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Equities
Canada’s main stock index edged higher early Wednesday, helped by firming gold prices. On Wall Street, key indexes were positive in early trading with the Dow touching a fresh record after a reading on U.S. inflation came in close to expectations.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 34.27 points, or 0.17 per cent, at 20,530.01.
In the U.S., the Dow Jones Industrial Average rose 36.22 points, or 0.10 per cent, at the open to 35,300.89. The S&P 500 opened higher by 5.43 points, or 0.12 per cent, at 4,442.18, while the Nasdaq Composite gained 46.30 points, or 0.31 per cent, to 14,834.38 at the opening bell.
Early Wednesday, new figures showed consumer prices rose 0.5 per cent in July on a monthly basis, compared with 0.9 per cent in June. The latest number matches market forecasts. The annual rate of inflation came in at 5.4 per cent in July, matching the pace seen in June. Economists had been forecasting an annual rate in July of about 5.4 per cent.
“U.S. inflation has seen the mountaintop, but, although its 12-month core pace climbed down a bit in July, it remains at lofty levels,” CIBC chief economist Avery Shenfeld said.
“Looking ahead, a stabilizing in oil prices and a likely drop in used car prices at some point will help cool the headline inflation rate, but production bottlenecks and shipping delays remain as upside threats in upcoming months,” he said.
Market sentiment was also underpinned by news that the U.S. Senate approved a US$3.5-billion spending plan for U.S. President Joe Biden’s top priorities in an early morning vote on Wednesday. The vote was 50-49, divided along party lines, according to a Reuters report. On Tuesday, the Senate passed a US$1-trillion infrastructure plan, which now moves to the House of Representatives
In this country, earnings continue to roll in. Companies reporting ahead of the start of trading include Canada Goose, CAE and Metro.
Canada Goose topped quarterly revenue forecasts, helped by rising demand as economies reopen. The company said first-quarter revenue rose to $56.3-million, from $26.1-million a year earlier. Analysts on average had expected $49.7 million, according to IBES data from Refinitiv. However, Canada Goose said net loss widened to $56.7-million, from $50.1-million a year earlier. Shares were down nearly 14 per cent just before 10 a.m. ET.
Overseas, the pan-European STOXX 600 edged up 0.11 per cent by afternoon. Britain’s FTSE 100 gained 0.40 per cent. Germany’s DAX slid 0.07 per cent while France’s CAC 40 rose 0.39 per cent.
In Asia, Japan’s Nikkei finished up 0.65 per cent. Hong Kong’s Hang Seng gained 0.20 per cent.
Commodities
Crude prices turned negative after a report that the White House will call on OPEC and its allies to boost production to head off rising gasoline prices.
The day range on Brent is US$70.29 to US$71.18. The range on West Texas Intermediate is US$67.90 to US$68.79. Both benchmarks gained more than 2 per cent on Tuesday.
Prices had been steady in early going but lost altitude after a CNBC report suggested that the U.S. don’t think current OPEC plans to boost production by 400,000 barrels a day on a monthly basis starting in August are enough. A statement by National Security adviser Jake Sullivan, obtained by CNBC, says the U.S. has been “engaging with relevant OPEC+ members on the importance of competitive markets in setting prices. The White House later confirmed the report.
Earlier, markets drew some support from a report from the American Petroleum Institute showing weekly U.S. crude inventories fell by 816,000 barrels while gasoline stocks dropped by 1.1 million barrels. More official figures will be released later Wednesday morning by the U.S. Energy Information Administration.
Price were also underpinned by the latest forecast from the EIA that said increased travel and job growth have boosted U.S. demand this year.
In other commodities, gold prices edged higher.
Spot gold was up 0.1 per cent at US$1,730.31 per ounce, and U.S. gold futures rose 0.1 per cent to $1,732.70.
“Lingering Delta virus concerns are offering some safe-haven inflows into gold in the Asian session, but gold is still struggling to recover from the flash crash on Monday,” Stephen Innes, managing partner at SPI Asset Management, said.
Currencies
The Canadian dollar was slightly weaker as its U.S. counterpart neared its best levels of the year against the euro and the highest in five weeks against the yen.
The day range on the loonie is 79.70 US cents to 79.90 US cents.
There were no major Canadian economic reports on Wednesday’s calendar.
“Currencies have traded in very tight ranges overnight, USD consolidating yesterday’s gains against the euro and Japanese yen,” RBC chief currency strategist Adam Cole said.
On world markets, the euro hit US$1.1706 in early deals in Europe, with the year’s low of $1.1704 now within range, according to figures from Reuters. The U.S. dollar index, at 93.155, is near its 2021 high of 93.439.
The yen, which has dropped for five consecutive sessions against the U.S. dollar, fell 0.1 per cent to 110.75 per dollar, its lowest since early July. The U.S. dollar also touched a two-week high versus Britain’s pound at US$1.3816.
More company news
National Bank said CEO Louis Vachon will retire on Oct. 31 after 15 years in the role. Chief operating officer Laurent Ferreira will take over the job effective Nov. 1.
Metro Inc. says it earned $252.4-million in its latest quarter, down from $263.5-million in the same quarter last year when shoppers stocked up at the start of the pandemic. The grocery and drugstore retailer says the profit amounted to $1.03 per diluted share for the 16-week period ended July 3, down from $1.04 per diluted share a year ago. Sales in what was the company’s third quarter were $5.72-billion, down from $5.84-billion last year.
CAE Inc posted a quarterly profit compared to a loss a year earlier, benefiting from higher demand for its flight simulators as air travel rebounds from 2020 pandemic lows. The Canadian company’s first-quarter net income stood at $47.3-million, or 16 cents per share, up from a loss of $110-million, or 42 cents per share, a year earlier.
Stelco Holdings Inc. says it saw a jump in earnings in the second quarter as it benefitted from higher steel prices and shipping volumes. The Hamilton-based company, which wholly owns Stelco Inc., says earnings for the second quarter came in at $363-million, or $4.09 per share, up from nil earnings in the same quarter last year. Adjusted net income for the quarter ending June 30 was $380-million, or $4.28 per share, up from earnings of $10-million or 11 cents per share last year.
U.S cyber-security company NortonLifeLock Inc said it has agree to buy its London-listed rival Avast Plc for between $8.1-billion and $8.6-billion in cash and shares to create a leader in consumer security software. The two companies had said they were in advanced merger talks last month.
Southwest Airlines Co warned on Wednesday it may not be profitable in the third quarter, as the more infectious Delta variant of the coronavirus hits bookings. The airline said cancellations had increased this month due to the variant, becoming the first major U.S. airline to flag a hit from the more infectious strain. The company forecast third-quarter operating revenue to be down 15% to 20% versus 2019, a cut of about three to four points from its prior outlook issued three weeks ago.
Economic news
(8:30 a.m. ET) U.S. CPI for July.
With Reuters and The Canadian Press