Equities
Canada’s main stock index opened higher Thursday with materials stocks helping lift sentiment. Wall Street’s key indexes saw a mixed start after a weaker-than-expected reading on U.S. retail sales.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 69.5 points, or 0.33 per cent, at 20,958.9.
In the U.S., the Dow Jones Industrial Average fell 26.33 points, or 0.07 per cent, at the open to 38,397.94.
The S&P 500 opened higher by 2.52 points, or 0.05 per cent, at 5,003.14, while the Nasdaq Composite gained 6.15 points, or 0.04 per cent, to 15,865.30 at the opening bell.
“The market has been very quick in swallowing and digesting this Tuesday’s less-than-ideal inflation data from the U.S. – which showed that inflation in the U.S. didn’t ease as much as expected in January, remember that data?” Swissquote senior analyst Ipek Ozkardeskaya said.
“It was just two days ago, it was supposed to be important, and potentially trend changing. Interestingly, the kneejerk market reaction remained short lived.”
On Thursday morning, markets also got a weaker-than-forecast reading on U.S. retail sales for January. The U.S. Commerce Department said sales for the month fell 0.8 per cent. Economists had been forecasting a drop closer to 0.3 per cent.
In Canada, corporate earnings continue to roll in with retailer Canadian Tire and energy giant Cenovus both scheduled to release results.
The Globe’s Susan Krashinsky Robertson reports that Canadian Tire posted a 67.6-per-cent decline in net income in the quarter, which included the all-important holiday shopping season. Net income attributable to shareholders fell to $172.5-million, compared to $531.9-million in the same period the prior year. Excluding some normalizing items, net income attributable to shareholders fell to $3.38 per share in the quarter ended Dec. 30, compared to $9.34 per share in the prior year. According to the company, about $2.26 of that decline was related to an accounting change in how it records the impact of a margin sharing arrangement with its Canadian Tire store owners. Canadian Tire shares were under pressure shortly after the start of trading in Toronto.
Meanwhile, Manulife Financial, Canada’s biggest insurer, topped analysts’ forecasts for core earnings in the latest quarter, helped by strength in its Canadian and Asian units. Manulife reported core earnings of $1.77-billion, or 92 cents per share, in the three months ended Dec. 31, compared with $1.54-billion, or 77 cents per share, a year earlier. Analysts had forecast earnings of 85 cents, according to LSEG data. The results were released after Wednesday’s closing bell.
Overseas, the pan-European STOXX 600 was up 0.58 per cent in morning trading. Britain’s FTSE 100 gained 0.15 per cent. New figures released Thursday morning showed Britain’s economy contracted by 0.3 per cent in the final quarter of last year. That followed a contraction of 0.1 per cent in the third quarter of 2023, indicating a technical recession which is defined as two consecutive quarters of negative growth.
Germany’s DAX rose 0.64 per cent. France’s CAC 40 added 0.88 per cent.
In Asia, Japan’s Nikkei jumped 1.21 per cent, closing above 38,000 for the first time since 1990. Japan’s economy shrank by 0.4 per cent in the fourth quarter, also marking a second straight quarter of negative growth. Hong Kong’s Hang Seng gained 0.41 per cent.
Commodities
Crude prices were weaker after the International Energy Agency cut its global demand forecast and weekly U.S. inventory figures showed a bigger-than-expected build in oil stocks.
The day range on Brent was US$80.90 to US$81.72 in the early premarket period. The range on West Texas Intermediate was US$75.91 to US$76.69.
Early Thursday, the International Energy Agency cut its 2024 global oil demand forecast as growth loses momentum. The agency said the pace of expansion is set to decelerate to 1.22 million barrels per day this year - about half of the growth in 2023 - owing in part to a sharp slowdown in Chinese consumption, Reuters reported. The IEA had previously forecast 2024 demand growth of 1.24 million bpd.
Meanwhile, the U.S. Energy Information Administration reported on Wednesday that U.S. crude inventories rose by 12 million barrels to 439.5 million barrels in the week to Feb. 9. Analysts had been forecasting a smaller build of 2.6 million barrels.
“It’s understandable why oil prices are so volatile, there’s tremendous uncertainty around the Middle East, the economy, and interest rates which is generating these large moves,” OANDA senior analyst Craig Erlam said.
“There has been more of an upside bias of late but broadly speaking the price remains at reasonable levels that won’t be a concern from an inflationary standpoint.”
In other commodities, spot gold was steady at US$1,992.33 per ounce by early Thursday morning, after hitting its lowest since Dec. 13 on Wednesday. U.S. gold futures also remained flat at $2,004.20.
“Gold remains below US$2,000 after breaking below the psychologically significant threshold on Tuesday,” Mr. Erlam said.
“The move below appeared to be a reluctant acceptance that rates may not fall as soon or as fast as hoped, a belief that had kept the yellow metal elevated since the start of the year.”
Currencies
The Canadian dollar was slightly firmer in early trading while its U.S. counterpart held near three-month highs against a group of world currencies.
The day range on the loonie was 73.78 US cents to 73.92 US cents in the predawn period. The Canadian dollar was down about 0.57 per cent against the greenback over the past five days.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, fell 0.11 per cent to 104.61. The index, however, remains near the three-month high of 104.97 hit on Wednesday.
The euro edged up 0.05 per cent to US$1.0734. Britain’s pound was down 0.06 per cent at US$1.2558.
In bonds, the yield on the U.S. 10-year note was lower at 4.226 per cent ahead of the North American opening bell.
More company news
Cenovus Energy narrowly missed estimates for quarterly profit on Thursday, hit by lower oil prices. The Canadian oil and gas firm reported net income of 39 cents per share for the fourth quarter, compared with 40 cents per share, per LSEG data. -Reuters
Deere & Co cut its 2024 profit forecast on Thursday as farmers turn hesitant about big-ticket farm equipment purchases due to high borrowing rates and falling crop prices. The world’s largest farm equipment maker now expects net income for fiscal 2024 in the range of US$7.50-billion to US$7.75-billion, compared with its previous forecast of US$7.75-billion to US$8.25-billion. -Reuters
Economic news
(8:15 a.m. ET) Canadian housing starts for January.
(8:30 a.m. ET) Canada’s manufacturing sales and new orders for December.
(8:30 a.m. ET) Canadian construction investment for December.
(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 10.
(8:30 a.m. ET) U.S. retail sales for January.
(8:30 a.m. ET) U.S. import prices for January.
(9:15 a.m. ET) U.S. industrial production and capacity utilization for January.
(10 a.m. ET) U.S. business inventories for December.
(10 a.m. ET) U.S. NAHB Housing Market Index for February.
With Reuters and The Canadian Press
Terry Weber