Equity Markets
U.S. stock futures were higher early Thursday as markets await the outcome of an OPEC meeting in Vienna. On Bay Street, banks will again dominate as CIBC and Toronto-Dominion Bank report fourth-quarter results. Futures on this side of the border were higher. As the North American open approached, Dow futures were up by triple digits and appeared set to breach 24,000 for the first time on optimism ahead of a Senate vote on a U.S. tax overhaul.
OPEC and non-OPEC producers appeared set to agree to extend production cuts through to the end of next year in a bid to clear a global market overhang despite concerns that Russia could oppose the move because of the impact of sharply higher prices on that country's economy. The original production cuts were set to expire in March. Members on Thursday signalled that they could exit the deal early if the market overheats. Crude prices were higher ahead of the meeting.
"There has been some concern that an extended freeze could well leave the field open to US shale producers who are already pumping at record levels," Michael Hewson, CMC Markets U.K.'s chief market strategist, said in a note. "Therefore the biggest question isn't around an extension, it's about how long the extension lasts for."
On Bay Street, bank earnings continue to roll out. Canadian Imperial Bank of Commerce posted net income $1.16-billion or $2.59 a share, compared with $931-million or $2.32 a share the year before. Excluding one-time items, the bank reported earnings per share of $2.81, ahead of analysts' forecasts which called for earnings of $2.59.
Meanwhile, TD posted earnings per share of $1.42, up from $1.20 a year earlier. On an adjusted basis, earnings per share were $1.36 compared with $1.22 a year earlier, but below consensus forecasts which called for earnings by that measure of $1.39.
"It looks like TD disappointed on the back of a retracement in earnings in its U.S. retail segment," Barclays analysts John Aiken said in a note. "While the domestic platform managed to shake off most of the annual Q4 uptick in expenses, this legacy appears to continue to affect the U.S. platform. Further, there was a modestly greater deterioration in U.S. credit than we have been anticipating."
On Wall Street, retailers could get some attention again after Sears Holdings Corp. posted a double-digit drop in same-store sales, but narrowed its loss. Sales at stores open for more than a year fell 17 per cent in the latest quarter at the company's Sears outlets. Same-store sales at its Kmart stores fell 13 per cent. Sears posted a net loss of $558-million, roughly in line with the company's earlier forecasts. A year earlier, Sears Holdings posted a loss of $748 million in the same quarter a year ago. Sears shares surged in premarket trading climbing 30 per cent.
Overseas, a drop in tech stocks on Wall Street during Wednesday's session sent a note of caution through world markets. Key tech companies like Apple, Amazon and Facebook all took a hit during the previous session. All those stocks, however, were trading higher again in premarket action Thursday. Nasdaq futures also pointed higher.
The world's broadest equity gauge – the MSCI all-country index – was on course to finish November with its 13th straight monthly gain – the longest such winning streak in the index's 30-year history, according to Reuters
In Europe, the pan-European Stoxx 600 was up about half a percentage point at last check. Britain's FTSE was up 0.22 per cent, although shares on the Daily Mail and General Trust fell more than 20 per cent after the owner of the Daily Mail and Mail on Sunday posted a pre-tax loss for the fiscal year. France's CAC 40 rose 0.49 per cent and Germany's DAX was up 0.79 per cent.
In Asia, markets were mostly lower, following the same path as the tech losses on Wall Street. Of the key Asian indexes, Japan's Nikkei managed to finish up about 0.57 per cent with tech losses offset by gains in financials. Tech shares were also among the worst performers on Hong Kong's Hang Seng, which finished down 1.51 per cent. The Shanghai composite index lost 0.61 per cent.
Commodities
Oil prices were higher as a deal seemed imminent among OPEC and non-OPEC producers to extend production cuts through to the end of next year. West Texas Intermediate was trading in a day range of $57.26 (U.S.) a barrel to $57.98. Brent crude was moving in a day range of $63.24 to $64.21.
OPEC's current pact to cut oil production by 1.8 million barrels a day is set to expire in March. Reuters reports that comments at a morning session attended by OPEC members suggested ministers were likely to back a nine-month extension to the current agreement. Concerns about the possible extension surfaced earlier this week amid suggestions that Russia was reluctant to sign on because of concerns how rallying oil prices would affect that country's economy. Thursday's agreement was likely tin include a review in June if demand overtakes supply.
"With that in mind, anything short of this could trigger a decline in oil prices, as could an extension in line with expectations as we saw when the last one was announced in May," OANDA senior market analyst Craig Erlam said in a note.
"Only a more aggressive cut is likely to provide any substantial upside, although I'm not sure there'll be much appetite for such action given the progress that's already been made and the market share that is being conceded to U.S. shale as a result."
On Wednesday, the U.S. Energy Information Administration reported a decline in crude stocks with inventories at the Cushing, Oklahoma, storage hub seeing their biggest decline in eight years.
Crude inventories fell 3.4 million barrels in the week to Nov. 24, compared with analysts' expectations in a Reuters poll for a decrease of 2.3 million barrels. Analysts said the decine at the Cushing facility was likely the result of the shutdown of the Keystone pipeline on Nov. 16 after a leak in South Dakota.
In other commodities, gold touched a week low as the U.S. dollar rose on an upward revision to third-quarter gross domestic product. Spot gold and U.S. gold futures were both lower in early going. Silver hit its lowest level in eight weeks.
London copper prices were higher on positive manufacturing data from China, although prices looked set for a monthly decline on worries about slowing demand in that country.
