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Equities
Canada’s main stock index fell early Thursday, tracking weaker global market sentiment. South of the border, major U.S. indexes also started in the red new figures showed spiking inflation ahead of next week’s policy decision from the Federal Reserve.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 114.06 points, or 0.53 per cent, at 21,379.17.
In the U.S., the Dow Jones Industrial Average fell 179.48 points, or 0.54 per cent, at the open to 33,106.77.
The S&P 500 opened lower by 25.33 points, or 0.59 per cent, at 4,252.55, while the Nasdaq Composite dropped 157.20 points, or 1.19 per cent, to 13,098.35 at the opening bell.
“I’d be surprised if it [this week’s rally] is sustained for any significant period of time unless we see actual progress towards a ceasefire and Russian exit,” OANDA senior analyst Craig Erlam said in a note.
He said Wednesday’s gains may have been “a hopeful rally rather than one built on solid foundations but it’s the first glimmer of hope we’ve had in weeks.”
Early Thursday, Russian and Ukrainian foreign ministers met in Turkey, the highest level of contact since the start of the war on Feb. 24, but news conferences held by each indicated no progress had been made in resolving the conflict.
In the U.S., traders kept a close eye on the inflationary picture. New figures released ahead of the opening bell showed that the annual rate of inflation rose to 7.9 per cent in February. That was in line with economists’ forecasts but also the the sharpest increase since 1982.
The Federal Reserve makes its next policy decision next week. Economists are still expecting a quarter point increase despite current global uncertainty.
“Given what’s set to be a stronger CPI profile ahead than previously thought, reflecting the jump in energy prices and renewed supply chain disruptions on the war in Ukraine, there is no need for the Fed to pause between the four 25-basis-point rate hikes we expect this year, with the first one expected at next week’s FOMC,” CIBC senior economist Katherine Judge said.
In this country, investors get results from Sobeys-owner Empire Co. Ltd. and travel company Transat AT ahead of the start of trading.
Empire said third-quarter net earnings grew in the 13 weeks ended Jan. 29, to $203.4-million or 77 cents per share, compared to $176.3-million or 66 cents per share in the same period the prior year.
Meanwhile, Transat says its loss attributable to shareholders for the quarter ended Jan. 31 totalled $114.3-million or $3.03 per diluted share, compared with a loss of $60.5-million or $1.60 per diluted share a year earlier. The latest quarter was affected by the rise in Omicron cases and related travel restrictions implemented by the federal government.
Overseas, the pan-European STOXX 600 was down 1.57 per cent by midday, reversing at least of some of the previous session’s gains. The European Central Bank said Thursday it plans to end asset purchases in the third quarter, accelerating its exit from extraordinary stimulus and surprising economists who had expected few policy commitments amid Russia’s invasion of Ukraine.
Britain’s FTSE 100 fell 1.43 per cent. Germany’s DAX and France’s CAC 40 were down 2.86 per cent and 3.32 per cent, respectively.
In Asia, Japan’s Nikkei spiked 3.94 per cent in the wake of the previous session’s rally on Wall Street. Hong Kong’s Hang Seng rose 1.27 per cent.
Commodities
Crude prices gained in a choppy session as traders weigh the possibility of world producers moving to hike output in the wake of sanctions on Russian crude.
The day range on Brent is US$110.20 to US$117.37. The range on West Texas Intermediate US$107.01 to US$113.48. On Wednesday, Brent fell 13 per cent, its biggest drop in two years. WTI lost 12.5 per cent.
“Volatility continues to be the winner overnight, particularly in the commodity space as the street engaged in its latest grasping at straws attempt to price in ‘peak-Ukraine’,” OANDA senior analyst Jeffrey Halley said.
Reuters reports that markets got conflicting signals on whether producers would step up production.
UAE Energy Minister Suhail al-Mazrouei said on Twitter late on Wednesday his country is committed to the existing agreement by the Organization of the Petroleum Exporting Countries and allies to ramp up oil supply by 400,000 barrels per day monthly following sharp cuts in 2020.
Hours earlier, prices fell on comments from UAE’s ambassador to Washington saying his country will be encouraging OPEC to consider higher output to fill the supply gap due to sanctions on Russia, Reuters reported.
“To suggest the oil market is confused would be an understatement as we are in an unprecedented situation,” Stephen Innes, managing partner at SPI Asset Management, said.
Gold prices, meanwhile, were down.
Spot gold were off 0.5 per cent at US$1,981.96 per ounce by early Thursday morning after dropping as much as 1 per cent. U.S. gold futures were unchanged at US$1,988.60. Gold fell about 3 per cent on Wednesday, seeing its worst intraday drop in more than a year.
Currencies
The Canadian dollar was weaker while its U.S. counterpart edged higher against a basket of currencies.
The day range on the loonie is 77.86 US cents to 78.18 US cents.
“Elevated volatility and heightened risk aversion remain clear impediments to the CAD benefitting more obviously from the gains in commodity prices at the moment,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
“With little else to focus on at the moment (we get Canadian jobs data tomorrow morning), we expect external developments will continue to shape CAD trading in the near term.”
On global markets, the U.S. dollar index was up 0.2 per cent ahead of the latest U.S. inflation figures. The index, which weighs the greenback against a selection of world currencies, lost 1.17 per cent on Wednesday.
The euro was trading at US$1.10489, down 0.32 per cent after jumping 1.6 per cent on Wednesday, its best day since June 2016, according to figures from Reuters.
Britain’s pound was down 0.2 per cent at US$1.3159 after jumping 0.65 per cent overnight.
More company news
Amazon.com Inc said its board approved a 20-for-1 split of the e-commerce giant’s common stock and authorized a US$10-billion buyback plan. This is the first stock split by Amazon since 1999 and will give investors 19 additional shares for every share they hold. Trading based on the new share price will begin on June 6. Shares were up nearly 6 per cent in premarket trading. The news was announced after Wednesday’s close.
Exercise bike company Peloton Interactive Inc is testing new pricing strategy in order to turn around the company, the Wall Street Journal reported on Thursday, citing Chief Executive Barry McCarthy. Starting Friday, the company will begin testing a new pricing system that will let customers pay a single monthly fee for the namesake stationary bike and a monthly subscription to workout courses, according to the report. Upon cancellation, the company will take back the bike with no charge, the WSJ reported.
Economic news
ECB Monetary Policy meeting
(8:30 a.m. ET) U.S. initial jobless claims for week of March 5.
(8:30 a.m. ET) U.S. CPI for February.
With Reuters and The Canadian Press