate environment.
The day range on Brent was US$94.10 to US$94.99 in the early premarket period. The range on West Texas Intermediate was US$90.40 to US$91.63.
“It looks like nothing is going to get in the way of this oil price rally,” OANDA senior analyst Ed Moya said.
“Energy traders know a bullish trend when they see one and it will take a lot more than a strong [U.S.] dollar, softer Russian ban, and weakening demand, to disrupt this rally.”
Late Tuesday, weekly U.S. inventory numbers from the American Petroleum Institute showed stockpiles rose last week by 1.6 million barrels. Analysts had been forecasting a drop of about 300,000 barrels.
However, Reuters also notes markets continued to worry about U.S. crude stockpiles at the key Cushing, Oklahoma, storage hub falling below minimum operating levels.
Further drawdowns at Cushing, the delivery point for U.S. crude futures, could also provide new upward pressure on oil markets as it would compound supply tightness stemming from supply cuts by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, the news agency reported.
More official U.S. government inventory figures are due later this morning.
In other commodities, gold prices fell to their lowest level in more than a month amid continued strength in the U.S. dollar.
Spot gold was down 0.1 per cent at US$1,897.91 per ounce by early Wednesday morning, after hitting its lowest level since Aug. 22 earlier in the session. U.S. gold futures eased 0.2 per cent to US$1,915.90.
Currencies
The Canadian dollar steadied, holding around 74 US cents, while its U.S. counterpart continued to trade near its best level in 10 months against a group of world currencies.
The day range on the loonie was 73.91 US cents to 74.07 US cents in the predawn period. The Canadian dollar was down 0.50 per cent against the greenback over the last five days by early Wednesday morning.
On world markets, the U.S. dollar index, which weighs the currency against a basket of global counterparts, was up 0.04 per cent at 106.28 early Wednesday morning. Earlier, the index touched a 10-month high of 106.32.
The euro, meanwhile, slid 0.1 per cent to US$1.0567, after hitting a six-month low of US$1.0555 earlier in the session, according to figures from Reuters.
Britain’s pound slid 0.1 per cent at US$1.2149 after hitting a six-month low of US$1.2135 earlier on Wednesday
In bonds, the yield on the U.S. 10-year note was lower at 4.501 per cent ahead of the North American opening bell. On Tuesday, the yield hit its highest level since 2007.
More company news
E-commerce giant Shopify is investing in wholesale platform Faire, the companies said on Wednesday, in a global deal that would see the start-up adopt Shopify technology for its clients. Faire, founded in 2017 and valued at US$12.59-billion, would become the recommended wholesale marketplace for Shopify merchants. The companies declined to disclose the value of the deal or how big a stake Shopify was taking. -Reuters
Uranium miner IsoEnergy said on Wednesday that it would buy all the shares of Consolidated Uranium it does not already own in an all-stock deal, valuing the combined company at $903.5-million. The deal is expected to close in the fourth quarter of this year, post which Consolidated Uranium shareholders would own 29.5 per cent of the combined company, while the rest will be held by IsoEnergy. -Reuters
Target said it would close nine stores across four U.S. states, including California, citing that theft and organized retail crime was threatening the security of the retailer’s employees and customers. The move, effective Oct. 21, will see the closing of one store in New York City, two in Seattle, three locations across the San Francisco and Oakland markets and three in Portland. -Reuters
Economic news
(8:30 a.m. ET) U.S. durable goods orders for August.
With Reuters and The Canadian Press
Terry Weber