Currencies and bonds
The Canadian dollar was trading at the mid 77-cents (U.S.) mark as the U.S. dollar found its footing on upbeat economic news. The day range for the loonie so far is 77.51 cents to 77.78 cents.
With no big economic reports on deck, traders will be waiting for the release of Canada's third-quarter GDP figures on Friday morning.
"The Canadian economy cooled sharply in Q3 after a torrid four-quarter run where growth averaged 3.7 per cent, the strongest since 2006," BMO economist Sal Guatieri said in a recent note. "We're looking for 1.6-per-cent growth in the quarter."
He said weaker consumer spending and a drag from exports were likely among the factors holding back the economy in the quarter, although September's GDP is likely bounce back after the previous month's contraction. However, he noted, September's growth will likely still come in at a modest 0.1 per cent.
Also on Friday, markets will get Canadian employment figures for November. Those numbers are expected to show slowing employment growth after a solid first 10 months of the year, he said. BMO is forecasting an increase in employment for the month of 10,000 positions, sparking a one-tick decline in the unemployment rate to 6.2 per cent.
In world currencies, the U.S. dollar rose Thursday, pulling away from the two-month low seen earlier in the week. The greenback got a lift from an upward revision to third-quarter GDP growth, which was seen bolstering the case for continued interest rate hikes in the new year.
The U.S. dollar index, a broader measure of the greenback against world currencies, was higher ahead of the North American open. The euro, meanwhile, was flat against the U.S. dollar while the pound rose on news of progress in Brexit talks. The pound was just below a two-month high against the U.S. dollar in Asian trading.
In bonds, the yield on the U.S. 10-year note was higher at 2.386 per cent. The yield on the 30-year note was higher at 2.825 per cent.
Stocks set to see action
CIBC is reporting $1.16-billion of net income in its fourth quarter, up 25 per cent from $931-million during the same period last year, on strong performances across its divisions. The Toronto-based bank says its net income for the three months ended Oct. 31 amounted to $2.59 per diluted share, compared with $2.32 per share during the same period in 2016.
TD Bank says it earned $2.71-billion in its latest quarter, up from $2.30-billion a year ago, boosted by its Canadian and U.S. retail banking business. The bank says the profit amounted to $1.42 per diluted share for the quarter ended Oct. 31, up from $1.20 per diluted share in the same quarter last year.
Sears Holdings Corp continued its streak of declining sales in the third quarter, reporting a double-digit drop in comparable sales at its Sears and Kmart chains. Sales at Sears stores open for more than a year fell 17 per cent in the quarter ending Oct. 28, while comparable sales at Kmart fell 13 per cent. Net loss attributable to shareholders was $558-million, in line with the forecast of $525-million to $595-million Sears gave earlier this month, citing store closures.
Airbus' technology head Paul Eremenko is to leave and join rival United Technologies Corp, two sources told Reuters on Thursday, as Airbus overhauls its top management to fight back against rival Boeing. An Airbus spokesman declined to comment on the reports of Eremenko's departure, which first appeared in La Tribune newspaper. Officials at UTC could not immediately be reached for comment. One of the two sources said Eremenko was leaving for "personal reasons". Eremenko was hired from Google in 2015 with a mandate to foster innovation and import radical thinking from Silicon Valley - the company has long said digital technology will change the way aircraft are made.
The publisher of Britain's Daily Mail newspaper said revenue and profit would decline in its media business over the coming year, with the tough outlook for the print business sending its shares 25 percent lower. Daily Mail & General Trust reported a 13 percent decline in pretax profit in the year to the end of September despite its highly popular MailOnline website moving into the black in the last three months. In common with other newspaper groups, DMGT is battling tough print advertising markets and long-term declines in circulation.
Enbridge Inc. is issuing $1.5-billion of shares and plans to sell at least $3-billion in assets as it seeks to fund major development projects and streamline its operations following its takeover of Spectra Energy, The Globe's Jeffrey Jones reports. Enbridge also said it is increasing its dividend by 10 per cent as part of a series of moves announced late Wednesday. The company has $22-billion worth of projects it intends to complete through 2020. It also aims to speed up debt reduction, it said.
Kroger Co, the biggest U.S. supermarket chain, reported a 4.5 percent rise in quarterly sales on Thursday as its aggressive discounting lured more customers to its stores. Net earnings attributable to Kroger rose to $397-million, or 44 cents per share, in the third quarter ended Nov. 4, from $391-million, or 41 cents per share, a year earlier. Sales climbed to $27.75-billion from $26.56-billion. Shares were up nearly 6 per cent in premarket trading.
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Economic News
Statistics Canada says Canada's current account deficit grew by $3.8-billion in the third quarter to $19.3-billion, as the deficit on international trade in goods expanded for the third consecutive quarter.
Initial claims for state unemployment benefits fell by 2,000 to a seasonally adjusted 238,000 last week, the U.S. Labor Department said on Thursday. Economists polled by Reuters had forecast claims edging up to 240,000 in the latest week.
U.S. consumer spending slowed in October as the hurricane-related boost to motor vehicle purchases faded, while underlying price pressures pushed higher for a second straight month, suggesting a recent disinflationary trend has probably run its course, Reuters reports. The Commerce Department said on Thursday consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.3 per cent last month after a downwardly revised 0.9 per cent jump in September.
The personal consumption expenditures (PCE) price index excluding food and energy, rose 0.2 per cent in October. The so-called core PCE increased 1.4 per cent in the 12 months through October, matching September's rise.
With files from Reuters and The Canadian Press