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Equities
Canada’s main stock index opened higher Thursday on gains in energy and industrial stocks. South of the border, key indexes were also positive after the latest Federal Reserve minutes offered few surprises.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 88.99 points, or 0.44 per cent, at 20,472.74.
In the U.S., the Dow Jones Industrial Average rose 127.89 points, or 0.40 per cent, at the open to 32,248.17.
The S&P 500 opened higher by 5.87 points, or 0.15 per cent, at 3,984.60, while the Nasdaq Composite dropped 24.90 points, or 0.22 per cent, to 11,409.84 at the open.
The Fed minutes released on Wednesday afternoon showed all participants backed a half percentage-point rate hike at the last meeting to fight inflation, which they agreed had become a key threat to economic growth. The minutes also showed that “most participants” thought further hikes of that magnitude would “likely be appropriate” at the Fed’s policy meetings in June and July.
“The FOMC minutes told us nothing that we did not already know and offered little more than a range of policy options after June and July’s well-telegraphed 50 basis-point rate hikes,” Stephen Innes, managing partner with SPI Asset Management, said.
“I suspect what is keeping the market on and even keel despite the Fed moving closer to restrictive territory is that China gives policy stimulus when the U.S. takes it away.”
Sentiment, meanwhile, was tempered by chip designer Nvidia’s latest forecast which suggested second-quarter revenue would be below estimates as a result of supply chain issues and slowing demand in the gaming segment. The company forecast second-quarter revenue of US$8.10-billion, plus or minus 2 per cent. Analysts on average expect US$8.45-billion, according to IBES data from Refinitiv. Shares were lower in early trading on the Nasdaq.
In this country, bank earnings continue to dominate with results from Royal Bank, CIBC and Toronto-Dominion.
RBC reported net income excluding one-off items of $2.99 in the three months ended April 30, compared with $2.79 a year earlier. Analysts had expected $2.70 a share, according to IBES data from Refinitiv.
After adjusting for special items, including costs related to CIBC’s acquisition of retailer Costco’s credit card portfolio, CIBC said it earned $1.77 per share. On average, analysts expected adjusted earnings of $1.80 per share.
Meanwhile, TD said net income excluding one-off items was $3.71-billion, or $2.02, in the three months ended April 30, compared with $3.8-billion, or $2.04, a year earlier. Analysts had expected $1.93 a share, according to IBES data from Refinitiv.
RBC and TD shares were higher in early trading in Toronto while CIBC shares slipped.
On Wednesday, Bank of Nova Scotia and Bank of Montreal both reported higher second-quarter profit. The Globe’s James Bradshaw reports that CEOs for the two banks predict they can keep adding new loans and increasing profits in the coming quarters, offering an optimistic outlook for the financial sector that is at odds with economists’ increasingly gloomy forecasts of a downturn ahead.
Ahead of the opening bell, Canadian investors will also got March retail sales figures from Statistics Canada. The agency says sales were unchanged for the month. Sales rose in 10 of 11 subsectors, led by higher sales at gasoline stations. Core retail sales — which exclude gasoline stations and motor vehicle and parts dealers — increased 1.5 per cent in March. The government agency also said early estimates suggest a retail sales gain for April of 0.8 per cent.
Overseas, the pan-European STOXX 600 edged up 0.34 per cent by midday. Britain’s FTSE 100 up 0.05 per cent. Germany’s DAX and France’s CAC 40 gained 0.85 per cent and 0.68 per cent, respectively.
In Asia, Japan’s Nikkei lost 0.27 per cent. Hong Kong’s Hang Seng also closed down 0.27 per cent.
Commodities
Oil prices edged higher, supported by a bigger-than-forecast decline in weekly U.S. crude inventories and continued tight global supply.
Brent crude futures for July settlement gained 47 US cents, or 0.41 per cent, to US$114.50 a barrel early Thursday morning. U.S. West Texas Intermediate crude futures for July delivery climbed 53 US cents, or 0.48 per cent, to US$110.86 a barrel.
Figures from the U.S. Energy Information Administration showed crude stocks bell by 1 million barrels last week. Gasoline inventories also fell while distillate stocks rose by 1.7 million barrels as refiners picked up the pace of processing.
“The beginning of the summer driving season is here and the pent-up demand for travel is so high that Americans will travel regardless of the price at the pump,” OANDA senior analyst Ed Moya said.
“The oil market remains tight and crude prices seem like they will continue to be supported.”
Meanwhile, traders continue to keep an eye on efforts by the EU to agree on an embargo on Russian oil. An EU summit is set for next week and European Council President Charles Michel on Wednesday said he is confident that an agreement can be reached.
In other commodities, gold prices pulled back.
Spot gold dipped 0.5 per cent to US$1,844.15 per ounce, by early Thursday morning. U.S. gold futures eased 0.2 per cent to US$1,843.30.
Currencies
The Canadian dollar was down slightly while its U.S. counterpart was little changed against a group of global currencies after the latest Fed minutes suggested the central bank will likely push ahead with its current course of rate hikes.
The day range on the loonie is 77.82 US cents to 78.11 US cents.
“We look for the CAD to pick up a little more support in the short run if the data run continues to support the impression that the domestic economy is running ahead of BoC expectations, which will keep policymakers on a relatively aggressive tightening path in the next few months,” Shaun Osborne, chief FX strategist with Scotiabank, said in an early note.
On world markets, the U.S. dollar index, which measures the currency against six major peers, was flat at 102.06 as the minutes showed the Fed is likely to stay the course.
The euro was little changed at US$1.0679 while the dollar fell 0.4 per cent to 126.73 yen, according to figures from Reuters.
Risk-sensitive currencies were trading broadly flat against the U.S. dollar.
Economic news
(8:30 a.m. ET) Canadian retail sales for March.
(8:30 a.m. ET) U.S. initial jobless claims for week of May 21.
(8:30 a.m. ET) U.S. Real GDP for Q1.
(8:30 a.m. ET) U.S. pre-tax corporate profits for Q1.
(10 a.m. ET) U.S. pending home sales for April.
More company news
Telus International made and then abruptly withdrew a US$830-million buyout approach for Australian rival Appen Ltd, Appen said on Thursday. “Telus informed us that they were revoking their Indicative Proposal. No reasons were given,” the Australian software seller said. Telus International did not immediately respond to a request from Reuters for comment regarding the withdrawal of the proposal.
Broadcom Inc said it will buy cloud service provider VMware Inc in a US$61-billion cash-and-stock deal to further diversify the chipmaker’s business into enterprise software. The acquisition is the second biggest announced globally so far this year, after Microsoft Corp’s US$68.7-billion deal to buy video game maker Activision Blizzard Inc in January.
Macy’s Inc raised its full-year profit forecast, helped by strong demand for apparel from consumers returning to work and social events, even as red-hot inflation saps consumer spending power for discretionary products. The company said it expects fiscal 2022 adjusted earnings per share of US$4.53 to US$4.95, compared with its previous forecast of US$4.13 to US$4.52.
With Reuters and The Canadian Press