Equities
Canada’s main stock index rose at Thursday’s opening bell on gains in commodities and financial stocks. On Wall Street, major indexes following the previous session’s rally with new figures showing a modest easing in U.S. inflation.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 104.98 points, or 0.51 per cent, at 20,558.24, touching close to six-month highs.
The Dow Jones Industrial Average fell 56.2 points, or 0.16 per cent, at the open to 34533.59. The S&P 500 rose 7.0 points, or 0.17 per cent, at the open to 4087.14, while the Nasdaq Composite rose 7.2 points, or 0.06 per cent, to 11475.172 at the opening bell.
On Wednesday, Fed chair Jerome Powell delivered what are likely to be his last public remarks before the central bank’s next interest rate decision on Dec. 14. Markets are expecting a hike of 50 basis points after a string of 75-basis-point hikes.
In his remarks, Mr. Powell suggested that rates would have to stay higher for longer to head of inflation, although increases in smaller increments are also likely as soon as the upcoming meeting. The comments fuelled a sharp rally on Wall Street on Wednesday afternoon.
“Anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets,” OANDA senior analyst Craig Erlam said.
“The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.”
On Thursday morning, a key measure of underlying inflation closely watched by the Fed showed easing price pressures in October. The U.S. Commerce Department said prices, as measured by the PCE index, rose 6 per cent in October from a year earlier, down from 6.3 per cent in September. Excluding volatile food and energy prices, so-called core inflation over the previous 12 months was 5 per cent, less than the 5.2-per-cent annual increase in September, The Associated Press reported.
In Canada, the country’s biggest banks remain at the forefront with results from Toronto-Dominion Bank, CIBC and Bank of Montreal.
TD said net income, excluding one-off items, rose to $4.07-billion, or $2.18 per share, for the three months ended Oct. 31, from $3.87-billion, or $2.09 per share, a year earlier. Analysts had expected $2.09 a share, according to Refinitiv data. TD shares were up more than 2 per cent early trading in Toronto.
Adjusted to exclude one-time items, CIBC said it earned $1.39 per share in the latest quarter, short of the $1.72 analysts had been expecting, The Globe’s James Bradshaw reports this morning. CIBC raised its quarterly dividend by two cents to 85 cents per share. CIBC shares were down in morning trading.
BMO, meanwhile, reported net income, excluding one-off items, of $3.04 a share, in the three-month period ended Oct. 31, down from $3.33 a share, last year. Analysts had estimated the company to report a profit of $3.07 per share, according to data from Refinitiv IBES. BMO shares were little changed in early trading.
Earlier this week, Bank of Nova Scotia and RBC both topped analysts’ forecasts. National Bank, meanwhile, saw a 4-per-cent dip in fourth-quarter profit, falling short of analysts’ expectations.
Overseas, the pan-European STOXX 600 rose 0.54 per cent. Britain’s FTSE 100 was flat. Germany’s DAX gained 0.32 per cent while France’s CAC 40 slid 0.04 per cent.
In Asia, Japan’s Nikkei finished up 0.92 per cent. Hong Kong’s Hang Seng added 0.75 per cent.
Commodities
Crude prices advanced as traders await the upcoming meeting of OPEC+ members amid uncertainty over the group’s next move on supply.
The day range on Brent was US$86.26 to US$87.66 in the early premarket period. The range on West Texas Intermediate was US$79.93 to US$81.23. Prices had wavered in the early premarket period but firmed as the North American approached. Both benchmarks were up more than 2 per cent Thursday morning.
OPEC+ is scheduled to meet again on Dec. 4. Early reports had suggested the group could cut its output to prop up prices. However, more recent reports have indicated that the group could hold steady on production.
OANDA’s Craig Erlam notes that crude prices have rebounded strongly in recent days, up about 10 per cent from lows, on OPEC speculation as well as the prospect of a price cap on Russian crude and optimism over China’s COVID-19 controls.
“There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend,” Mr. Erlam said in an early note.
“That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday.”
On Thursday, crude prices drew some support from a weaker U.S. dollar in the wake of the latest Fed comments and a drop in weekly U.S. inventories reported by the U.S. Energy Information Administration.
Elsewhere, gold prices hit a two-week high on Thursday, supported by a weaker U.S. dollar.
Spot gold was up 0.7 per cent at US$1,781.15 per ounce early Thursday morning, after topping a high it held since Nov, according to Reuters. 16. U.S. gold futures climbed 2 per cent to US$1,794.60.
Currencies
The Canadian dollar was steady, moving in a fairly narrow range, while its U.S. counterpart pulled back on expectations of small U.S. rate hikes in coming months.
The day range on the loonie was 74.36 US cents to 74.66 US cents.
“The CAD outperformed the G10-excluding USD during the USD’s appreciating phase earlier this year and is underperforming as the USD trend transitions to what we expect to be a sustained bear move,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“In both cases, however, the CAD has struggled to gain any headway against the USD itself, which seems a bit unfair.”
There were no major Canadian economic reports due Thursday. Traders will get November jobs figures in Canada and the United States on Friday.
On world markets, the U.S. dollar as much as 1.64 per cent against the Japanese yen to 135.85 yen, its lowest level since August 23, but then recovered a little to 136.38, according to figures from Reuters.
The euro was up 0.2 per cent at US$1.0432 having traded as high as US$1.0463 early in the day. Britain’s pound was at US$1.2114, up 0.46 per cent.
In bonds, the yield on the U.S. 10-year note was lower at 3.618 per cent in the predawn period.
More company news
Royal Bank of Canada says Jacynthe Côté will be appointed as chair of the bank’s board of directors next year. The bank says Côté will take over the role effective upon her re-election as an independent director at RBC’s annual meeting on April 5, 2023. -The Canadian Press
Shares of Salesforce Inc sank on Thursday after co-CEO Bret Taylor’s sudden exit caught Wall Street off guard and raised concerns about the merit in having two leaders. His departure after just a year in the role coincides with slowing revenue growth at the software company as it faces stiff competition from the likes of Microsoft, a stronger dollar and businesses cutting spending amid red-hot inflation. -Reuters
Economic news
930 am ET) S&P global manufacturing PMI for Canada for November.
(830 am ET) U.S. initial jobless claims.
(830 am ET) U.S. personal spending and personal income for October.
(830 am ET) U.S. core PCE price index for October.
(945 am ET) U.S. S&P global manufacturing PMI for November.
(10 am ET) U.S. construction spending for October.
With Reuters and The Canadian Press
Terry Weber