Equity Markets
Canada's main stock index rose Thursday as shares of Element Fleet Management Corp. rebounded, which was partly offset by short-seller target Asanko Gold Inc. tumbling.
The Toronto Stock Exchange's S&P/TSX composite index was up 35.82 points, or 0.23 per cent, at 15,385.73, shortly after the open. Five of the index's 10 main groups were slightly higher, with technology and financial shares leading the market higher.
Earlier Thursday, crude prices seesawed, moving back and forth across the break-even mark. Canadian forestry stocks were also likely to come into focus on word of a softwood lumber aid package.
U.S. stocks opened higher on Thursday after better-than-expected private sector hiring showed that the labor market continues to strengthen, further boosting chances of a rate hike by the Federal Reserve later this month.
The Dow Jones industrial average was up 14.97 points, or 0.07 per cent, at 21,023.62, the S&P 500 was up 5.73 points, or 0.24 per cent, at 2,417.53 and the Nasdaq composite was up 25.84 points, or 0.42 per cent, at 6,224.36.
"Encouraged by strong unemployment data, U.S. investors sent stocks on Wall Street higher on the open," LCG senior market analyst Jasper Lawler said. "Private payrolls don't always tally well with the non-farms data from the BLS but it's another bit of evidence that the U.S. is pulling out of the economic weakness that dogged the first quarter."
He noted Conagra and Pinnacle Foods were among the top risers on merger talk. Industrials like GE and Caterpillar got a lift on the Dow on the potential impact of "lighter-touch environmental regulations," he said.
ADP said Thursday that private hiring rose by 253,000 jobs last month, well ahead of the 180,00-position gain most economists had been forecasting.
In the U.S., traders will now be casting an eye forward to Friday's jobs report. U.S. non-farm payrolls are seen growing by 180,000 jobs with the unemployment rate expected to hold steady. This morning traders will got a key reading on factory activity. The Institute for Supply Management's index for May ticked higher to 54.9, slightly ahead of forecasts, on gains in new orders and employment.
On this side of the border, the forestry sector could get a boost with a report in The Globe and Mail that Ottawa will deliver about $860-million in aid for the softwood-lumber industry to offset the pain caused by punitive duties imposed by the United States. Energy stocks could also get a bit of a reprieve after leading the Toronto Stock Exchange's S&P/TSX composite index lower on Wednesday. Crude prices attempted a move higher early Thursday but failed to make a convincing recovery, with oil remaining volatile amid expectations the United States will withdraw from the Paris climate accord.
Overseas, European markets moved higher in early trading after a report that European manufacturing grew at the fastest rate in six years in May. Britain's blue-chip FTSE 100 was up 0.37 per cent early on, while Germany's DAX rose 0.28 per cent and France's CAC 40 rose 0.59 per cent.
In Asia, shares were mixed in the wake of a new report suggesting factory activity in China contracted for the first time in 11 months. Japan's Nikkei closed up 1.07 per cent, while Hong Kong's Hang Seng advanced 0.58 per cent. The Shanghai Composite Index finished down 0.5 per cent.
Commodities
Crude prices recovered in lated morning trading as new figures showing falling U.S. inventories helped ease concerns over rising production outside OPEC.
Figures released by the U.S. Energy Information Administration on Thursday showed crude stocks fell by 6.4 million barrels last week. The market had been expected a decline of about 3 million barrels. Those figures came on the heels of a report late Wednesday by the American Petroleum Institute also showing a bigger-than-expected draw.
Also factoring into Thursday's moves is the expectation that U.S. President Donald Trump will announce a U.S. withdrawal from the Paris climate accord. If that happens, the U.S. would join two other countries - Syria and Nicaragua - in opting out of the pact. Traders say such a move would favour greater use of fossil fuels in the world's biggest oil market.
In metals, gold fell as the U.S. dollar firmed and traders looked for a clearer idea on the timing of U.S. interest rate hikes. Spot gold was down in early trading after touching its highest level since late April in early action. Gold futures were also lower.
Silver was down more than 1 per cent. Copper was modestly lower.
Currencies and bonds
The Canadian dollar edged higher midmorning, mirroring shifting crude prices. A day earlier, the loonie had been hit after crude fell more than 1 per cent, offsetting reports showing strong first-quarter economic growth and a healthy hand off heading into the second quarter. The day's range so far is 73.99 cents (U.S.) to 74.20 cents. There were no big economic reports scheduled for release Thursday to offer direction for the loonie.
"There are no top-tier data releases scheduled in Canada today. But the corrective pullback in USD/CAD appears to have run its course after yesterday's sell-off in crude," RBC Capital Markets global head of FX strategy Elsa Lignos noted in a report.
In other currencies, China's yuan rose above 6.8 per U.S. dollar for the first time since last November after China's central bank pushed its reference rate higher. Reuters reports that's the second-biggest single-day appreciation of the currency since it was de-pegged from the dollar in 2005.
Britain's pound remained volatile as conflicting polls failed to provide clarity on next week's election. Sterling was off slightly Thursday after the most recent poll showed a narrowing lead for Prime Minister Theresa May's Conservatives over the opposition Labour Party.
The U.S. dollar rose for the first time in five days against the yen on a spike in private sector hiring and rising expectations that the Federal Reserve will raise interest rates later this month. Interest rate futures have now priced in a 96-per-cent chance of a June rate increase.
