U.S. futures were up early Thursday, a far cry from the previous morning's inflation-data doldrums, while Canadian futures nudged up, too, as the Toronto Stock Exchange prepared for a rash of corporate financial news.
Michael Gregory of Bank of Montreal Capital Markets said Thursday morning's futures prices suggested a strong open for the three major U.S. stock indices.
A rash of Canadian companies, meanwhile, released their quarterly financial results after Wednesday's markets closed, including Sun Life Financial Inc., Barrick Gold Corp., Goldcorp Inc. and Kinross Gold Corp., while others such as Shopify Inc. and Bombardier Inc. were scheduled to release results Thursday morning.
Investors have been showing cautious optimism after last week's market volatility. "It would currently appear that last week's plunge was just a sharp correction in an otherwise bullish market, although it may be too soon to say that with any real confidence," wrote OANDA analyst Craig Erlam on Thursday.
European equities continued their recovery Thursday morning, with the FTSE 100, DAX and CAC 40 all hitting one-week highs. "Investors are viewing the smaller swings on global stock markets as a sign that a lot of the fear dissipated, and are content to buy back into the market," wrote David Madden, a market analyst with CMC Markets UK, in a research note.
Oil rose towards US$65 barrel on Thursday, supported by Saudi Arabia's comment that it would rather see an undersupplied market than end an OPEC-led deal to withhold production too soon, and by a weak U.S. dollar.
Saudi Energy Minister Khalid al-Falih said on Wednesday the Organization of the Petroleum Exporting Countries would do better to leave the market tight than end the deal on cutting output too early. Saudi Arabia is OPEC's top producer.
Brent crude, the global benchmark, was up more than 30 cents early Thursday morning extending the previous session's gain of US$1.64. U.S. crude was up, too.
Gold was on track for its fourth straight session of gains as the U.S. dollar skidded to its lowest in two weeks on concerns about the impact of high levels of U.S debt and tax cuts.
Spot gold was up 0.2 percent at UA$1,353.73 an ounce just after 6 a.m. eastern time after earlier hitting its highest since Jan. 25 at US$1,357.08. It had risen 1.6 percent on Wednesday, its highest one-day gain since May 2017. U.S. gold futures were down a hair.
"We are back to what was driving gold prior to that little spike in volatility last week which is the direction of the dollar and the longer term direction of U.S debt and how it's going to be serviced," ICBC Standard Bank analyst Tom Kendall said.
Silver was up 0.3 percent at US$16.92 an ounce after earlier hitting a more than one-week high of US$16.98.
Currencies and bonds
With oil up, the Canadian dollar was trading higher Wednesday, popping over 80.20 U.S. cents after 2 a.m. eastern time but trading closer to 80.10 cents later in the morning.
The greenback has been suffering lately. The U.S. national debt recently topped $20 trillion, while the 2019 fiscal deficit is projected at near $1 trillion, including deficit-financed tax cuts and two-year spending caps that Congress passed last week.
"The story I hear most frequently from people is it's the re-emergence of the twin deficits," said RBC Capital Markets head of currency strategy Adam Cole, in London, of the dollar's persistent weakness. "There seem to be concerns on the U.S. fiscal position and what that implies for the current account."
Some strategists suggested another reason for the dollar's falls after Wednesday's data was that U.S. consumer price growth was seen as a gauge for global inflationary pressures and that, as such, stronger growth would suggest a faster pace of monetary tightening from other central banks.
The euro climbed back above $1.25 for the first time in two weeks, trading up as much as half a percent on the day.
Stocks set to see action
Nicolas Van Praet reports that Bombardier Inc. narrowed its net loss for the fourth quarter and boosted revenue as a strong performance in rail allows the company to claim a bigger share of that business from its investment partner. The Montreal-based manufacturer said Thursday that its stake in rail unit Bombardier Transportation will increase from 70 per cent to 72.5 per cent after its financial performance for 2017 exceeded the incentive targets underlying the investment of partner Caisse de dépôt et placement du Québec.
Shopify Inc. seems to have put its short-seller blues behind it, writes David Milstead. Shares reached a 52-week high Wednesday, gaining more than 8 per cent in TSX trading. Thursday's release of fourth-quarter earnings may justify the enthusiasm, with analysts expecting strong numbers from the holiday season. What may be key to the shares' performance, though, will be the company's 2018 outlook.
Sun Life Assurance Co. of Canada, meanwhile, will become the first major insurance company to add medical marijuana to its group benefits plans for Canadian companies, reports Clare O'Hara. It's a pivotal move in the insurance industry that will help ease the financial burden for medical-marijuana users, and a sign of the growing acceptance of cannabis in the Canadian workplace. The company beat analyst expectations when it reported financials Wednesday, reporting earnings per share, excluding unusual items, of $1.05 versus analyst expectations of $1.02, per Thomson Reuters I/B/E/S data. Profits jumped at its U.S. businesses, but fell here at home.
Initial claims for U.S. state unemployment benefits increased 7,000 to a seasonally adjusted 230,000 for the week ended Feb. 10, the Labor Department said on Thursday.
The U.S. producer price index rose 0.4 per cent in January, matching expectations. In the 12 months through January, the PPI rose 2.7 per cent after advancing 2.6 per cent in December. Economists polled by Reuters had forecast the PPI rising 0.4 per cent last month and increasing 2.5 per cent from a year ago.
(9 a.m. ET) Canadian existing home sales for January. Consensus is a decline of 0.5 per cent year over year.
(9 a.m. ET) Canadian MLS Home Price Index for January. Estimate is an increase of 8.0 per cent from the previous year.
(9:15 a.m. ET) U.S. industrial production for January. Consensus is an increase of 0.2 per cent from December.
(10 a.m. ET) U.S. housing market index for February. Consensus is 72, unchanged from January.
With files from Reuters and Bloomberg
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