Equities
Markets on both sides of the border slipped at Thursday’s opening bell as news of British Prime Minister Liz Truss’ resignation injected fresh uncertainty into global markets.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 19.56 points, or 0.1 per cent, at 18,654.84.
The Dow Jones Industrial Average fell 11.89 points, or 0.04 per cent, at the open to 30,411.92.
The S&P 500 opened lower by 6.11 points, or 0.17 per cent, at 3,689.05, while the Nasdaq Composite dropped 23.09 points, or 0.22 per cent, to 10,657.41 at the opening bell.
Shortly before the North American open, Ms. Truss announced she was leaving her post after her economic program sparked turmoil in the markets.
“I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to notify him that I am resigning as leader of the Conservative Party,” she said.”
Michael Hews, chief market analyst with CMC Markets U.K., noted that the pound saw a modest rebound in the wake of the news while yields slipped back.
“While this has brought about a brief respite to the political risk premium it’s hard to see how any replacement will be able to coalesce around any form of unity of policy in this dumpster fire of a government,” Mr. Hewson said.
“The Conservative party in its current form is so riven by partisanship that even if Rishi Sunak does take over, as is widely being predicted, there will always be those working in the background to undermine him.”
Thursday's analyst upgrades and downgrades
In this country, investors are now looking ahead to next week’s Bank of Canada interest rate decision after a new reading on inflation showed an easing in the headline figure but continued price pressures below the surface. The annual rate of inflation in Canada eased to 6.9 per cent in September, marking the third month of falling inflation. However, the figure was still above market expectations, suggesting the central bank is likely to deliver another outsized rate hike on Wednesday.
“The Bank of Canada has clearly not slayed the inflation dragon yet and is therefore set for another large rate hike next week,” CIBC economist Karyne Charbonneau said.
“We now believe the bank will need to go with a 75 basis-point hike next week rather than the 50 basis points we previously anticipated,” she said. “The Bank might then be left with a last 25 basis points in December if growth numbers support it.”
On the corporate side, shares of Tesla were down about 8 per cent in early trading after the electric vehicle maker said it expected to miss its vehicle delivery target this year and posted revenue below Wall Street forecasts. Revenue for the third quarter was US$21.45-billion, a record but still short of analysts’ estimates of US$21.96-billion, according to IBES data from Refinitiv.
U.S. earnings continue Thursday with results due from American Airlines and Union Pacific along with others.
In Asia, Japan’s Nikkei finished down 0.92 per cent. Hong Kong’s Hang Seng lost 1.4 per cent.
Commodities
Crude prices gained in early going, helped by reports that China is considering cutting quarantine periods in its fight against COVID-19.
The day range on Brent was US$91.95 to US$93.92 in the early premarket period. The range on West Texas Intermediate was US$85.88 to US$87.14. Both benchmarks were up by more than 1 per cent early Thursday morning.
“The market is bouncing on that quarantine news and by extension a flickering light at the end of the zero-COVID policy tunnel,” Stephen Innes, managing partner at SPI Asset Management, said.
Bloomberg reported Thursday that China is now weighing cutting the quarantine period for incoming visitors to seven days from 10 days. Mr. Innes called the move “first positive sign we have seen out of China on the COVID front.” Traders have kept a close eye on China, one of the world’s biggest crude consumers, as it maintains its zero-COVID policy.
Meanwhile, U.S. President Joe Biden announced a plan on Wednesday to sell off the rest of his release from the nation’s emergency oil reserve by year’s end, or 15 million barrels of oil, and begin refilling the stockpile, Reuters reported. The move is aimed at curbing high gasoline prices.
In other commodities, gold prices held near three-week lows, hit by higher Treasury yields.
Spot gold was flat at US$1,627.98 per ounce. Prices had earlier hit their lowest since Sept. 28 at US$1,621.20.
U.S. gold futures were down 0.1 per cent to US$1,632.70.
Currencies
The Canadian dollar edged higher while Japan’s yen hit its lowest level since 1990 against the U.S. dollar.
The day range on the loonie is 72.42 US cents to 72.75 US cents.
“The CAD is picking up a little support in early trade,” Shawn Osborne, chief FX strategist with Scotiabank, said. “Look for spot to continue — generally — tracking risks sentiment.”
There were no major Canadian releases on Thursday’s calendar. Markets will get fresh retail sales figures on Friday.
On world markets, the greenback hit the symbolic level of 150 yen for the first time since August 1990 as the U.S. dollar drew support from high treasure yields, Reuters reported. The moves again raised the spectre of intervention by Japanese officials in the currency markets.
Elsewhere, Britain’s pound rallied in the wake of news that British Prime Minister Liz Truss was resigning. The pound was last up 0.5 per cent at US$1.1278, having headed higher ahead of the news.
The euro traded at US$0.9786, struggling to regain ground it lost during a U.S. dollar surge the day before.
In bonds, the yield on the U.S. 10-year note was up at 4.136 per cent in the predawn period. Earlier Thursday, the benchmark U.S. 10-year Treasury yield rose to 4.18 per cent, its highest level since mid-2008, according to figures from Reuters.
More company news
Mullen Group Ltd. reported its third-quarter profit more than doubled compared with a year ago as its revenue rose nearly 20 per cent. The Alberta-based trucking and logistics company says it earned net income of $38.0-million or 39 cents per diluted share for the quarter ended Sept. 30. The result was up from a profit of $17.5-million or 18 cents per diluted share in the same quarter last year. Revenue for the three-month period totalled $518.4-million, up from $432.5-million a year earlier. -The Canadian Press
Marlboro maker Philip Morris International Inc raised its buyout offer for Swedish Match AB in a last-ditch effort to get shareholder support for its US$16-billion move into the fast-growing market for alternatives to cigarettes. Philip Morris increased its bid by more than 9% to 116 Swedish crowns per share and said that the offer was its “best and final price”. -Reuters
U.S. wireless carrier AT&T Inc raised its annual profit view and posted a better-than-expected adjusted profit in its third-quarter on Thursday on strong demand for its phone and internet services, and as more Americans upgraded to 5G plans. AT&T’s promotional offers on smartphones and wireless plans helped it add 708,000 net new monthly bill paying wireless phone subscribers, surpassing Factset estimates of 552,300 additions and sending its shares up 2.8 per cent before the bell. -Reuters
American Airlines Group Inc expects to report a profit in the December quarter above Wall Street estimates, the company said on Thursday, helped by a strong rebound in travel as the demand shows no signs of cooling despite high airfare. The carrier said it expects adjusted profit between 50 and 70 cents per share for the fourth quarter ending December, compared with analysts’ estimate of 22 cents per share, according to Refinitiv IBES data. -Reuters
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Oct. 15.
(10 a.m. ET) U.S. existing home sales for September.
(10 a.m. ET) U.S. leading indicator for September.
With Reuters and The Canadian Press
Terry Weber