Equities
Canada’s main stock index advanced at Wednesday’s opening bell with firmer crude prices bolstering energy shares. On Wall Street, key indexes also saw early gains with traders awaiting the Federal Reserve’s rate announcement later in the session.
In the U.S., the Dow Jones Industrial Average rose 29.00 points, or 0.09 per cent, at the open to 33,081.87.
The S&P 500 opened higher by 7.47 points, or 0.18 per cent, at 4,201.27, while the Nasdaq Composite gained 35.83 points, or 0.28 per cent, to 12,887.06 at the opening bell.
“The six-week period between the September and November Fed meetings did not provide any economic data that would prevent the Fed from maintaining its current position, particularly given the recent rise in longer-term interest rates,” Joe Gaffoglio, President of Mutual of America Capital Management, said in a note.
“The most significant risks in the coming months include the potential for another government shutdown in mid-November, escalation of wars in the Middle East and Ukraine, and the possibility of additional rate hikes, all of which would create additional headwinds for financial markets.”
The Fed has one more policy meeting this year, scheduled for Dec. 12 and 13. In Canada, new figures released on Tuesday showed the economy stalled in August with Statistics Canada forecasting a mild contraction for the third quarter. If that happens, it would be the second consecutive quarter of negative growth for the Canadian economy.
Last week, the Bank of Canada held interest rates steady. It’s next policy announcement is Dec. 6. Bank of Canada Governor Tiff Macklem and senior deputy governor Carolyn Rogers appear later this afternoon before the Senate committee on banking, commerce and the economy.
On the corporate side, Canada Goose shares fell about 9 per cent in early trading in Toronto after the luxury coat maker said it expects fiscal 2024 revenue of between $1.20-billion and $1.40-billion, compared to its previous forecast of $1.40-billion to $1.50-billion.
After the close, potash giant Nutrien reports results.
On Wall Street, shares of Advanced Micro Devices gained in early trading after the chip designer forecast fourth-quarter revenue and gross margins below Wall Street estimates but also reported adjusted profit and revenue ahead of market forecasts in the third quarter. The results were released after Tuesday’s closing bell.
Overseas, the pan-European STOXX 600 gained 0.50 per cent by late midday after a choppy morning.
Britain’s FTSE 100 gained 0.32 per cent. Germany’s DAX and France’s CAC 40 added 0.39 per cent and 0.35 per cent, respectively.
In Asia, Japan’s Nikkei closed up 2.41 per cent. Hong Kong’s Hang Seng slid 0.06 per cent, reversing early gains.
Commodities
Crude prices edged higher in early trading as markets await the Fed decision and continue to weigh developments in the Middle East.
The day range on Brent was US$85.15 to US$85.75 in the early premarket period. The range on West Texas Intermediate was US$81.02 to US$81.63.
“It is interesting crude prices have given up the bulk of their gains since Hamas attacked Israel which suggests either the geopolitical risk-premium has sharply reduced or global economic concerns have increased, perhaps a combination of the two,” OANDA senior analyst Craig Erlam said in a recent note.
“There’s clearly still a lot of concern around events in the Middle East though and so oil prices will remain very sensitive to developments there.”
Sentiment has been tempered somewhat this week by disappointing factory activity numbers out of China, which showed a contraction in October. China is among the world’s top consumers of crude.
Later this morning, traders will get the latest weekly U.S. inventory figures from the Energy Information Administration. Industry figures released late Tuesday by the American Petroleum Institute showed crude oil inventories rose by about 1.3 million barrels last week, while fuel stockpiles fell by about 360,000 barrels, according to Reuters.
In other commodities, spot gold fell 0.2 per cent to US$1,978.14 per ounce by early Wednesday morning, while U.S. gold futures dropped 0.4 per cent to US$1,987.10. Spot gold finished October up more than 7 per cent as investors sought out safer holdings amid escalated geopolitical tensions.
Currencies
The Canadian dollar was down slightly, trading around 72 US cents in the early premarket period, while the U.S. dollar saw modest gains against a group of world currencies.
The day range on the loonie was 71.99 US cents to 72.13 US cents in the early premarket period. The Canadian dollar lost nearly 1 per cent against the greenback over the past month.
“The CAD remains weak after it got dunked on following the soft August GDP data and headlines around the data’s releases, suggesting Canada was tracking ‘back to back’ quarterly contractions,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index edged higher to 106.75.
Britain’s pound slipped to US$1.2125 ahead of this week’s Bank of England rate decision. The euro fell 0.1 per cent to US$1.0567, according to figures from Reuters.
In bonds, the yield on the U.S. 10-year note was higher at 4.903 per cent in the predawn period.
More company news
WeWork shares tanked over 35% in premarket trading on Wednesday after media reports that the flexible workspace provider was planning to file for bankruptcy as early as next week. The New York-based firm, struggling with a heavy debt load and hefty losses for a few years now, was once privately valued at US$47-billion and now has a market capitalization of just about US$121-million. The bankruptcy filing would follow a series of troubles for the SoftBank-backed company since its IPO plans imploded in 2019 on skepticism over its business model of taking long-term leases and renting them for short term. -Reuters
Kraft Heinz beat Wall Street estimates for third-quarter profit and raised its annual forecast as the Jell-O maker’s margins benefited from higher prices of its packaged meals and condiments. Packaged food makers from Kellogg and Coca-Cola Co to General Mills have hiked product prices steadily as consumers continue to spend on their quick-fix meals and condiments. Kraft’s adjusted gross margin for the quarter expanded 396 basis points to 34%. -Reuters
Economic news
(8:15 a.m. ET) U.S. ADP National Employment Report for October.
(9:30 a.m. ET) Canada’s S&P global manufacturing PMI for October.
(9:45 a.m. ET) U.S. S&P global manufacturing PMI for October.
(10 a.m. ET) U.S. ISM manufacturing PMI for October.
(10 a.m. ET) U.S. construction spending for September.
(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for September.
(2 p.m. ET) U.S. Fed announcement with chair Jerome Powell’s press conference to follow.
(4:15 p.m. ET) Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers appear before the Senate Standing Committee on Banking, Commerce and the Economy.
With Reuters and The Canadian Press