Equities
Canada’s main stock index saw a muted start Thursday with gains in materials shares offset by weakness in health-care stocks. Wall Street’s key indexes slid at the opening bell as interest rate concerns continue to weigh on sentiment and traders await comments from Fed chair Jerome Powell later in the day.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 3.48 points, or 0.02 per cent, at 19,432.5.
In the U.S., the Dow Jones Industrial Average fell 30.83 points, or 0.09 per cent, at the open to 33,519.44. The S&P 500 opened lower by 4.86 points, or 0.11 per cent, at 4,269.65, while the Nasdaq Composite dropped 49.48 points, or 0.38 per cent, to 13,043.37 at the opening bell.
“Day in and day out, the ongoing reality of higher-for-longer interest rates sets in deeper as the Fed’s messaging strengthens on The Street,” Stephen Innes, managing partner with SPI Asset Management, said.
“Concerns have shifted towards the possibility that more robust economic data may lead the Federal Reserve to continue raising rates or at least refrain from cutting them back from their current elevated levels soon,” he said.
On Thursday, Wall Street got a final reading on third-quarter GDP growth ahead of the start of trading. The latest figures showed came in at 2.1 per cent, matching an earlier estimate but also slightly below market forecasts for growth of 2.2 per cent. The latest number is also marks a downward revision from the first reading on growth, which came in at 2.4 per cent.
Meanwhile, Federal Reserve chair Jerome Powell is set to speak at a town hall this afternoon.
In Canada, earnings are due late in the day from retailer Aritizia as well as BlackBerry. Both report after the close of trading.
The Globe’s David Berman reports that Aritzia’s share price has been sliced in half this year as inflation and product markdowns weigh on the retailer’s profit margins and earnings. He notes that Luke Hannan, an analyst at Canaccord Genuity, expects Aritzia’s revenue in the second quarter fell 4.3 per cent compared with the same period last year, while profit margins decline partly as a result of product markdowns. For the full fiscal year, he expects that Aritzia will report a profit of 87 cents a share, down from $1.86 last year.
Overseas, the pan-European STOXX 600 was down 0.24 per cent in morning trading. Britain’s FTSE 100 slid 0.59 per cent. Germany’s DAX and France’s CAC 40 lost 0.13 per cent and 0.02 per cent, respectively.
In Asia, Japan’s Nikkei closed down 1.54 per cent. Hong Kong’s Hang Seng slid 1.36 per cent.
Commodities
Crude prices were choppy as a drop in U.S. inventories bolstered supply concerns but high interest rates continued to underpin demand fears.
The day range on Brent was US$96.30 to US$97.69 in the early premarket period. The range on West Texas Intermediate was US$93.42 to US$95.03. Early in the session, the WTI breached US$95 a barrel for the first time since August 2022. Brent, meanwhile, saw its best level since November.
“Brent crude is now just over a few dollars away from the US$100 price level, which could see further momentum buying if global leaders don’t do anything to try to jawbone prices down,” OANDA senior analyst Ed Moya said.
“The Biden administration will undoubtedly want lower energy prices given we are just over a year from the presidential election, but tapping the low levels from the [strategic petroleum reserves] will only provide temporary relief.”
The gains came after the U.S. Energy Information Administration reported that crude stockpiles fell by 2.2 million barrels last week to 416.3 million, far more than analysts had been forecasting.
Supply concerns have already been pushing prices up in recent weeks after OPEC+ members Saudi Arabia and Russia said they would extend voluntary production curbs through to the end of the year.
In other commodities, gold prices were slightly higher after hitting a six-month low during the previous session.
Spot gold was up 0.1 per cent to US$1,876.80 per ounce by early Thursday morning after falling 1.4 per cent, its biggest daily decline since July, on Wednesday. U.S. gold futures rose 0.2 per cent to US$1,894.10.
“Gold futures are breaking below the US$1900 level and that could trigger further selling if the bond market selloff remains intact,” Mr. Moya said. “Further downside could initially target the March lows around the US$1880 region.”
Currencies
The Canadian dollar was modestly lower, trading around 74 US cents, early this morning, while its U.S. counterpart continued to hold near its best levels in 10 months against a group of world currencies.
The day range on the loonie was 73.98 US cents to 74.17 US cents in the predawn period. The Canadian dollar was up 0.37 per cent against the greenback for the year to date as of early Thursday morning.
“Domestic news and developments remain light (ahead of the July GDP print tomorrow) and while firmer energy prices are a modest plus,” Shaun Osborne, chief FX strategist with Scotiabank, said.
Markets are now looking ahead to July GDP numbers from Statistics Canada on Friday morning. Economists are expecting to see slim growth of 0.1 per cent for the first month of the third quarter. The country’s economy contracted at an annual rate of 0.2 per cent in the second quarter of the year.
The U.S. dollar index, which weighs the greenback against a basket of currencies, was down 0.17 per cent 106.49 ahead of the North American opening bell. Overnight, the index hit 106.84, its best level since late November.
The euro was largely flat but held above Wednesday’s eight-month low of $1.04880, according to figures from Reuters. Britain’s pound traded at US$1.2137, not far from its lowest since mid-March.
In bonds, the yield on the U.S. 10-year note edged up to 4.643 per cent early Thursday morning, holding close to levels last seen in 2007.
More company news
GameStop on Thursday named Ryan Cohen as its CEO and chairman, giving the billionaire activist investor more power to spearhead a turnaround of the video game retailer. Cohen will relinquish that title of executive chairman, a role that he had taken on after the company ousted former CEO Matt Furlong in June. Shares of the retail investor darling jumped 6 per cent in premarket trading. -Reuters
Lululemon Athletica Inc. says it has struck a five-year partnership with Peloton Interactive Inc. The deal will make Vancouver-based Lululemon the primary athletic apparel partner of Peloton, while New York-based Peloton will be the exclusive digital fitness content provider to Lululemon. As part of the collaboration, some Peloton instructors will become Lululemon ambassadors, while Lululemon will sell co-branded clothing. -Reuters
Micron Technology forecast a wider than expected first-quarter loss, and its shares sank 4 per cent in premarket trading even as it prepares to ramp up production of new product lines and said it was working to become a supplier to Nvidia The Idaho-based chipmaker’s first-quarter revenue forecast exceeded Wall Street estimates, powered by demand for its memory chips from the rapidly growing artificial intelligence sector. The results were released after Wednesday’s closing bell. -Reuters
Economic news
(8:30 a.m. ET) Canada’s Survey of Employment, Payrolls and Hours for July.
(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 23.
(8:30 a.m. ET) U.S. real GDP for Q2.
(10 a.m. ET) U.S. pending home sales for August.
(4 p.m. ET) U.S. Fed Chair Jerome Powell hosts a town hall with educators in Washington.
With Reuters and The Canadian Press