In bonds, German 10-year bond yields - the euro zone's benchmark - rose as much as 2 basis points early Thursday to 0.32 per cent , but remained not far from the 0.286 per cent hit Wednesday, its lowest in over a month. U.S. Tresurys edged lower as ahead of the release of Thursday's economic data. The benchmark 10-year Treasury notes was higher.
Stocks set to see action
BRP Inc. is instituting the first quarterly dividend in its history, preparing to buy back shares and raising its outlook for the current financial year. The maker of Ski-Doo snowmobiles, Sea-Doo watercraft and other recreational equipment says it will begin paying a quarterly dividend of 8 cents per share starting in July. The Quebec-based company says it also plans to buy back up to $350-million of its shares by the end of July. The announcements come with BRP's first-quarter results, which included an $18.5-million net loss or 17 cents per share.
Lululemon Athletica reports its latest results after the close. Analysts are expecting the retailer to report earnings per share of about 28 cents.
Canadian Western Bank said on Thursday it was experiencing higher-than normal demand for mortgages as a result of challenges faced by its largest competitor, Home Capital Group. Home Capital has scaled back on lending to focus on repairing its balance sheet following rapid deposit withdrawals after a management shake-up and accusations brought by a regional regulator that it had misled investors about its mortgage business. The company has said the accusations are without merit. he bank reported earnings per share, excluding one-off items, of $0.59 compared with $0.41 a year ago. Analysts had on average expected earnings of $0.57, according to Thomson Reuters I/B/E/S data.
Saputo Inc. is projected to report adjusted quarterly earnings on Thursday of 48.4 cents, up 18 per cent from a year earlier, on revenue of $2.85-billion.
The Canadian government will unveil about $860-million in aid for the softwood-lumber industry Thursday in a bid to ease the pain caused by punitive duties imposed on Canada in a new timber trade dispute with the United States. Five Canadian forestry firms must pay preliminary countervailing duties ranging from 3.02 per cent to 24.12 per cent on lumber shipments, while the U.S. Department of Commerce slapped other lumber producers from Canada with a weighted-average duty of 19.88 per cent.
Starbucks Canada will begin serving beer and wine Thursday in Vancouver, a year after launching its bar menu at a few locations in Toronto and Ottawa. It's part of a push by the coffee giant to attract more customers in the late afternoon and evening, rather than just be a stopover for morning coffee.
Carson Block, the founder of activist short seller Muddy Waters LLC, says nothing shy of a massive rally in gold will save Asanko Gold Inc. "At this point Asanko has backed itself into a corner and short of gold ripping to $1,700 an ounce, we don't see how this company gets out of it," Block said Wednesday in a telephone interview from San Francisco. After falling 31 per cent in Wednesday, in premarket trading Thursday Asanko's New York market-listed shares were up 1.6 per cent. However, the stock fell nearly 18 per cent in early trading.
Deere & Co said on Thursday it would buy privately held road construction company Wirtgen Group for $5.2 billion including debt. Headquartered in Germany, Wirtgen makes road construction equipment. Deere's shares rose 3.3 per cent in premarket trading.
U.S. paints and coatings maker PPG Industries has dropped its attempt to buy Dutch rival Akzo Nobel in a €26.3-billion ($39.9-billion) deal, stung by repeated rejections from the company, legal defeats and hostility from Dutch politicians. Although it has retained its independence, Akzo must make good on promises it made to appease shareholders unhappy after it refused to enter talks with Pittsburgh-based PPG.
Goodyear Tire's shares were up 6 per cent after Morgan Stanley raised its rating to "overweight" from "underweight."
Box Inc. was up 6.4 per cent after the cloud storage firm's quarterly earnings edged ahead of Wall Street analysts' expectations.
Apparel retailer Express fell 22 per cent after its first quarter profit and revenue missed expectations and it outlined disappointing guidance for 2017.
Dollar General Corp.'s profit and sales beat analysts' estimates, as the Dollar-store chain operator benefited from higher consumer spending at its stores and lower advertising costs. Excluding items, the company earned $1.03 per share, beating the average analysts' estimate of $1 per share, according to Thomson Reuters I/B/E/S. The company's shares were up 3.7 per cent in premarket trading.
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Economic News
The U.S. ADP national employment report showed an increase of 253,000 positions last month. Consensus had called an increase of 180,000 jobs from April.
U.S. jobless claims rose to a five-week high of 248,000. Economists had been expecting a number closer to 239,000.U.S. initial jobless claims for week of May 27.
The Institute for Supply Management index edged up to 54.9 in May, beating forecasts. The rise was due to an increase in new orders and employment. The production subindex fell slightly but remained in growth territory.
The EIA Petroleum Status Report showed crude inventories fell by 6.4 million barrels last week. The market had been looking for a drop of about 3 million barrels.
Factories across much of Asia ran into a soft patch in May as export demand slowed but those in Europe enjoyed buoyant growth amid signs of steady improvement in the global economy Analysts said the weakness in Asia was likely to be temporary and the findings from private business surveys came a day after Moody's Investors Service painted an upbeat picture of global growth. Further indications the euro zone's economy is enjoying a stable and broad-based recovery, alongside inflationary pressures, will be welcomed by policy makers at the European Central Bank.
With files from Reuters