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Equities
Canada’s main stock index fell early Wednesday, marking a fifth straight session of declines, on weakness in materials stocks and a rise in this country’s annual rate of inflation. On Wall Street, key indexes started in the red as investors await the release of the minutes from the Federal Reserve’s latest policy meeting.
Just after the opening bell, the Toronto Stock Exchange’s S&P/TSX composite index was down 47.02 points, or 0.23 per cent, at 20,316.57.
In the U.S., the Dow Jones Industrial Average fell 33.1 points, or 0.09 per cent, at the open to 35310.2. The S&P 500 fell 7.1 points, or 0.16 per cent, at the open to 4440.94, while the Nasdaq Composite dropped 19.9 points, or 0.14 per cent, to 14636.244 at the opening bell.
U.S. investors will get the Fed minutes this afternoon, with markets looking for signs that the central bank is ready to start paring back its asset purchase program.
“The FOMC minutes is the major event on today’s economic calendar,” Ipek Ozkardeskaya, senior analyst with Swissquote, said in an early note.
“Investors will be hunting for hints about the upcoming Federal Reserve (Fed) QE tapering. Yesterday, Fed Chair Jerome Powell said that the monetary policy has its limits. Yes, it’s called inflation: the major side-effect of boundless money injection.”
On the corporate side, Wall Street got more retail results, with earnings reports from Target and Loew’s. Those reports come a day after Walmart and Home Depot offered a mixed bag of earnings.
Target topped analysts’ forecasts for same-store sales but also saw a slowing in online sales. Total comparable sales rose 8.9 per cent in the three months ended July 31, exceeding expectations of 8.68%, according to IBES data from Refinitiv. Digital comparable sales in the second quarter rose 10 per cent, compared with a 195-per-cent rise in the same period a year earlier
In this country, Statistics Canada said the annual rate of inflation rose to 3.7 per cent in July, from 3.1 per cent in June. Economists had been expecting the annual rate to come in closer to 3.4 per cent in July. The July rate was the highest since 2011. On a monthly basis, consumer prices rose 0.6 per cent, also above market forecasts.
“The Bank of Canada’s core-common component measure of underlying inflationary pressures, our preferred indicator, actually remained stable at 1.7 per cent,” CIBC senior economist Royce Mendes said.
“As a result, the central bank will likely continue to view the current overshoot as transitory, and remain focused on healing the labour market.”
Shares of Canadian post producer Tilray Inc. were up about 2 per cent in early trading in Toronto after the company said it will buy convertible debt of U.S. rival MedMen Enterprises Inc’s for about US$166-million in a deal with partners, giving it a pathway to enter the United States. By buying convertible debt and warrants - which can be changed into shares later - Tilray gets the option to take a “significant equity position in MedMen... following U.S. cannabis legalization,” it said in a statement.
Overseas, the pan-European STOXX 600 was trading up 0.04 per cent by midday. Britain’s FTSE 100 slid 0.34 per cent. Germany’s DAX and France’s CAC 40 fell 0.05 per cent and 0.33 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.59 per cent. Hong Kong’s Hang Seng gained 0.47 per cent.
Commodities
Crude prices steadied after four days of losses with fresh industry figures showing a decline in weekly U.S. inventories helping offset concerns over the recovery in demand.
The day range on Brent is US$68.86 to US$69.72. The range on West Texas Intermediate is US$66.42 to US$67.19.
The American Petroleum Institute said oil and gas inventories decline last week, while distillate stocks rose. More official numbers are due later Wednesday morning from the U.S. Energy Information Administration.
OANDA senior analyst Craig Erlam said crude prices saw little lasting benefit from reports that OPEC+ saw no need to ramp up production faster following a U.S. request last week.
“In much the same way that the market slipped following the [U.S.] comments last week before quickly recovering, the short-term burst on Monday is proving short-lived,” he said.
“We’re unsurprisingly back where we started, with OPEC+ responding to market forces not political pressure.”
In other commodities, gold prices edged higher.
Spot gold was up 0.1 per cent at US$1,787.63 per ounce, after hitting its highest since Aug. 6 at US$1,795.25 in the previous session.
U.S. gold futures were steady at US$1,788.20.
“Gold prices are continuing to perform quite well following a really strong rebound from last week’s flash crash,” Mr. Erlam said.
“U.S. yields have continued to soften this week which is giving the yellow metal a much-needed boost. It’s now closing in on US$1,800 where is could run into significant resistance.”
Currencies
The Canadian dollar was steady, holding not far from recent lows against the U.S. dollar, while the greenback traded near a nine-month high against the euro.
The day range on the loonie is 79.10 US cents to 79.36 US cents.
“The CAD is little changed but retains a soft undertone,” Shaun Osborne, chief FX strategist with Scotiabank, said.
Canadian investors got July inflation figures ahead of the opening bell while global markets struck a cautious tone awaiting the release of the Fed minutes later in the day. The Canadian dollar gained after the release of the inflation data.
On global markets, the U.S. dollar index, which weighs the greenback against a group of currencies, held steady around 93.01, just below the one-week high it hit on Tuesday, according to figures from Reuters.
The New Zealand dollar was up 0.17 per cent at US$0.6935 in early London trading having fallen about 1 per cent to US$0.6868 immediately after the Reserve Bank of New Zealand said it would keep rates at 0.25 per cent.
More company news
Lowe’s Cos Inc reported a smaller-than-expected fall in same-store sales on Wednesday, as the home improvement company benefited from higher spending by builders and contractors that helped offset some of the slowdown in demand from do-it-yourself customers. Same-store sales fell 1.6 per cent in the second quarter ended July 30, compared to analysts’ estimates of a 2.2-per-cent drop, according to IBES data from Refinitiv.
The Globe’s Clare O’Hara and James Bradshaw report that Sun Life Financial Inc. has told its 12,000 Canadian employees they must receive the COVID-19 vaccination in order to return to offices in three major Canadian cities, becoming one of the first federally regulated financial institutions to mandate vaccinations for its staff. Canada’s second-largest insurer announced the vaccination requirement in an internal memo on Tuesday afternoon, saying employees who have volunteered in a return to work pilot project in offices in Toronto, Montreal and Waterloo, Ont., “must attest to having received all recommended doses of the approved COVID-19 vaccine at least 14 days prior to first entering the office.”
Economic news
(8:30 a.m. ET) Canada’s CPI for July.
(8:30 a.m. ET) U.S. housing starts for July.
(8:30 a.m. ET) U.S. business permits for July.
(2 p.m. ET) U.S. Fed minutes for July 27-28 meeting are released.
With Reuters and The Canadian Press