Equity Markets
Wall Street opened higher on Thursday as the quarterly earnings season kicked into high gear, although oil and the upcoming French election was in focus for many traders. Investors looked to snap a losing streak which has seen the Dow drop more than 200 points in the last two days.
The Dow Jones Industrial Average rose 32.06 points, or 0.16 per cent, to 20,436.55. The S&P 500 gained 5.52 points, or 0.23 per cent, to 2,343.69. The Nasdaq Composite added 23.33 points, or 0.4 per cent, to 5,886.37.
As of Wednesday, 57 companies in the S&P 500 have reported earnings, with about three-quarters f those beating analysts' forecasts. Reuters reports that overall profits of S&P 500 companies have risen more than 10 per cent, the best since 2011. As well, the U.S. Federal Reserve's Beige Book, released Wednesday afternoon, suggested the U.S. economy "is continuing to expand at a decent clip" indicating a continued – albeit moderate – economic improvement, TD economist Katherine Judge noted in a commentary. The report, she said, points to a continued, gradual course of rate hikes.
Canada's main stock index also rose in early trading as Canadian Pacific Railway Ltd. jumped on an earnings beat and banks and many other financial stocks also gained. The Toronto Stock Exchange's S&P/TSX composite index was up 47.13 points, or 0.30 percent, at 15,600.01 shortly after the open. Nine of its 10 main groups gained.
Global stocks managed modest gains with shares in both Europe and Asia trending higher, helped by a rebound in crude's rebound. Concern over the first round of the French presidential elections this coming weekend continued to affect sentiment. Britain's FTSE 100 was steady, up 0.13 per cent while the CAC 40 in France jumped 1.12 per cent and Germany's DAX was up 0.03 per cent. In Asia, Japan's Nikkei 225 closed largely unchanged, ended trading down 0.1 per cent. China's Shanghai Composite was also little changed, finishing the trading day up 0.06 per cent.
Commodities
Crude prices recovered some lost ground after Wednesday's big decline, which saw prices drop more than 3 per cent. The gains were fuelled by signals from top Gulf producers that OPEC-led supply cuts could be extended past the middle of this year. Reuters reported that OPEC members Saudi Arabia and Kuwait suggested that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russia, to cut oil output was likely to be extended beyond June. Both Brent crude and West Texas Intermediate futures were higher early Thursday. However, gains were tempered by continuing concern over the supply overhang. Figures released Wednesday pointed to a drop in U.S. crude stocks but also a surprise build in gasoline supplies.
"The continued rise in U.S. rig counts and U.S. production, as well as the slow progress in getting inventories lower is likely to raise the tensions within OPEC about the effectiveness of the production quotas and cuts agreed since the end of last year," Michael Hewson, chief market analyst at CMC Markets U.K., said in a note.
Gold prices firmed Thursday as tensions over North Korea and the French presidential elections continued to lend support to safe-haven assets. Spot gold prices were unchanged early Thursday after the metal suffered its worst one-day drop in over a month on Wednesday, falling 0.8 per cent.
Currencies and bonds
The U.S. dollar was weaker against most major currencies early Thursday. The usual factors – geopolitical tensions, continued worries about U.S. President Donald Trump's ability to push through his fiscal agenda – weighed on the greenback.
"We still expect the (U.S.) dollar to strengthen a bit more into the end of year, but I do see more and more signs that perhaps the dollar has peaked," Barclays strategist Hamish Pepper told Reuters.
The Canadian dollar was also down slightly against the U.S. dollar in early going as rebounding oil prices failed to fuel excitement for the loonie.
In bonds, France's borrowing costs edged lower ahead of a bond auction coming just before the weekend presidential election. French bonds have come under heavy selling pressure this year with surprise support for candidates at both ends of the political spectrum rattling investors. Other euro zone bond yields were little changed Thursday.
Stocks set to see action
General Motors shares could see some action after the auto maker announced Venezuelan authorities had illegally seized its plant in Valencia. "Yesterday, GMV's (General Motors Venezolana) plant was unexpectedly taken by the public authorities, preventing normal operations. In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities," GM said in a statement. GM vowed to take legal action over the move.
Canadian Pacific Railway Ltd. reported a higher-than-expected quarterly profit as it earned more from shipments of commodities such as grain and coal, and the company expressed optimism that demand was improving. Excluding items, CP earned $2.50 per share, just beating analysts' average estimate of $2.49 per share, according to Thomson Reuters I/B/E/S.
Consumer-products giant Unilever NV saw its shares rise in Europe after posting better-than-expected results. Unilever said underlying sales rose 2.9 per cent in the first quarter, beating analysts' estimates, which called for a 2-per-cent increase.
Ahead of the start of trading, Verizon Communications Inc., the No. 1 U.S. wireless carrier, reported a 20-per-cent decline in quarterly profit as it lost wireless postpaid subscribers. Net income attributable to Verizon fell to $3.45-billion (U.S.), or 84 cents per share, in the first quarter ended March 31, from $4.31-billion, or $1.06 per share, a year earlier. Excluding items, earnings per share was 95 cents. Analysts had expected adjusted earnings or 99 cents a share. Total operating revenue fell to $29.81 billion from $32.17 billion a year earlier. Verizon shares were down nearly 2 per cent in premarket trading.
Alcoa Corp. says it is moving its global headquarters back to Pittsburgh, where the 129-year-old company had been based until moving to New York City in 2006. Alcoa has maintained offices in Pittsburgh and 10 employees will relocate from its New York headquarters when the move is made Sept. 1.
WestJet Airlines Ltd. said Thursday it will launch a new no-frills carrier later this year. The carrier says it will start with 10 Boeing 737-800 aircraft in its initial fleet and offer no-frills, lower-cost flights.
Qualcomm rose 2.2 per cent after the largest maker of chips used in smartphones, reported quarterly revenue and profit that beat analysts' estimates.
American Express was up 2.4 per cent after the company's first-quarter profit fell less than expected.
Shares of Philip Morris fell 5 per cent in premarket trading after the tobacco maker's first-quarter profit forecast came in below estimates.
CSX Corp.'s first-quarter profit rose about 2 per cent as the railroad hauled more, but its results were hurt by restructuring expenses. Without the $173-million restructuring charge it would have delivered earnings per share of 51 cents, higher than the 43 cents expected by analysts. CSX said its revenue improved 10 per cent to $2.87-billion. Analysts expected $2.76-billion. Its shares were up 5.9 per cent in premarket trading.
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Economic News
The U.S. Department of Labor said Thursday jobless claims rose by 10,000 to 244,000 for the week ended April 15. Economists had been expecting claims to come in around the 240,000 mark. Applications for for unemployment benefits have now been below 300,000 for the longest stretch since 1970.
The Philadelphia Federal Reserve said its index for manufacturing activity fell to a reading of 22 in April from 32.8 in a month earlier. The index has been positive for nine consecutive months and remains at a relatively high reading. Firms reported an increase in manufacturing employment and work hours this month. The current employment index improved 2 points, its fifth straight positive reading.
The Conference Board's leading economic index rose 0.4 per cent in March to 126.7, following a 0.5-per-cent increase a month earlier.
In Canada, no major releases are on deck but Toronto's overheating housing market will be in the spotlight again as the Ontario government releases a package of measures aimed at cooling red-hot home prices. The 16 new measures, announced Thursday morning by Ontario Premier Kathleen Wynne, include a 15-per-cent foreign buyers' tax and caps on rent increases.
With files from Reuters, Bloomberg and The Associated Press