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Equities
Canada’s main stock index opened near record highs on Wednesday, buoyed by gains in industrial stocks and positive global sentiment. On Wall Street, the Nasdaq hit a new high as investors await key employment figures later in the week.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 52.54 points, or 0.26 per cent, at 20,635.48.
The industrials index was up more than 1 per cent, helped by gains in rail stocks.
In the U.S. , the Dow Jones Industrial Average rose 26.82 points, or 0.08 per cent, at the open to 35,387.55.
The S&P 500 opened higher by 6.12 points, or 0.14 per cent, at 4,528.80, while the Nasdaq Composite gained 49.74 points, or 0.33 per cent, to 15,308.98 at the opening bell.
“We’re seeing a strong start to September in the markets, just as we move into the business end of the week,” OANDA senior analyst Craig Erlam said.
“There are obviously downside risks to the outlook for the rest of this year, with the spread of delta naturally casting a shadow over the global recovery but there’s also plenty of reason to be hopeful,” he said.
Markets are now focused on Friday’s U.S. employment figures. Economists are expecting to see 613,000 new jobs added in August after a gain of 330,000 in July. On Wednesday, payroll processing company ADP said U.S. private payrolls rose by 374,000 in August, short of market forecasts.
In this country, Laurentian Bank released third quarter results ahead of the North American open. The bank reported adjusted earnings per share in the most recent period of $1.25, ahead of analysts’ expectations of $1.08. Quarterly revenue totalled $254.9-million. Analysts polled by Refinitiv had been looking for revenue of $249.2-million.
Quebec-based convenience store giant Alimentation Couche-Tard Inc. topped market forecasts in its latest quarter. Adjusted earnings fell 4.7 per cent to US$758-million from US$795-million in the first quarter of 2020. On a share basis they were unchanged at 71 cents. Revenue for the three months ended July 18 was US$13.58-billion, up from US$9.71-billion in the prior-year period. Analysts had expected to see 65 cents per share in adjusted profit on US$13.27-billion of revenues, according to financial data firm Refinitiv. The results were released after Tuesday’s close.
Elsewhere, The Globe’s Eric Atkins reports the U.S. rail regulator has dealt a blow to Canadian National Railway Co.’s expansion ambitions, blocking the first of CN’s two steps to take over U.S. carrier Kansas City Southern. The Surface Transportation Board on Tuesday rejected CN’s proposal to create a voting trust in which it planned to operate KCS while it applies to the STB for approval of the takeover itself.
The STB’s unanimous decision throws into question CN’s US$29.8-billion bid for the U.S. railway announced in May, and is expected to allow rival bidder Canadian Pacific Railway Ltd. to re-enter the battle.
CP shares were up more than 3 per cent in early trading in Toronto. CN stock was up more than 4 per cent.
Overseas, the pan-European STOXX 600 was up 0.73 per cent by midday. Britain’s FTSE 100 gained 0.87 per cent. Germany’s DAX and France’s CAC 40 rose 0.33 per cent and 1.52 per cent, respectively.
In Asia, Japan’s Nikkei ended up 1.29 per cent. Hong Kong’s Hang Seng rose 0.58 per cent. Gains in Asia came even as a private survey showed shrinking factory activity in China last month. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 49.2 last month, from 50.3 in July, breaching the 50-mark that separates growth from contraction.
Commodities
Crude prices reversed early gains ahead of a meeting of OPEC and its allies, which is widely expected to see the group stick to its current plan to add 400,000 barrels a day in production each month through to December.
The day range on Brent is US$71.59 to US$72.38. The range on West Texas Intermediate is US$68.40 to US$69.24.
Ahead of Wednesday’s meeting, OPEC+ raised its 2022 demand forecast. The group now sees demand of 4.2 million barrels a day, up from an earlier forecast of 3.28 million barrels a day, according to OPEC+ sources cited by Reuters.
“WTI crude will hover around the US$68 level until the OPEC+ meeting is concluded,” OANDA senior analyst Ed Moya said.
“Energy traders are counting on seeing further declines with U.S. stockpiles and for the OPEC+ group to stay the course with their gradual output increases.”
Late Tuesday, the American Petroleum Institute reported that U.S. crude stocks fell by 4 million barrels for the week ended Aug. 27.
More official figures are due later Wednesday morning from the U.S. Energy Information Administration. A Reuters poll of analysts suggests the market is expecting to see a decline in crude inventories of about 3.1 million barrels last week.
In other commodities, gold prices were little changed as markets await Friday’s U.S. jobs report.
Spot gold was steady at US$1,815.60 per ounce, while U.S. gold futures were steady at US$1,817.90.
“A print above 1 million jobs [in Friday’s report] will put the taper back front and centre and be bearish for gold. Whereas a number around 700,000, or lower, will alleviate those concerns and be supportive of gold,” OANDA senior market analyst Jeffrey Halley said.
Currencies
The Canadian dollar was firmer in early going despite a surprisingly weak reading on second-quarter economic growth while its U.S. counterpart edged higher against world currencies but remained near recent lows.
The day range on the loonie is 79.13 US cents to 79.48 US cents.
On Tuesday, Statistics Canada said GDP contracted at an annual rate of 1.1 per cent in the second quarter. Economists had been expecting to see an increase of 2.5 per cent. The agency also offered a soft early reading on July GDP, forecasting a decline for the month of 0.4 per cent.
“The CAD survived a shocker of a GDP report yesterday but the significantly weaker than expected growth in Q2 — and indications that Q3 got off to a rough start — will make it harder for the CAD to progress on its own merits from here at least for now,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
On world markets, the U.S. dollar index, which measures the greenback against a group of rivals, edged up to 92.777 from Tuesday, when it dipped as low as 92.395 for the first time since Aug. 6.
The euro consolidated gains below a near one-month high on Wednesday as a higher-than-expected inflation reading pushed up bond yields.
In early London trading, the euro held at US$1.1803, below an Aug. 5 high of US$1.1842 hit on Tuesday, according to figures from Reuters.
More company news
The Globe’s Alexandra Posadzki reports Telus Corp. is partnering with General Motors of Canada to provide 5G connectivity to the automaker’s vehicles, a move that the companies say will provide faster and more reliable in-car services and that paves the way for autonomous driving. The first GM vehicles with built-in 5G chips connecting them to Telus’s wireless network are expected to be introduced in 2025. In addition, GM vehicles from 2019 or later will be able to migrate to Telus’s 4G LTE network, the companies said.
Campbell Soup Co forecast fiscal 2022 earnings below market estimates, as higher packaging, ingredients and transportation expenses eat into its profit margins. The company expects adjusted earnings between US$2.75 and US$2.85 per share for fiscal 2022, compared with market estimates of US$2.87, according to Refinitiv IBES.
Economic news
(815 am ET) U.S. ADP National Employment Report.
(930 am ET) Markit Manufacturing PMI for Canada for August.
(945 am ET) U.S. Markit Manufacturing PMI for August.
(10 am ET) U.S. ISM Manufacturing PMI for August.
(10 am ET) U.S. Construction Spending for July.
With Reuters and The Canadian Press