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Equities
Canada’s main stock index started higher early Wednesday, buoyed by gains in energy shares alongside higher crude prices as investors await the Bank of Canada’s latest policy decision. On Wall Street, markets wavered with economic concerns tempering sentiment.
At 9:37 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 0.16 per cent, at 20,840.75. Energy shares were up 1.5 per cent.
In the U.S., the S&P 500 was down 0.1 per cent in the first few minutes of trading Wednesday, and the tech-heavy Nasdaq composite gave back 0.4 per cent. The Dow Jones Industrial Average was up 0.2 per cent.
“Various downgrades to U.S. growth prospects, with Goldman Sachs downgrading its economic outlook for the U.S. economy appears to have prompted a reassessment of where markets might go next, in the face of a possible paring back of stimulus measures in the coming months,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“Against these concerns of a weaker outlook, the August jobs report has also served to crystallise concerns, that after a decent summer, the economic recovery is rolling over, at around the same time central banks are starting to look at reducing some of their emergency stimulus measures.”
Investors will get a snapshot of U.S. economic conditions with the release of the Federal Reserve’s Beige Book. The report comes out at 2 p.m. ET.
In this country, the Bank of Canada releases its latest policy decision shortly after the start of trading. Most economists expect to see few surprises from the central bank ahead of the upcoming federal election.
“The Bank of Canada is likely to want to keep a lower profile today with an election coming up on the September 20th with the central bank acknowledging the weaker economic outlook, keeping asset purchases steady at $2-billion a week, after scaling them back by $1-billion a week in July, and leaving rates unchanged,” Mr. Hewson said.
Bank of Canada Governor Tiff Macklem is scheduled to deliver the bank’s economic progress report in remarks on Thursday to the Fédération des chambres de commerce du Québec.
On the corporate side, The Globe’s Eric Atkins reports that activist investor TCI Fund Management has launched a battle for control of Canadian National Railway Co. in the wake of the railway’s apparently failed bid to buy Kansas City Southern Railway Co. TCI, run by British billionaire Chris Hohn, on accused Canada’s largest rail carrier of being run by “incompetent” and “weak” leadership, and said it will soon call a special shareholders’ meeting to oust CN’s chairman, chief executive officer and other directors.
In earnings, Vancouver-based Lululemon will release quarterly results after the close of trading. On Wall Street, GameStop also reports after the close.
Overseas, the pan-European STOXX 600 was down 0.53 per cent around midday. Britain’s FTSE 100 fell 0.35 per cent. Germany’s DAX and France’s CAC 40 fell 0.64 per cent and 0.42 per cent.
In Asia, Japan’s Nikkei finished up 0.89 per cent. Hong Kong’s Hang Seng lost 0.12 per cent.
Commodities
Crude prices edged higher in early going on slower return to production in the U.S. Gulf region although a firmer greenback and economic concerns capped the advance.
The day range on Brent is US$71.55 and US$72.17. The range on West Texas Intermediate is US$68.31 to US$68.89.
Prices were supported by a slower restart after recent storms in the Gulf of Mexico, which shut down production.
Reuters reports that about 80 per cent of U.S. Gulf production remained offline on Tuesday, with 79 production platforms still unoccupied. About 17.5 million barrels of oil has been lost to the market so far.
“Oil’s short term direction will be dictated by what sort of mood New York arrives in [on Wednesday], as nothing has materially changed in the markets this week,” OANDA senior analyst Jeffrey Halley said.
“Although admittedly, oil’s rally had looked like running low on momentum last week, even as the U.S. dollar sagged. The slowing of upward momentum after the U.S. data, economic recovery doubts and U.S. dollar strength had raised the odds of a deeper downward price move.”
Later in the session, traders will get the first of two weekly U.S. inventory report, with the release of fresh numbers from the American Petroleum Institute.
Analysts polled by Reuters expect that crude stocks fell by 3.8 million barrels in the week to Sept. 3.
More official U.S. government figures will be released on Thursday morning.
In other commodities, gold prices were holding below the US$1,800 mark.
Spot gold was flat at US$1,795.22 per ounce, hovering close to an over one-week low of US$1,791.90 touched on Tuesday. U.S. gold futures fell 0.1 per cent to US$1,796.90.
“Gold has been warning for several days that its upward momentum had waned materially and that its rally was in trouble,” Mr. Halley said. “Notably, in previous sessions, gold had been unable to rally on U.S. dollar weakness.”
Currencies
The Canadian dollar was weaker, trading below 79 US cents, as investors await the Bank of Canada’s policy decision and the U.S. dollar managed its best level in a week against a group of world currencies.
The day range on the loonie is 78.69 US cents to 79.21 US cents.
Investors will get the Bank of Canada’s policy decision at 10 a.m. ET, although no move is expected.
”The central bank will need to acknowledge the weaker outturn, but typically non-MPR [monetary policy report] meetings simply give the forward guidance timeframe from the previous MPR, and we would expect that to be the case today,” RBC chief currency strategist Adam Cole said.
“The risk to the forward policy guidance is clearly skewed to later than the H2-2022 given in July and this may well be communicated, but a change, if there is one, will very likely have to wait until the Oct. 27 MPR.”
On world markets, the U.S. dollar index, which measures the currency against six rivals, traded 0.1-per-cent higher at 92.628 after earlier touching 92.655, a level not hit since Sept. 1, according to figures from Reuters.
The euro also traded 0.1-per-cent lower at US$1.1831 after hitting $1.1828, its lowest since Sept. 1. Markets will the the European Central Bank’s policy decision on Thursday.
More company news
The head of Apple Inc’s car project, Doug Field, is going to work for Ford Motor Co to lead the automaker’s advanced technology and embedded systems efforts, a hiring coup for Ford Chief Executive Jim Farley. Field most recently served as vice president of special projects at Apple and was previously senior vice president, engineering at Tesla. Earlier in his career, Field worked at Ford.
JPMorgan has struck a deal to buy a majority stake in German car giant Volkswagen’s payments business ahead of a planned rollout of in-car technology that allows drivers to automatically pay for fuel or tolls. The U.S. bank has agreed to buy close to 75% of Volkswagen Payments S.A. for an undisclosed sum, subject to regulatory approvals.X
The U.S. Securities and Exchange Commission (SEC) has threatened to sue Coinbase Global Inc if the crypto exchange goes ahead with plans to launch a program allowing users to earn interest by lending crypto assets, Coinbase said. The SEC has issued Coinbase with a Wells notice, an official way it tells a company that it intends to sue the company in court, Paul Grewal, the company’s chief legal officer said in a blog post. He said Coinbase would delay the launch of its ‘Lend’ product until at least October as a result.
Economic news
(10 am ET) Bank of Canada policy announcement.
(10 am ET) U.S. job openings and labour turnover survey for July.
(2 pm ET) U.S. Beige book.
With Reuters, The Canadian Press and The Associated Press