Equities
Stocks on both sides of the border sank early Thursday after a hotter-than-expected reading on U.S. inflation fuelled more worries about the size of rate hikes in coming months.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 265.97 points, or 1.46 per cent, at 17,940.31, extending losses for the sixth day.
In the U.S., the Dow Jones Industrial Average fell 455.0 points, or 1.56 per cent, at the open to 28755.83. The S&P 500 fell 56.7 points, or 1.58 per cent, at the open to 3520.37, while the Nasdaq Composite dropped 285.3 points, or 2.74 per cent, to 10131.816 at the opening bell.
Key Thursday was the release of the September U.S. inflation figures. Minutes of the most recent Federal Reserve meeting, released Wednesday afternoon, suggested the U.S. central bank plans to keep hiking interest rates until price pressures are under control.
New figures released early Thursday showed the annual rate of inflation in the United States was 8.2 per cent in September compared with 8.3 per cent in August. Economists had been forecasting a September figure closer to 8.1 per cent. The core CPI, which eliminates volatile food and fuel prices, rose 6.6 per cent last month, compared with the estimates of a 6.5-per-cent increase.
On a monthly basis, the U.S. consumer price index rose 0.4 per cent, more than the 0.2-per-cent increase markets had been forecasting.
“The September inflation data for the U.S. showed that core price pressures remained red hot, adding urgency to the Fed’s rate hiking path,” CIBC economist Katherine Judge said.
In this country, The Globe’s Mark Rendell reports the International Monetary Fund said it expects “substantial further cooling” of the Canadian economy, and advised the federal and provincial governments to refrain from spending windfall revenues as the country teeters on the edge of recession. In a report published on Wednesday, IMF staff predicted the Canadian economy will grow 1.5 per cent in 2023, down from a projected 3.3 per cent this year.
On the corporate side, Vancouver-based fashion retailer Aritzia reported a 16-per-cent increase in second-quarter profit, helped by gains in retail and e-commerce sales. The company says it earned $46.3-million or 40 cents per diluted share in the second quarter, up from $39.8-million or 35 cents per share a year earlier. Excluding one-time items, adjusted net income was $82.6-million or 44 cents per share, compared with $72.9-million or 39 cents per share in the prior year. The results were released after Wednesday’s closing bell.
Overseas, the pan-European STOXX 600 was down 0.59 per cent by midday. Britain’s FTSE 100 lost more than 1 per cent. Germany’s DAX and France’s CAC 40 slid 0.21 per cent and 1.55 per cent, respectively.
In Asia, Japan’s Nikkei fell 0.60 per cent. Hong Kong’s Hang Seng lost 1.87 per cent.
Commodities
Crude prices were higher on supply concerns after OPEC+ cut output last week, prompting the International Energy Agency to warn that the move could tip the global economy into recession.
The day range on Brent was US$92.19 to US$93.40 in the early premarket period. The range on West Texas Intermediate was US$86.88 to US$88.03.
Last week, OPEC+ surprised markets by agreeing to cut supply by 2 million barrels a day. In a report released early Thursday, the IEA said that move has driven up prices and could push the world economy inro recession.
“The relentless deterioration of the economy and higher prices sparked by an OPEC+ plan to cut supply are slowing world oil demand,” the Paris-based agency said.
“With unrelenting inflationary pressures and interest rate hikes taking their toll, higher oil prices may prove the tipping point for a global economy already on the brink of recession,” it added in its monthly oil report.
Meanwhile, traders will get more weekly U.S. inventory figures later in the session from the U.S. Energy Information Administration.
Late Wednesday, industry group American Petroleum Institute reported that crude inventories rose by about 7.1 million barrels last week, raising concerns about weakening demand.
In other commodities, gold prices moved in a tight range.
Spot gold fell 0.2 per cent to US$1,668.59 per ounce by early Thursday morning. U.S. gold futures dipped 0.2 per cent to US$1,674.80.
Currencies
The Canadian dollar edged higher while its U.S. counterpart gained against a group of world currencies.
The day range on the loonie was 72.27 US cents to 72.47 US cents by early Thursday morning.
There were no major Canadian economic releases on Thursday’s calendar.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.05 per cent to 113.29 ahead of the latest U.S. inflation figures being released, according to figures from Reuters.
Britain’s pound slid 0.1 per cent to US$1.10860 as markets await the Friday deadline for the Bank of England to end its emergency bond-buying program. Reports have suggested the program could be extended if conditions warrant such a move.
The euro was flat at US$0.96965.
In bonds, the yield on the U.S. 10-year note was down slightly at 3.899 per cent in the predawn period.
More company news
Barrick Gold Corp on Thursday said it expects full-year gold production to be at the lower end of the range it forecast earlier and reported a fall in third-quarter preliminary output from the second quarter. The world’s second-largest gold miner warned in August it could exceed its gold production cost guidance as miners battle with inflation and rising costs of labor, energy and mining supplies. Barrick earlier this year forecast 2022 gold production of 4.2 million to 4.6 million ounces.
Delta Air Lines Inc’s quarterly profit missed Wall Street estimates on Thursday but the carrier expects travel demand to remain robust despite growing risks of an economic recession. Adjusted profit for the quarter through September came in at $1.51 a share, below analysts’ expectations of $1.53 per share. The company reported $12.84 billion in adjusted revenue. Delta expects its revenue in the fourth quarter to be up as much as 9% from the same period in 2019, translating into an adjusted profit of $1-$1.25 per share. That’s higher than a profit of 79 cents a share expected by analysts in a Refinitiv survey. -Reuters
Economic news
(830 am ET) U.S. initial jobless claims for week ended Oct. 8.
(830 am. ET) U.S. consumer prices for September.
With Reuters and The Canadian Press