Canada’s main stock index opened higher on Wednesday, tracking the heavyweight energy sector as escalating conflict in the Middle East pushed oil prices higher.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 35.97 points, or 0.15%, at 24,069.96.
Wall Street’s main indexes started lower on Wednesday as investors priced in a possible escalation in geopolitical tensions in the Middle East, while a survey allayed concerns about a rapid cooldown in the labor market.
The Dow Jones Industrial Average fell 31.8 points, or 0.08%, at the open to 42,125.14. The S&P 500 fell 10.6 points, or 0.19%, at the open to 5,698.14, while the Nasdaq Composite dropped 43.2 points, or 0.24%, to 17,867.124 at the opening bell.
While Israel is not a major producer of oil, Iran is OPEC’s third largest producer and the potential for a wider, sustained conflict raises the risk of disruptions to supplies by neighboring producers of crude. However, some analysts have been skeptical that the U.S. would experience massive oil shortages, since U.S. oil production is at an all-time high.
Early Wednesday, U.S. crude was up $2.11, or 3%, to $71.94 per barrel. Brent crude climbed $1.96 to $75.52 per barrel.
Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran, which he said “made a big mistake tonight and it will pay for it.” An Iranian commander threatened wider strikes on infrastructure if Israel retaliates.
Nike shares tumbled 7.3% in early trading after the shoe giant posted lackluster first-quarter results, including sales that came in lower than Wall Street was expecting. Nike, which is in the middle of a CEO transition, also pulled its full-year guidance and postponed its investors day conference. Its shares are down about 22% this year.
Shares of Humana shed close to 22% early Wednesday after the health insurer said a Medicare Advantage quality rating drop will hurt future bonus payments the company receives.
On Monday, the S&P 500 set an all-time high for the 43rd time this year. Stocks had been jumping on hopes the U.S. economy can continue to grow despite a slowdown in the job market, as the Federal Reserve cuts interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years, and it’s indicated it will deliver more cuts through next year.
The dominant question hanging over Wall Street is whether the cuts will ultimately prove to be too little, too late after the Fed earlier kept rates at a two-decade high in hopes of braking on the economy enough to stamp out high inflation.
Another threat to the economy could lie in a strike by dockworkers at 36 ports across the eastern United States that could snarl supply chains and drive up inflation.
The workers are asking for a labor contract that doesn’t allow automation to take their jobs, among other things. Supply chain experts say consumers won’t see an immediate impact because most retailers have stocked up on goods, moving ahead shipments of holiday gift items.
A debate Tuesday night between vice presidential candidates Democratic Gov. of Minnesota Tim Walz and Republican senator JD Vance drew scant market attention, analysts said.
“The market’s muted reaction says it all — traders are far more focused on pressing economic concerns and geopolitical risks than on the vice presidential showdown,” Stephen Innes of SPI Asset Management said in a commentary.
In Europe at midday, Germany’s DAX rose 0.7% and the FTSE 100 in London ticked up 0.1%. In Paris, the CAC 40 picked up 0.2%.
Tokyo’s Nikkei 225 lost 2.2% to 37,808.76. It has retreated since the ruling Liberal Democratic Party chose Shigeru Ishiba to lead the government, replacing Fumio Kishida, who stepped aside on Tuesday. Higher energy prices in Japan, which relies heavily on imported oil, gas and coal to power its industries, would add to Ishiba’s burdens as he works to pep up the economy.
Hong Kong’s Hang Seng roared 6.2% higher to 22,443.73, riding a wave of investor enthusiasm over recent moves by Beijing to rev up the Chinese economy with policies aimed at reviving the ailing property sector and supporting financial markets. With Shanghai and other markets in China closed, trading crowded into Hong Kong.
Reuters and The Associated Press
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