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Equities
Indexes on both sides of the border hovered near break even early Wednesday as investors await an afternoon policy announcement from the Federal Reserve.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 9.39 points, or 0.04 per cent, at 21,179.4.
In the U.S., the Dow Jones Industrial Average rose 6.46 points, or 0.02%, at the open to 36,059.09.
The S&P 500 opened flat at 4,630.65, while the Nasdaq Composite gained 8.91 points, or 0.06%, to 15,658.52 at the opening bell.
On Wednesday, market focus will be on the Fed’s latest policy decision, due at 2 p.m. ET. Markets are expecting the U.S. central bank to layout a roadmap for tapering its massive bond-buying program, which was put in place to support markets and the economy during the pandemic.
“The Federal Reserve is almost certain to announce tapering on Wednesday as it pares back its pandemic response and prepares for rate hikes next year,” OANDA senior analyst Craig Erlam said in a note.
“Given the path of travel for central banks around the world, I expect it will gradually accept that some hikes will be needed once tapering draws to a close, perhaps even immediately after. But that will become much more apparent in December when new forecasts are released.”
In this country, earnings continue to roll in. Canada’s biggest insurers are set to release results after the close with quarterly reports due from Manulife Financial, Sun Life and Great West Lifeco.
Ahead of the open, Cenovus Energy said it swung to a profit in its latest quarter on recovering energy demand.
The Calgary, Alberta-based company posted a net income of $551-million, or 27 cents per share, in the third quarter ended Sept. 30, compared with a loss of $194-million, or 16 cents per share, in the year-ago quarter. Cenovus also said it would double its dividend and buy back shares. Shares were up about 2 per cent in morning trading in Toronto.
Bank stocks will also likely be in focus on expectations that Canada’s banking regulator could lift or relax a temporary ban on banks and insurers increasing dividends or buying back shares.
The Globe’s James Bradshaw reports that the Office of the Superintendent of Financial Institutions (OSFI) put the moratorium in place in March, 2020, to ensure that banks could preserve capital as the pandemic hobbled the global economy. But massive government stimulus spending, combined with payment deferrals that banks granted on loans, softened the impact of the crisis on financial institutions, and banks are now sitting on tens of billions of dollars of excess capital.
Overseas, the pan-European STOXX 600 was up 0.6 per cent at midday. Britain’s FTSE 100 slid 0.42 per cent. Germany’s DAX fell 0.06 per cent while France’s CAC 40 rose 0.10 per cent.
In Asia, Hong Kong’s Hang Seng slid 0.30 per cent. Markets in Japan were closed.
Commodities
Crude prices fell in early going after new figures showed a continued build in U.S. inventories.
The day range on Brent is US$83.10 to US$84.20. The range on West Texas Intermediate is US$82.17 to US$83.08.
Figures from the American Petroleum Institute showed that crude stocks rose by 3.6 million barrels last week, while gasoline inventories fell by 552,000 barrels. Distillate stocks increased by 573,000 barrels. The rise in crude inventories marked the sixth consecutive increase for that measure.
More official figures are due later Wednesday morning from the U.S. Energy Information Administration.
“Crude prices are declining after the API reported the sixth straight week of crude oil inventory builds and as the Biden administration exhausts every possible plea to OPEC+ members before tapping their Strategic Petroleum Reserve,” OANDA senior analyst Edward Moya said.
“World leaders are running out of cards to pressure OPEC+ and that should mean whatever dip that comes from tapping strategic reserves from China or the U.S. will likely be bought into.”
U.S. President Joe Biden, speaking at the COP26 climate summit in Glasgow, blamed rising oil and gas prices on a refusal by OPEC nations to increase production.
OPEC and its allies are scheduled to meet later this week to discuss production plans.
“There remains plenty of reasons to be bullish on the oil market at the minute, not least the seeming unwillingness of OPEC+ to ramp up the pace of monthly output increases in the face of strong demand, a tight market and high prices,” OANDA’s Craig Erlam said.
“Who knows, maybe they [OPEC] will surprise us on Thursday and dial it up a little, even temporarily, but I doubt it. They’ve been through a period of low prices and with U.S. shale not responding particularly quickly to these higher prices as their priorities have shifted, the prospect of high but not recessionary prices may appeal to many.”
Elsewhere, gold prices eased ahead of the Fed policy announcement.
Spot gold slid 0.4 per cent to US$1,780.30 per ounce. U.S. gold futures fell 0.4 per cent to US$1,781.80.
Currencies
The Canadian dollar was little changed while its U.S. counterpart traded near recent highs as investors await the Fed announcement.
The day range on the loonie is 80.49 US cents to 80.62 US cents.
“The CAD is a relative under-performer on the session so far, with hefty declines in crude oil (WTI down nearly 2%), reflecting intensifying US pressure on OPEC+ to lift output,” Shaun Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian economic releases on Wednesday’s calendar.
On world markets, the U.S. dollar index traded unchanged on the day at 94.11, close to its 2021 peak of 94.563 hit last month, according to figures from Reuters.
Against the euro the greenback was also flat at US$1.1579, near the US$1.1522 low reached in October and which marked the strongest level for the dollar since July 2020.
U.S. dollar/yen traded at 113.94, near a four-year high.
In bonds, the yield on the U.S. 10-year note was lower at 1.524 per cent in the predawn period.
More company news
Norwegian Cruise Line Holdings Ltd reported a bigger quarterly loss on Wednesday, as the cruise operator spent heavily to prepare its ships that remained anchored without passengers for months for voyages again. The company’s net loss widened to $845.9-million in the third quarter ended Sept. 30, from $677.4-million a year earlier. Still, Norwegian Cruise said overall cumulative booked position for 2022 is in line with pre-pandemic record levels at higher pricing, adding it expected to be profitable in the second half of next year.
Economic news
(8:15 a.m. ET) U.S. ADP National Employment Report for October.
(9:45 a.m. ET) U.S. Markit services and composite PMI for October.
(10 a.m. ET) U.S. factory orders for September.
(10 a.m. ET) U.S. ISM Services PMI for October.
(2 p.m. ET) U.S. Fed announcement with chair Jerome Powell’s press briefing to follow.
With Reuters and The Canadian Press