Bay Street Headed For Cautious Start; Inflation Data In Focus

(RTTNews) - Canadian shares are likely to open on a cautious note on Wednesday, with investors reacting to the consumer inflation data and tracking weak commodity prices.

Easing fears about a 100-bps hike in interest rate by the Fed at its upcoming policy meeting later this month resulted in some strong buying in global markets earlier this week.

Data on Canada's inflation for the month of June is due at 8:30 AM ET. Canada's annual inflation accelerated to 7.7% in May, the highest since January 1983, and above market expectations of 7.4%.

The CPI rose at a fresh record high of 6.3% in May. On a monthly basis, consumer prices rose 1.4%, higher than an expected rise of 1%.

Data on Canada raw materials prices and producer prices are also due at 8:30 AM ET. Raw materials prices increased 37.4% (YoY) in May, while the Producer Price Index rose 15% in May.

In company news, Canadian Pacific Railway Limited (CP.TO) said it welcomed the announcement by Kansas City Southern or "KCS" and its affiliate Kansas City Southern de México, S.A. de C.V. or "KCSM" of an agreement extending the concession exclusivity rights granted to KCSM for an additional 10 years. CP completed its acquisition of KCS in December 2021.

The Canadian market ended on a buoyant note on Tuesday, extending gains to a third straight session, in line with global markets amid fading concerns about an aggressive rate hike by the Federal Reserve at its upcoming meeting later this month.

The benchmark S&P/TSX Composite Index ended with a gain of 342.09 points or 1.84% at 18,937.71, a few points down from the day's high of 18,944.12.

Asian stocks ended on a strong note on Wednesday after Wall Street rallied to its best day in more than three weeks overnight, helped by reasonably healthy corporate earnings for the past quarter. Sentiment was also underpinned after Netflix reported better-than expected results and a smaller subscriber loss than analysts had feared.

Chinese shares gained amid renewed bets of tech crackdown ending after reports suggested that authorities are preparing to impose a fine of more than $1 billion on ride-hailing firm Didi Global over data breaches.

European stocks pared early gains and are currently down in negative territory in cautious trade with investors looking ahead to the European Central Bank's policy announcement on Thursday.

In commodities, West Texas Intermediate Crude oil futures are down $1.55 or 1.49% at $102.67 a barrel.

Gold futures are lower by $4.70 or 0.27% at $1,706.00 an ounce, while Silver futures are down $0.038 or 0.2% at $18.675 an ounce.