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Equities
Canada’s main stock index started lower Thursday with energy and health-care shares weighing. On Wall Street, key indexes started lower with tech shares under pressure and concerns about inflation and interest rates persisting.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 81.05 points, or 0.39 per cent, at 20,711.38.
In the U.S., the Dow Jones Industrial Average fell 82.28 points, or 0.25 per cent, at the open to 32,828.62.
The S&P 500 opened lower by 14.12 points, or 0.34 per cent, at 4,101.65, while the Nasdaq Composite dropped 69.80 points, or 0.58 per cent, to 12,016.47 at the opening bell.
“The moody range-trading that has typified U.S. equity markets in June continued [Wednesday] as Wall Street decided that inflation was a concern, after all, sending equity markets lower,” OANDA senior analyst Jeffrey Halley said in an early note.
Markets get fresh U.S. inflation figures Friday morning. Before that, they get a reading on weekly U.S. jobless claims early Thursday.
In this country, the Bank of Canada will be at the forefront with the release of the central bank’s financial system review this morning followed by a press conference.
“We’ll be watching for the BoC’s view on the risks around housing and household debt with interest moving sharply higher,” Benjamin Reitzes, managing director, Canadian rates and macro strategist with BMO, said.
Overseas, the pan-European STOXX 600 was down 0.47 per cent shortly after the ECB confirmed it will end a long-running bond buying program on July 1 and signalled a string of interest rate hikes starting this summer.
Britain’s FTSE 100 slid 0.49 per cent. Germany’s DAX and France’s CAC 40 fell 0.56 per cent and 0.55 per cent, respectively.
In Asia, Japan’s Nikkei managed to end up 0.04 per cent. Hong Kong’s Hang Seng slid 0.66 per cent. Sentiment was hit by news that Shanghai’s Minhang district in Shanghai it will conduct COVID-19 tests for all residents on June 11 and ordered residents to stay home during the period.
Commodities
Crude prices wavered in early going, rattled by word of new measures aimed at controlling COVID-19 in China.
The day range on Brent is US$122.92 to US$123.60. The range on West Texas Intermediate is US$121.33 to US$122.43. Both benchmarks saw their best levels since March on Wednesday.
Prices were under pressure early Thursday on news that parts of Shanghai began imposing new lockdown restrictions, with residents of Minhang district ordered to stay home for two days in a bid to control COVID-19, according to a Reuters report.
“The lockdown of the Minhang district of Shanghai has delivered a much-needed wake-up call around the reality of China’s COVID-zero policy to regional markets,” OANDA senior analyst Jeffrey Halley said in an early note.
Meanwhile, the U.S. Energy Information Administration reported that crude inventories rose by 2 million barrels in the week to June 3 to 416.8 million barrels. Analysts had been expecting to see a decline of about 1.9 million barrels.
However, the U.S. posted a record fall in strategic crude reserves even as commercial stocks rose. As well, gasoline inventories were down for the week compared with expectations of a build suggesting continued demand.
In other commodities, gold prices slipped as U.S. Treasury yields remained high.
Spot gold was down 0.1 per cent at US$1,851.70 per ounce by early Thursday morning, while U.S. gold futures eased 0.1 per cent to US$1,853.90.
Currencies
The Canadian dollar was down slightly in early going while its U.S. counterpart held steady against a group of global currencies.
The day range on the loonie is 79.48 US cents to 79.69 US cents.
“The CAD backdrop remains generally constructive, we believe, amid firm growth trends, positive terms of trade and a hawkish central bank,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“This should limit scope for CAD softness and keep the currency trending generally firmer versus its major currency peers.”
Markets are awaiting the latest Canadian jobs stats on Friday morning. Economists are expecting to see a modest increase of 10,000 jobs in the May report. The jobless rate is expected to hold at 5.2 per cent.
On world markets, the dollar index was broadly at 102.64.
The euro was trading at 142.76 yen, just below a January 2015 high of 144.25 yen hit on Wednesday, according to figures from Reuters. The Japanese currency has weakened more than 4 per cent versus the euro so far in June.
Against the U.S. dollar, the yen fell to a new 20-year low of 134.56 yen per dollar in early trade before recovering to 133.79.
More company news
Transat A.T. Inc. reported its second-quarter loss grew compared with a year ago as it worked to capitalize on a recovery in the travel business. The company says its net loss attributable to shareholders amounted to $98.3-million or $2.60 per diluted share for the quarter ended April 30. The result compared with a loss of $69.6-million or $1.84 per diluted share a year earlier.
Nutrien, the world’s largest fertilizer producer, said on Thursday it plans to increase potash production to an annual 18 million tonnes by 2025 to mitigate supply uncertainty from Eastern Europe. Prices of potash, a key input used in nitrogen fertilizers, have soared since Western sanctions were imposed against Russia for its invasion of Ukraine, exacerbating an already tight market. “The challenge of feeding a growing world has never been clearer as global supply constraints have contributed to higher commodity prices and escalated concerns for global food security,” said Ken Seitz, Nutrien’s interim president and CEO.
A hamburger and two potato fries will feature on the new logo at former McDonald’s restaurants in Russia, the local company said, as it unveiled an advertising campaign ahead of its official reopening on Sunday. After more than three decades in Russia, McDonald’s Corp in May said it was selling its restaurants in Russia to one of its local licensees, which will rebrand them under a new name that has yet to be disclosed. “The logo depicts the restaurant’s two main symbols: two yellow potato fries and a yellow-orange burger,” the press service said.
Target Corp on Thursday raised its quarterly dividend by 20% to US$1.08 per share despite the big-box retailer earlier this week warning of weaker margins. The company on Tuesday cut its quarterly margin forecast issued less than a month ago, saying it would offer more discounts and cancel orders with suppliers as it struggles to clear excess inventory.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of June 4.
(12 p.m. ET) U.S. flow of funds for Q1.
(10:30 a.m. ET) Bank of Canada Financial Systems Review with press conference to follow.