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Equities
Canada’s main stock index opened higher Thursday with energy stocks gaining alongside rising crude prices. On Wall Street, indexes jumped at the start of trading, with the Nasdaq again touching a record high, on a better-than-expected jobs report.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 232.27 points, or 1.5 per cent, at 15,747.49.
The Dow Jones Industrial Average rose 201.48 points, or 0.78 per cent, at the open to 25,936.45. The S&P 500 opened higher by 27.78 points, or 0.89 per cent, at 3,143.64, while the Nasdaq Composite gained 114.04 points, or 1.12 per cent, to 10,268.67 at the opening bell.
The U.S. Labor Department said the U.S. economy generated 4.8 million jobs in June. Economists had been expecting an increase closer to 3 million. The unemployment rate fell to 11.1 per cent last month from 13.3 per cent in May.
“U.S. payrolls regained another 4.8 million jobs in June, which on top of the gain in May means that around a third of the jobs lost between March and April have now been recouped,” CIBC economist Andrew Grantham said in a note.
“However, it will be much slower, harder going from here. With COVID-19 case counts rising again in parts of the country, leading to the delaying/reversing of reopening plans, high-frequency employment data already show a stall in the prior improving trend towards the end of June.”
Separately, the Labor Department said initial claims for state unemployment benefits totaled a seasonally adjusted 1.427 million in the week ended June 27, down from 1.482 million in the prior week.
In this country, markets got May international trade numbers.
Statistics Canada said the country’s trade deficit narrowed to $677-million in May from $4.3-billion a month earlier. Following historic declines, exports rose 6.7 per cent for the month, reflecting resumed production in the auto industry and improved crude prices. Imports fell 3.9 per cent.
“Trade is the lifeblood of Canada’s goods sector, but even with exports seeing some improvement in May, we’re still a long way from clearing out the clots that emerged in the coronavirus recession,” Avery Shenfeld, chief economist with CIBC Capital Markets, said.
“Goods exports and imports are each sitting down roughly 1/3rd from where they stood a year ago.”
Market sentiment also drew support Thursday from reports that a COVID-19 vaccine from Pfizer and Germany’s BioNTech was found to be well tolerated in early-stage human trials. Those reports come as about a dozen U.S. states either pause or rollback their reopenings as a result of a spike in new infections.
“Based on a vaccine trial containing 45 people, including placebos, the V-shaped recovery gnomes are, once again, reaching for the sky,” Jeffrey Halley, Senior Market Analyst, Asia Pacific at OANDA, said.
Overseas, major European markets were higher by afternoon with the pan-European STOXX 600 rising 1.83 per cent.
Britain’s FTSE 100 rose 1.43 per cent. Germany’s DAX added 2.78 per cent and France’s CAC 40 advanced 2.64 per cent.
In Asia, Hong Kong’s Hang Seng jumped 2.85 per cent. The Shanghai Composite Index rose 2.13 per cent. Japan’s Nikkei gained 0.11 per cent.
Commodities
Crude prices reversed early losses and were higher in early going with a decline in U.S. crude inventories helping ease concerns about demand.
The day range on Brent is US$41.73 to US$42.66. The range on West Texas Intermediate US$39.46 to US$40.42.
The U.S. Energy Information Administration said weekly U.S. crude stocks fell 7.2 million barrels from the previous week’s record levels. The weekly decline was more that analysts had been forecasting. Those figures, however, were offset somewhat by figures showing gasoline stocks rose despite expectations of a decline.
“Oil markets have been predictably range-bound in Asia trade as prices remain supported by OPEC compliance and the EIA inventory draw,” AxiCorp chief market strategist Stephen Innes said.
“Still, markets remain temporarily top-heavy due to COVID-19 concerns, a counter-seasonal gasoline inventory build, and the prospect that OPEC+ is likely to roll back cuts in August.”
Mr. Innes said traders will also be keeping a close eye in coming days on travel figures out of the United States with the July 4 long weekend traditionally being one of the busiest U.S. driving weekends.
