Futures for the Toronto stock market pointed to a lower opening Thursday as oil prices lagged and with the U.S. markets closed for the Thanksgiving holiday, after the TSX gained more than 200 points on Wednesday.
On Wednesday, the Dow eased into the red after earlier gaining 200 points as Apple stock fell. The S&P and Nasdaq both ended in the positive.
“I think that the recent moves in equities have largely been about big tech catching up with the rest of the market,” said Eoin Murray, the head of investment at Hermes Investment Management.
“Post the (global market) wobbles at the end of January, it has really only been big tech that has run off into the stratosphere ... So this is simply big tech coming back down to earth.”
Overseas, European markets slipped back into the red on Thursday as investor worries mounted about slowing global growth in the face of rising U.S. interest rates and trade tensions.
Chinese markets extended their slump in Asia amid the trade war with the United States, and Europe followed suit.
The region had plenty of concerns of its own. Italy was under pressure in both stock and bond markets as sparring resumed over its budget plans. Some disappointing big-name earnings added to the gloom.
Britain’s FTSE was off 1 per cent, Germany’s DAX fell 0.6 per cent and France’s CAC declined 0.4 per cent.
Europe’s tech sector lost another 1.2 percent, but it wasn’t the worst performer. Banks were 1.6 percent weaker and mining companies and other resources firms were down nearly 2 percent and approaching a one-month low.
That reflected the bitter Sino-U.S. trade war, encouraging investors to take money off the table before U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, meet in Argentina next week.
The focus will be on whether they can make any progress on their trade feud. Singapore became the latest to warn about the potential impact on Thursday. The city state is considered as a bellwether for international trade.
“Risks in the global economy are tilted to the downside,” said Loh Khum Yean, Singapore’s permanent secretary for trade and industry.
MSCI’s broadest index of Asia-Pacific shares outside Japan had ended little changed after recovering from an initial wobble.
The index has managed to hold up so far in November after three straight monthly declines, but is on track for its worst annual performance since 2011.
“Investors are still wary about whether they’ll see further lows, given none of the issues that drove the recent correction have dissipated,” said Shane Oliver, Sydney-based head of investment strategy at AMP.
Japan’s Nikkei rose 0.65 per cent, Hong Kong’s Hang Seng added 0.18 per cent and China’s Shanghai fell 0.2 per cent.
Commodities
Oil prices fell on Thursday after U.S. crude inventories swelled to their highest level since December stoking concerns about a global glut but OPEC talk of an output reduction limited losses.
Benchmark Brent fell 67 cents to US$62.82 a barrel, after dropping by as much as US$1 earlier in the session. U.S. WTI fell more than a US$1 before easing back to trade down 79 cents at US$53.84.
U.S. commercial crude oil inventories climbed by 4.9 million barrels to 446.91 million barrels last week, the U.S. Energy Information Administration (EIA) said on Wednesday, its highest level since December. U.S. crude oil production also stayed at a record 11.7 million barrels per day (bpd), the EIA said.
Tamas Varga, analyst at PVM brokerage, said the market trend was “still bearish.” “The question is what OPEC will do in December, will they cut, and if so, by how much?” he said.
The Organization of the Petroleum Exporting Countries is worried about the emergence of a glut that could pull down prices further. But OPEC’s biggest exporter Saudi Arabia is also under U.S. pressure to prevent prices spiking higher again.
Gold prices crept higher on Thursday towards a two-week peak scaled in the previous session, helped by an easing dollar and as investors sought refuge from weakness in financial markets on economic growth concerns.
Spot gold was up 0.1 per cent at US$1,227.20 an ounce, though moves were contained by the U.S. Thanksgiving holiday. Prices on Wednesday had peaked at US$1,230.07, the highest level since Nov. 7. U.S. gold futures were flat at US$1,228.20.
The dollar fell for a second day running, while Europe’s share markets dropped into the red as investor worries mounted about slowing global growth.
“Weaker stocks tend to be supportive of the gold market, given the uncertainty that prevailing in the market,” said Saxo Bank analyst Ole Hansen, adding that the softer dollar was also adding support.
Gold could be vulnerable to more gains if the dollar weakens further, making bullion cheaper for holders of other currencies, analysts said.
Currencies and bonds
The Canadian dollar was slightly higher at 75.57 US cents in early trading Thursday.
“The USD/CAD has retraced part of Tuesday’s outsized rally on the back of firmer crude oil prices (+1.9 per cent) and a bounce in U.S. equities (0.3 per cent). With today being a U.S. holiday combined with a lack of domestic data releases, liquidity will be more of a factor as USD/CAD takes direction from broader moves in risk. Support is located at $1.3202 and $1.3169, with $1.3270 and $1.3348 serving as resistance," said a note from RBC Capital Markets.
The U.S. dollar edged lower for a second consecutive day as greater risk appetite board encouraged investors to sell the greenback after a recent rally.
Indicators of risk in the currency markets such as the euro against the Swiss franc and the Canadian dollar flashed green, though gains were tiny, since U.S. markets were shut for Thanksgiving Day.
“Markets are on a slightly stronger footing today though moves are unlikely to be large given the U.S. markets are closed,” said Ulrich Leuchtmann, an FX strategist at Commerzbank in Frankfurt. Against a basket of other currencies, the dollar slipped 0.1 per cent at 96.65, retreating away from a near 1 1/2-year high of 97.693, hit earlier this month.
The Canadian 10-year bond yield was slightly higher at 2.366 per cent. The U.S. 10-year Treasury yield was at 3.065 per cent.
Stocks to watch
Canada’s federal government is considering a proposal from its main oil producing province of Alberta to share the cost of buying rail cars to move oil stuck in the region because of a lack of pipeline capacity, said two sources with direct knowledge of the matter.
Canada’s Centerra Gold has promised Kyrgyzstan’s government that it will produce at least 15.5 tonnes of gold at the giant Kumtor mine this year, the Kyrgyz prime minister’s press service said.
Nissan Motor’s board voted on Thursday to oust Carlos Ghosn from his post as chairman following his shock arrest this week, public broadcaster NHK reported, marking the stunning downfall of the executive once hailed as the savior of the Japanese automaker. The removal of Ghosn clouds the direction of the Renault-Nissan alliance, which he had personally shaped and pledged to consolidate with a deeper tie-up despite reservations at Nissan. Ghosn is also Renault’s chairman and chief executive.
Major Japanese wireless carriers are planning to cut the price of Apple Inc’s iPhone XR as early as next week, the Wall Street Journal reported on Thursday, citing people familiar with the matter. The iPhone maker will offer subsidies to mobile network operators in Japan to boost the sales of iPhone XR, the Journal reported.
Earnings include: Dollar Tree Inc.; Falcon Oil & Gas Ltd.; Nexus REIT
Other reading: Thursday’s small-cap stocks to watch
Economic news
None.
U.S. markets closed for the Thanksgiving holiday.
With files from Reuters