Equities
Canada’s main stock index recouped some of the previous session’s losses at Thursday’s opening bell, with consumer discretionary and materials stocks leading gains. On Wall Street, key indexes were also positive in early trading with optimism over rate cuts in the new year helped by fresh economic data.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 125.94 points, or 0.61 per cent, at 20,726.75.
In the U.S., the Dow Jones Industrial Average rose 143.32 points, or 0.39 per cent, at the open to 37,225.32.
The S&P 500 opened higher by 25.94 points, or 0.55 per cent, at 4,724.29, while the Nasdaq Composite gained 145.20 points, or 0.98 per cent, to 14,923.14 at the opening bell.
“With markets already struggling to wrap their head around the continued efforts from Fed members to reign in rate cut expectations, the recent rise in energy prices does increase the risk of a resurgence for inflation going forward,” Joshua Mahony, chief market analyst with Scope Markets, said.
“The longer we see energy prices rise, the longer we are likely to wait until the Federal Reserve are willing to cut interest rates. The strength of the U.S. economy is key within that, with yesterday’s surprisingly strong consumer confidence reading serving to highlight the risk that a strong economy allows the Fed to keep rates elevated for a longer time.”
On Thursday, Canadian investors got a reading on October retail sales before the start of trading. Statistics Canada said sales rose 0.7 per cent for the month, slightly below the 0.8-per-cent increase the agency had earlier forecast. Sales were up in seven of nine subsectors in October, led by gains at motor vehicle and parts retailers.
Statscan’s early estimate for November suggests sales for the month were largely unchanged. That estimate is subject to revision.
“With consumers humming Jingle Bells as they strolled through the malls this holiday season, we expect personal consumption expenditure to grow by a solid 1.5 per cent annualized in Q4,” TD economist Maria said.
“While improved spending patterns during the holiday season has hit a high note, it’s uncertain if this harmonious rhythm will play on in the same key into the new year as spending is forecast to decelerate in the first half of 2024.”
The figures come after Statistics Canada reported that the country’s annual rate of inflation held steady at 3.1 per cent in November, surprising markets which had expected a further easing in price pressures. On Friday morning, Statscan releases GDP figures for October. Early estimates suggested that the economy grew by 0.2 per cent in October after a 0.1-per-cent increase in September.
In the U.S., weekly jobless claims totalled 205,000 positions, below market forecasts for an increase of about 215,000. Separately, the U.S. Commerce Department said the third reading on third-quarter GDP was revised down to 4.9 per cent annual growth, from the previously reported 5.2 per cent.
On the corporate side, BlackBerry shares were down more than 12 per cent in early trading in Toronto as investors reacted to the company’s latest results. After Wednesday’s closing bell, BlackBerry posted third-quarter adjusted earnings of 1 US cent a share, and reported a net loss of 4 US cents a share. Analysts had expected an adjusted loss of 3 US cents and net loss of 4 US cents. The company also cut its revenue forecast for its connected car software division, The Globe reports.
On Wall Street, shares of Micron Technology were up 7 per cent in morning trading after the chipmaker topped analysts’ estimates in the most recent quarter and forecast strong second-quarter revenue. The company forecast revenue of US$5.3-billion, plus or minus US$200-million, for the second quarter, compared with estimates of US$5.03-billion, according to LSEG data, Reuters reported.
After the close today, Nike Inc. reports its latest results.
Overseas, the pan-European STOXX 600 was down 0.49 per cent by midday. Britain’s FTSE 100 slid 0.57 per cent. Germany’s DAX and France’s CAC 40 lost 0.47 per cent and 0.49 per cent, respectively.
In Asia, Japan’s Nikkei finished down 1.59 per cent after a weak handoff from Wall Street. Hong Kong’s Hang Seng edged up 0.04 per cent.
Commodities
Crude prices were choppy in early trading as concerns about global trade amid continued tensions in the Middle East came up against a surprise build in weekly U.S. inventories.
The day range on Brent was US$79 to US$80.13 in the early premarket period. The range on West Texas Intermediate was US$73.51 to US$74.58. Crude prices were coming off a third consecutive day of gains on Wednesday.
On Wednesday, Greece advised commercial vessels sailing in the Red Sea and the Gulf of Aden to avoid Yemeni waters in the wake of attacks on ships by Houthi forces. That decision followed similar moves by other companies, including energy giant BP, earlier in the week.
“The initial response [to the Red Sea situation] was fairly mild which suggests there are other factors at play,” OANDA senior analyst Craig Erlam said in a recent note.
“Brent and WTI are recovering from similar lows seen earlier this year which is quite the fall off from just a couple of months ago - 20 per cent from peak to trough. And with markets pricing in so many rate cuts now, that could boost the global economy next year and by extension demand.”
Meanwhile, sentiment was tempered by figures from the U.S. Energy Information Administration showing that U.S. crude inventories rose by 2.9 million barrels last week. Analysts had been forecasting a decline of about 2.3 million barrels. EIA also said U.S. crude output rose to a record 13.3 million barrels per day last week, up from the prior all-time high of 13.2 million barrels per day.
Early Thursday morning, Angola announced it would leave OPEC. The country’s oil minister said the move was made because membership was not serving its interests.
In other commodities, gold advanced, helped by a weaker U.S. dollar.
Spot gold was up 0.3 per cent at US$2,035.19 per ounce by early Thursday morning. U.S. gold futures were steady at US$2,047.10.
Currencies
The Canadian dollar was firmer while its U.S. counterpart saw modest gains in thin trading as markets head toward the holiday break.
The day range on the loonie was 74.76 US cents to 74.97 US cents in the early premarket period. The Canadian dollar was up about 1.5 per cent for the year-to-date as of early Thursday morning.
“Nosediving stocks took the CAD off its high late yesterday but losses have steadied overnight and the CAD has regained a little ground,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The minutes of the BoC’s November policy decision revealed nothing new but did re-emphasize policymakers’ caution on the rate outlook amid elevated wages and shelter costs.”
The U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.06 per cent 102.34. The index is down more than 1 per cent for the year so far.
The euro was up 0.02 per cent at US$1.0945. The pound was down 0.05 per cent at US$1.2631.
In bonds, the yield on the U.S. 10-year note was up slightly at 3.879 per cent ahead of the North American opening bell.
Economic news
(8:30 a.m. ET) Canada’s Survey of Employment, Payrolls and Hours for October.
(8:30 a.m. ET) Canadian retail sales for October.
(8:30 a.m. ET) U.S. initial jobless claims for week of Dec. 16.
(8:30 a.m. ET) U.S. real GDP for Q3.
(8:30 a.m. ET) U.S. corporate profits for Q3.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for December.
(10 a.m. ET) U.S. leading indicators for November.
With Reuters and The Canadian Press
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