Canada’s main stock index rose to a record high on Wednesday, as upbeat corporate reports helped offset initial gloom arising from worries over a U.S.-China trade deal.
The Toronto Stock Exchange’s S&P/TSX composite index was up 48.61 points, or 0.29 per cent, at 16,957.99.
The index opened weaker, tracking global stocks, as lack of details on the U.S.-China trade deal in a highly anticipated speech by President Donald Trump made investors wary.
The largest percentage gainers on the TSX was Home Capital Group, which jumped 14.3 per cent after the mortgage lender’s third-quarter profit beat estimates.
Civil aviation training company Cae Inc. rose 4 per cent after its second-quarter profit and revenue topped expectations.
Seven of the index’s 11 major sectors were up, led a 1.6-per-cent increase in the technology sector.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.6 per cent as gold futures rose, while industrials closed 0.4 per cent higher.
The energy sector was down 0.5 per cent, despite a recovery in oil prices after OPEC said it saw no signs of global recession, while the financials sector slipped 0.1 per cent.
A notable decliner was Canada Goose Holdings Inc., down 10.9 per cent after it said that revenue from its wholesale business in the third quarter would take a hit due to early shipments to department stores.
Global equity markets and government bond yields fell on Wednesday as sentiment soured that a U.S.-China trade deal can be reached soon and on fears intensifying unrest in Hong Kong may lead to a Chinese crackdown.
Gold prices rose on fading investor optimism on the U.S.-China trade talks, helping to boost the appeal of the Swiss franc, Japanese yen and government debt as safe-havens.
A measure of emerging market currencies slipped, as did an index of emerging market equities, with both registering their largest single-day declines in almost three months.
The dollar was stable after a rise in U.S. consumer prices was greater than expected and Federal Reserve Chair Jerome Powell offered an upbeat economic outlook, bolstering the case for the U.S. central bank to pause its monetary easing cycle.
“It seems overnight there were a lot more fears that the U.S. and China were further apart on the trade deal than initially suggested,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
Powell said he saw “sustained expansion” ahead for the U.S. economy, with low unemployment boosting household spending and the full impact of the three interest rate cuts in the past three months still to be felt.
U.S. stocks traded little changed as investors eyed an improving economic outlook. But fears of a pending recession have lessened, a reason why the spread between short- and long-term Treasury yields has widened, said Joseph LaVorgna, chief economist for the Americas at French bank Natixis in New York.
“You’re going to see the market move higher. We’re going to consolidate and move higher because the fundamentals are pretty solid and that means that you’re going to get 10-year notes up over 2 per cent,” LaVorgna said.
MSCI’s gauge of stocks across the globe shed 0.25 per cent, while the FTSEurofirst 300 index of leading European shares closed down 0.2 per cent. Stocks on Wall Streets traded either side of break-even.
The Dow Jones Industrial Average rose 92.1 points, or 0.33 per cent, to 27,783.59, the S&P 500 gained 2.13 points, or 0.07 per cent, to 3,093.97 and the Nasdaq Composite dropped 3.99 points, or 0.05 per cent, to 8,482.10.
Emerging markets were hammered as anti-government protesters dug in across Hong Kong and set the stage for further confrontation as police said violence in the city had reached a “very dangerous and even deadly level.”
MSCI’s emerging markets equity index lost 1.31 per cent and its emerging markets currency index fell 0.46 per cent, both their biggest one-day declines since late August.
The Swiss franc rallied to a one-month high against the euro as hedge funds unwound some of their negative bets against the currency and as appetite for risky assets faltered due to the intensifying unrest in Hong Kong.
Against the euro, the franc gained as much as 0.5 per cent versus the euro to 1.0881 francs per euro, strengthening to its highest levels since Oct. 9 while it gained by almost a similar margin against the dollar.
The dollar index rose 0.06 per cent, with the euro down 0.05 per cent to $1.1002. The Japanese yen strengthened 0.25 per cent versus the greenback at 108.76 per dollar.
U.S. gold futures settled up 0.7 per cent at $1,463.30 an ounce.
Benchmark 10-year U.S. Treasury notes rose 10/32 in price to push their yield down to 1.8722 per cent.
Bond yields in the euro zone fell as investors in Europe weighed remarks on Tuesday by U.S. President Donald Trump on the trade outlook.
Tariffs would be raised on Chinese goods “very substantially” if China does not make a deal with the United States, Trump said in a speech at the Economic Club of New York.
Benchmark 10-year German government bond yields fell the most for a day since June, down 6 basis points at -0.3 per cent. Most euro zone 10-year bond yields fell 4 to 6 basis points on the day .
Federal Reserve Chair Jerome Powell and the Organization of the Petroleum Exporting Countries (OPEC) ahead of a weekly report on U.S. stockpiles.
Brent futures rose 31 cents, or 0.5 per cent, to settle at $62.37 per barrel, while U.S. West Texas Intermediate crude gained 32 cents, or 0.6 per cent, to settle at $57.12.
“The complex received a lift today ... on a rebound in risk appetite that appeared to be fueled by ... Powell’s testimony that emphasized growth and maintenance of low rates,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
Powell said the U.S. economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.
“The baseline outlook remains favorable,” Powell said.
OPEC said it saw no signs of global recession and rival U.S. shale oil production could grow by much less than expected in 2020.
OPEC Secretary General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident the United States and China would reach a trade deal.
“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.