Equities
Canada’s main stock index traded at its lowest level in more than a month early Thursday with commodity-linked stocks weighing. On Wall Street, key indexes were also down sharply at the opening bell after the Federal Reserve suggested interest rates would likely remain higher for longer.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 179.38 points, or 0.9 per cent, at 19,712.27.
In the U.S., the Dow Jones Industrial Average fell 193.35 points, or 0.57 per cent, at the open to 33,773.00. The S&P 500 opened lower by 36.95 points, or 0.92 per cent, at 3,958.37, while the Nasdaq Composite dropped 158.26 points, or 1.42 per cent, to 11,012.62 at the opening bell.
On Wednesday afternoon, the Federal Reserve hiked rates by half a percentage point, as expected, marking the seventh consecutive increase in 2022. However, hopes of a pivot were dashed by indications that the central bank would keep rates higher for longer than expected. The Fed’s latest quarterly summary of economic projects now sees the bank’s policy rate at 5.1 per cent by the end of next year, up from 4.6 per cent at the end of September.
“The FOMC message was very clear: the Fed is not ready to stop hiking rates - even though they will be hiking by smaller chunks,” Swissquote senior analyst Ipek Ozkardeskaya said.
“Jerome Powell said yesterday that the last two CPI reports were ‘a welcome reduction in the monthly pace of inflation’, however, ‘it will take substantially more evidence to have confidence’ that the job is done. Crystal clear. No pause, no cut, no softening in sight.”
On Thursday, the Bank of England raised its key rate by half a percentage point, as expected. The European Central Bank also hiked by 50 basis points.
In this country, the Canadian Real Estate Association says national home sales fell by 3.3 per cent in November on a monthly basis. Compared with the same month a year earlier, actual sales were down 38.9 per cent. The MLS Home Price Index slid 1.4 per cent month-over-month and was down 4.4 per cent year-over-year, CREA said.
Also, the Office of the Superintendent of Financial Institutions will make its announcement on the minimum qualifying rate for uninsured mortgages. OSFI makes the announcement once a year and industry players are watching to see what will happen, given the sharp rise in interest rates.
On the corporate side, Sobeys parent Empire Co. Ltd. said it will sell its 56 gas stations in Western Canada to a subsidiary of Shell Canada for about $100-million in cash. The sale came as the company reported it earned $189.9-million or 73 cents a share in its latest quarter, up from $175.4-million 66 cents in the same quarter a year earlier.
Overseas, the pan-European STOXX 600 was down 1.59 per cent by midday. Britain’s FTSE 100 fell 0.56 per cent. Germany’s DAX and France’s CAC 40 were off 1.77 per cent and 1.98 per cent.
In Asia, Japan’s Nikkei lost 0.37 per cent. Hong Kong’s Hang Seng finished down 1.55 per cent.
Commodities
Crude prices recouped some early losses as the U.S. dollar firmed on the latest Fed move and TC Energy said it would resume operations on the Keystone pipeline after a spill into a creek in Kansas.
The day range on Brent was US$81.82 to US$82.80 in the early premarket period. The range on West Texas Intermediate was US$76.31 to US$77.39.
“There remains immense uncertainty over the outlook for crude demand and supply which is leading to plenty of volatility in oil markets,” OANDA senior analyst Craig Erlam said.
A firmer U.S. dollar weighed on prices. The greenback advanced on hawkish comments from the Fed. A higher U.S. dollar makes crude more expensive for buyers holding other currencies.
Sentiment also came under pressure from news that TC Energy Corp is resuming operations in a section of its Keystone pipeline a week after a leak of more than 14,000 barrels of oil in rural Kansas triggered the whole pipe’s shutdown.
The company said in a statement on Wednesday that it had given notice to regulators and customers about the restart of pipeline sections unaffected by the incident. The segment of the pipeline where the incident occurred remains sealed off, according to Reuters.
In other commodities, gold prices fell nearly 1 per cent after the Fed indicated more rate hikes are likely next year.
Spot gold slipped 0.9 per cent to US$1,791.71 per ounce by early Thursday morning. U.S. gold futures were down 0.9 per cent at US$1,802.10.
Currencies
The Canadian dollar was weaker while its U.S. counterpart advanced against world currencies in the wake of the latest Fed policy announcement.
The day range on the loonie was 73.58 US cents to 73.86 US cents in the predawn period.
Overseas, the euro fell 0.67 per cent to US$1.0611, and Britain’s pound lost 0.9 per cent to US$1.2316, both falling from six-month highs hit this week, according to figures from Reuters. The greenback rose 0.9 per cent on the Japanese yen to 136.69.
The U.S. dollar advanced 0.3 per cent to 0.9279 francs, but pared its gains after the head of the Swiss National Bank said the central bank had been selling foreign currencies, Reuters reported.
In bonds, the yield on the benchmark U.S. 10-year note was lower at 3.486 per cent early Thursday morning.
More company news
The Globe’s Jameson Berkow reports Danish beer giant Carlsberg Group is buying Canada’s Waterloo Brewing Ltd. for $144-million, the companies announced late Wednesday. The $4-per-share all-cash deal, which represents a 19.4-per-cent premium to Waterloo’s Dec. 14 closing price, is by far the largest deal to buy a Canadian brewery in recent history. Waterloo, founded in 1984 as Ontario’s first craft brewery and based in Kitchener, Ont., produces Laker beer, LandShark Lager, various Seagram’s-branded products, as well as its namesake Waterloo Brewing lineup. Until mid-2019, the company was known as Brick Brewing Co. Ltd.
Travel company Transat A.T. Inc. reported a fourth-quarter net loss attributable to shareholders of $126.2-million compared with a loss of $121.3-million in the same quarter last year. The parent company of Air Transat says the loss amounted to $3.32 per diluted share for the quarter ended Oct. 31 compared with a loss of $3.21 per diluted share a year ago. -The Canadian Press
Brazilian planemaker Embraer SA said on Thursday that its E2 family of commercial jets has received Type Certification from Canada’s aviation regulator. The move opens room for Embraer to deliver in the coming days the first of fifty E195-E2 aircraft ordered by Toronto-based Porter Airlines. -Reuters
Tesla Inc Chief Executive Officer Elon Musk has sold 22 million shares worth $3.58 billion in the electric-vehicle maker this week, a U.S. securities filing showed on Wednesday. The latest sale, Musk’s second since his $44-billion purchase of Twitter in October, brings the total Tesla stocks sold by the billionaire to nearly $40-billion over the past year. He now owns 13.4% of the world’s most valuable carmaker, according to Refinitiv data. -Reuters
Economic news
(8:15 a.m. ET) Canadian housing starts for November.
(8:30 a.m. ET) U.S. initial jobless claims for week of Dec. 10.
(8:30 a.m. ET) U.S. retail sales for November.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for December.
(9 a.m. ET) Canada’s existing home sales and average prices for November.
(9 a.m. ET) Canada’s MLS Home Price Index for November.
(9:15 a.m. ET) U.S. industrial production for November.
(10 a.m. ET) U.S. business inventories for October.
With Reuters and The Canadian Press