“Failing positive news on the vaccine front, the oil market could find some equilibrium between WTI US$38-US$40 as traders could also be sitting tight waiting to gauge U.S. onshore oil responsiveness to the higher prices,” Mr. Innes said.
In other commodities, gold prices slipped from the eight-year highs seen in the last session.
Spot gold was down 0.1 per cent at US$1,768.56 per ounce, after hitting US$1,788.96 on Wednesday, its highest since October 2012.
U.S. gold futures fell 0.1 per cent to US$1,778.
Currencies
The Canadian dollar strengthened after Statistics Canada said this country’s trade deficit narrowed in May as economies began reopening.
The day range on the loonie is 73.47 US cents to 73.74 US cents.
Statscan said the trade gap narrowed to $677-million in May as exports rose 6.7 per cent. Analysts had been forecasting a trade deficit of about $3-billion for the month.
“The data is consistent with other indicators that industrial activity bounced back in May albeit at a slower pace than the early reports of the firming in consumer spending activity,” RBC senior economist Nathan Janzen said. “And numbers for June have looked better - including a further tick up in the Markit Canadian manufacturing PMI (to 47.8) also reported this morning.”
On global markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, is on track for a 0.4-per-cent decline for the week. That would be its biggest weekly drop in about a month, according to Reuters. Still, the index is up more than 2 per cent from its 2020 low seen in March.
Elsewhere, positive risk sentiment boosted other risk-oriented currencies such as the New Zealand dollar, which gained nearly 0.5 per cent against the U.S. dollar. The euro was up 0.1 per cent at US$1.1264.
Britain’s pound rose above US$1.25 for the first time in a week. It last sat at US$1.2482, having gained almost 2 per cent from Monday’s one-month low.
More company news
Tesla Inc beat Wall Street estimates for second-quarter vehicle deliveries, as lockdowns imposed globally to combat the spread of the coronavirus begin to ease. The electric-car maker delivered 90,650 vehicles during the quarter, above estimates of 74,130 vehicles, according to Refinitiv data. Tesla shares jumped 9 per cent in premarket trading.
Enbridge Inc can restart operations at the west leg of its Line 5 pipeline while the damaged east leg remains shut, a Michigan circuit court judge ruled on Wednesday. The ruling comes after the judge granted the Michigan attorney general’s motion for a temporary restraining order last Thursday, requiring Enbridge to halt Line 5 operations.
McDonald’s Corp plans to pause the reopening of its dine-in service in the United States by 21 days as the number of coronavirus cases rise in the country, according to a letter seen by Reuters. During the coronavirus-induced lockdowns, fast-food restaurants had to limit operations, leading to lower sales. Nearly 99% of McDonald’s restaurants in the U.S. remain open for drive through, delivery and take-out options.
American Airlines said on it expects summer long-haul international capacity to decline 25% in 2021 compared to 2019 due to lower demand resulting from the coronavirus outbreak. The U.S. carrier also said it would discontinue several international routes that were once popular leisure destinations but are now expected to exhibit decreased demand.
French TGV high-speed train maker Alstom is prepared to offload assets to secure early EU antitrust approval for its bid for Bombardier Inc’s rail division, Reuters reported, citing people familiar with the matter said. The companies believe they have a strong case with few overlapping activities even if EU antitrust regulators are not convinced by the concessions and instead opt to open a four-month long investigation, the report said.
Coty Inc appointed Sue Nabi as its chief executive officer, effective Sept. 1, with longtime executive and CEO Peter Harf set to become the executive chairman. Ms. Nabi is founder of luxury skincare line Orveda.
Economic news
(8:30 a.m. ET) Canadian merchandise trade balance for May.
(8:30 a.m. ET) U.S. initial jobless claims for week of June 27.
(8:30 a.m. ET) U.S. employment for June.
(8:30 a.m. ET) U.S. goods and services trade balance for May.
(9:30 a.m. ET) Canada's Markit manufacturing PMI for June.
(10 a.m. ET) U.S. factory orders for May.
With Reuters and The Canadian Press