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Equities
Canada’s main stock index opened higher Thursday, buoyed by health-care stocks although weakness in energy shares on the back of a moderation crude prices limited the gains. On Wall Street, key indexes start up, helped by positive earnings, after the previous session’s rout that saw the tech-heavy Nasdaq dip into correction territory.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 53.16 points, or 0.25 per cent, at 21,258.32.
In the U.S., the Dow Jones Industrial Average rose 74.01 points, or 0.21 per cent, at the open to 35,102.66.
The S&P 500 opened higher by 14.59 points, or 0.32 per cent, at 4,547.35, while the Nasdaq Composite gained 122.60 points, or 0.85 per cent, to 14,462.85 at the opening bell.
“Market sentiment is mixed,” Swissquote senior analyst Ipek Ozkardeskaya said.
“There is a certain will to buy a dip in U.S. indices, yet the aggressive hawkish Federal Reserve (Fed) pricing doesn’t allow the appetite to get restored. It results in hectic pricing as the US yields go up.”
Spiking bond yields have continued to spook investors, with the yield on the U.S. 10-year note hitting 1.9 per cent on Wednesday as markets anticipate the start of the Fed’s tightening cycle on rates. Early Thursday, the yield had pulled back somewhat to 1.834 per cent.
“The actual market pricing factors in the possibility of a 50 basis point rate hike in the U.S. in March,” Ms. Ozkardeskaya said.
“The idea of 50bp-hike opens the door for a more aggressive pricing on the yields, and that could continue weighing on the investor mood, if the focus remains heavily on the rates.”
On the corporate side, U.S. earnings continue to roll in with Netfilx results due after the close of trading.
“Netflix shares have taken a bit of a tumble in the past few weeks, largely due to concerns over valuations and the prospect of higher U.S. rates,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“Having hit a record high in November of $700 last year the shares have drifted lower, and could fall further even if we see a decent set of Q4 numbers.”
In this country, government moves on COVID-19 restrictions remain at the forefront.
The Globe reports this morning that Ontario Premier Doug Ford will on Thursday announce a gradual lifting of public-health restrictions that were implemented earlier this month. Sources familiar with the government’s decision said Ontario will allow restaurants to restart indoor dining at 50-per-cent capacity as of Jan. 31, with other restrictions to lift in February. Originally, Ontario had identified Jan. 26 as a potential reopening date when it brought in the new restrictions and announced that it was closing schools for two weeks Jan. 3.
Overseas, the pan-European STOXX 600 was up 0.07 per cent in early going. Britain’s FTSE 100 fell 0.15 per cent. Germany’s DAX rose 0.10 per cent and France’s CAC 40 fell 0.20 per cent.
In Asia, Japan’s Nikkei gained 1.11 per cent. Hong Kong’s Hang Seng jumped 3.42 per cent after China cut its one-year loan prime rate on Thursday.
Commodities
Crude prices pulled back after touching a seven-year high but improving demand and tight supply continue to underpin the market.
The day range on Brent is US$87.29 to US$88.59. The range on West Texas Intermediate is US$86.00 to US$87.27. Both benchmarks hit their highest level since fall of 2014 on Wednesday.
“The improving demand outlook and vulnerable supply situation suggest the oil market will remain tight for the foreseeable future,” OANDA senior analyst Ed Moya said.
“The lack of investment in new wells suggests the oil market will remain very tight going forward and that should support higher prices deep into the summer,” he said in a note.
Meanwhile, the American Petroleum Institute reported late Wedneday that U.S. crude and gasoline inventories rose last week while distillate stocks fell.
Crude stocks rose by 1.4 million barrels for the week ended Jan. 14. Gasoline inventories rose by 3.5 million barrels while distillate stocks fell by 1.2 million barrels.
More official figures are due later this morning from the U.S. Energy Information Administration.
In other commodities, gold prices edged higher, helped by a weaker U.S. dollar.
Spot gold was last up 0.1 per cent at US$1,840.96 per ounce by early Thursday morning, after hitting its highest since Nov. 22 at US$1,843.94. Prices on Wednesday posted their biggest jump in three months, according to Reuters.
U.S. gold futures fell 0.1 per cent to US$1,841.30.
Currencies
The Canadian dollar was higher after new figures showed a continuing spike in inflation, sparking increased expectations that the Bank of Canada will have to move sooner rather than later to tighten interest rates.
The day range on the loonie is 79.89 US cents to 80.12 US cents.
On Wednesday, Statistics Canada said the annual rate of inflation hit a three-decade high of 4.7 per cent in December. The figures come as the Bank of Canada prepares its upcoming policy statement next week. Economists are increasingly betting that the bank will move rates higher at that time.
“With the economy at full employment and inflation surging, we feel that immediate policy tightening is appropriate even in the face of an omicron surge,” National Bank economists Taylor Schleich and Warren Lovely said in a report.
“The BoC is probably leaning the same way, even if distorted estimates of the output gap are signalling there is still slack in the economy.”
On world markets, the U.S. dollar index, which measures the greenback against six major peers, slid 0.2 per cent to 95.428.
The euro was last at US$1.1368, up 0.2 per cent on the day, according to figures from Reuters. The pound was 0.2 per cent higher at US$1.3636 and the yen was unchanged at 114.33 per dollar.
The Australian dollar firmed 0.3 per cent, adding to the previous day’s gains.
More company news
American Airlines Group Inc reported a smaller fourth-quarter loss on Thursday, boosted by strong travel demand during the holiday season. The airline’s adjusted net loss fell to $921-million, or $1.42 per share, for the quarter ended Dec. 31, from $2.2-billion, or $3.86 per share, a year earlier when the COVID-19 pandemic hammered air travel.
United Airlines Holdings trimmed its capacity forecast and warned of higher costs, after posting a smaller-than-expected fourth-quarter loss, citing turbulence from the Omicron coronavirus variant. The Chicago-based carrier said the latest wave of the health crisis has depressed near-term demand even as bookings for the spring and beyond remain strong.
Baker Hughes Co on Thursday reported an adjusted quarterly profit compared with a year-ago loss, as producers took advantage of a rise in crude prices that fueled demand for oilfield service equipment. Adjusted net income stood at $224-million, or 25 cents per share, in the three months ended Dec. 31, compared with a loss of $50-million, or 7 cents per share, last year
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Jan. 15.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for January.
(10 a.m. ET) U.S. existing home sales for December.
With Reuters and The Canadian Press