Stocks flat despite U.S. debt hopes, strong earnings
North American stocks wavered in and out of positive territory in early trading Wednesday on hopes of a possible deal to resolve the U.S. debt-ceiling crisis, as well as strong corporate earnings south of the border.
The benchmark S&P/TSX composite index was up 6.37 points, or 0.05%, to 13,339.29.
shortly after markets opened. While gold prices —which had been pushing up bullion-related stocks — continued to retreat overnight, energy shares were lifted by strengthening oil prices.
Before the start of trading, Chinese oil producer CNOOC Ltd. said it would buy struggling Opti Canada Inc. in a deal worth US$2.1-billion. The move is expected to draw more Chinese attention to Canada’s oilsands.
“Canada has rich oilsands resources. They have lots of experience in running this kind of project. For CNOOC, they participate in stakes in order to learn the technology and gain operational experience,” Huang Jing, an analyst at Fubon Security Investment Trust Co., told Reuters.
Meanwhile, the Canadian dollar continued to gain strength on expectations the Bank of Canada will begin raising interest rates sooner than expected. The loonie was trading around US$1.0551, up 34 basis points.
On Tuesday, the central bank held its benchmark lending rate at one per cent, but hinted that if the domestic economy maintains steady growth, “some of the considerable monetary policy stimulus currently in place will be withdrawn.” The bank will provide more details on its economic outlook when it releases its quarterly Monetary Policy Report later Wednesday morning.
On the commodities market, oil futures were up US$1.15 to US$98.65 a barrel, while gold fell to US$1,584.40 an ounce from the previous day’s close of US$1,601.10.
The Dow Jones industrial average slipped 7.11 points, or 0.06%, to 12,580.31 and the Nasdaq composite index edged down 2.23 points, or 0.08%, to 2,824.29.
On Tuesday, U.S. President Barack Obama expressed optimism that lawmakers could soon reach a deal to reduce the country’s deficit by $3.75-trillion over 10 years, easing concerns over a possible default.
“Doing anything over 10-years has a suspiciously Greek accent to it but if it gets the (debt) ceiling raised markets can presumably overlook the somewhat unsettling parallel,” Paul Donovan, a senior economist at UBS, told Reuters.
Investors also got a boost from Apple Inc., which posted better-than-expected revenue and earnings after the close of trading Tuesday. Apple shares jumped five per cent in pre-market trading Wednesday. This comes after solid earnings earlier in the week from IBM, JPMorgan and others.
Overseas markets were also higher on Wednesday. London’s FTSE 100 index was up 62.37 points, or 1.08%, to 5,852.36 at midday. Frankfurt’s DAX had added 33.97 points, or 0.47%, to 7,226.64 and the Paris CAC was up 63.53 points, or 1.72%, to 3,758.48.
In Asia, Tokyo’s Nikkei stock average ended up 116.18 points, or 1.17%, to 10,005.90 and Hong Kong’s Hang Seng index finished with a gain of 101.29 points, or 0.49%, to 22,003.69.
On North American markets Tuesday, the S&P/TSX rose 78.78 points, or 0.59%, to 13,332.92. The Dow Jones closed at 12,857.42, a gain of 202.26 points, or 1.63%. The Nasdaq rose 61.41 points, or 2.22%, to 2,826.52.