Key stock indexes in both Canada and the United States started higher Thursday after fresh U.S. wholesale inflation numbers eased concerns about the Federal Reserve’s future plans on interest rates.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 34.06 points, or 0.17 per cent, at 20,488.38.
In the U.S., the Dow Jones Industrial Average rose 22.47 points, or 0.07 per cent, at the open to 33,668.97. The S&P 500 opened higher by 8.09 points, or 0.20 per cent, at 4,100.04, while the Nasdaq Composite gained 68.09 points, or 0.57 per cent, to 11,997.42 at the opening bell.
Early Thursday, U.S. wholesale inflation figures showed producer prices fell 0.5 per cent on a monthly basis in March. Economists had been expecting a flat reading. Excluding food and energy, the producer price index was down 0.1 per cent for the month. Markets had been forecasting an increase of about 0.2 per cent.
That report followed figures released Wednesday showing the annual rate of inflation in the U.S. eased to a near two-year low of 5 per cent in March, stoking expectations that the Federal Reserve could soon back off its tightening campaign. However, minutes from the most recent Fed meeting also sparked some concern about the U.S. economy with staff economists suggesting the fallout from turmoil in the banking sector could result in a “mild recession” later in the year.
“Most folks have pulled any thoughts of a June hike in part because the limited data available so far appear to confirm that credit is indeed somewhat tight in the aftermath of the banking turmoil and in part, because some Fed officials appear hesitant about even a May hike, which raises the bar for the FOMC to agree at its May meeting to both hike and signal additional tightening,” Stephen Innes, managing partner with SPI Asset Management, said.
In this country, the Bank of Canada left interest rates unchanged for the second consecutive meeting although The Globe’s Mark Rendell reports that the central bank also pushed back against market expectations of a rate cut later in the year.
“Inflation is coming down quickly and is forecast to be around 3 per cent this summer,” Bank of Canada Governor Tiff Macklem said in a news conference after the rate announcement.
“This is good news, but it is not job done,” he said. “If monetary policy is not restrictive enough to get us all the way back to the 2-per-cent target, we are prepared to raise the policy rate further to get there.”
Mr. Macklem is scheduled to deliver a fireside chat on a view from Canada of inflation and economic growth at the IMF spring meeting in Washington, DC, this morning.
Elsewhere, The Globe’s Niall McGee reports Teck Resources Ltd. has rejected Glencore PLC’s latest takeover proposal as value destructive, and is tweaking the structure of its own planned metallurgical coal spin off.
Meanwhile, copper miner Hudbay Minerals Inc said on Thursday that it would buy peer Copper Mountain Mining Corp in a deal valued at US$439 million. Under the terms of the deal, each Copper Mountain shareholder will get 0.381 of a Hudbay common share for each Copper Mountain share.
Overseas, the pan-European STOXX 600 edged up 0.30 per cent by midday. Britain’s FTSE 100 rose 0.13 per cent. Germany’s DAX was flat while France’s CAC 40 advanced 1.04 per cent.
In Asia, Japan’s Nikkei finished up 0.26 per cent. Hong Kong’s Hang Seng gained 0.17 per cent.
Crude prices were chopping after two positive sessions with economic concerns offsetting expectations of an end to U.S. rate hikes in the months ahead.
The day range on Brent was US$86.89 to US$87.47 in the early premarket period. The range on West Texas Intermediate was US$82.90 to US$83.44.
Crude prices added about 2 per cent on Wednesday after figures showing easing U.S. inflation led to speculation that the Federal Reserve could soon bring its current campaign of rate hikes to a conclusion.
Meanwhile, markets showed limited reaction to new figures from the U.S. Energy Information Administration that crude inventories rose by 597,000 barrels last week. Analysts had been expected. OANDA senior analyst Ed Moya noted that the report also suggested tightness in supply a the Cushing, Oklahoma, storage hub as well as strong gasoline demand, helping offset the crude build.
In other commodities, gold prices were up for a third session amid growing expectations of a Fed pause on rate hikes.
Spot gold was up 0.3 per cent at US$2,020.52 per ounce early Thursday morning. U.S. gold futures rose 0.5 per cent to $2,035.20. Prices rose more than 1 per cent on Wednesday.
The Canadian dollar was up in early trading while its U.S. counterpart fell to a two-month low as U.S. inflationary pressures ease.
The day range on the loonie is 74.24 US cents to 74.64 US cents in the early premarket period. The Canadian dollar is up 0.71 per cent over the last five days and up more than 2 per cent over the past month. Year-to-date, the dollar is up 1.16 per cent.
There were no major Canadian economic releases due Thursday.
On world markets, the U.S. dollar index, which measures the greenback against six major peer, was last down 0.2 per cent at 101.28, its lowest since the start of February, Reuters reported. The greenback looked set for its fifth down week in a row.
The euro, meanwhile, rose 0.27 per cent to a two-month high of US$1.102 in early trading.
Britain’s pound gained 0.22% per cent to US$1.251, in its third straight daily gain, according to figures from Reuters.
In bonds, the yield on the benchmark U.S. 10-year note was flat at 3.421 per cent in the predawn hours.
More company news
The Globe’s James Bradshaw reports this morning that Onex Corp. founder and chief executive officer Gerry Schwartz received no bonus or incentive pay in 2022 after a “disappointing year” for the company, as shareholders prepare to vote on a proposal that would put a time limit on his control of the company. Mr. Schwartz, who has led Onex since 1987 but is tentatively planning to step down as CEO, was paid a base salary of US$1.3-million last year, according to a company filing. But his annual cash bonus – which was worth US$5-million in each of the previous two years – as well as share-based awards and options were cut to zero.
Amazon.com Inc did not grant its Chief Executive Andy Jassy any new stock in 2022, shrinking the pay gap between the online retailer’s top boss and rank-and-file employees, the company said Thursday in a securities filing. At the same time, it awarded more than $40 million each to the recently elevated CEOs of its e-commerce and cloud businesses, at 2022 share prices, and Jassy took home a similar amount from his own earlier grants, the filing showed. -Reuters
Barrick Gold Corp said on Thursday its first-quarter gold production fell 15% sequentially, hurt by lower output at Carlin mine. The company’s total preliminary gold output was 0.95 million ounces in the three months ended March 31, down from 1.1 million ounces in the previous quarter. -Reuters
Corus Entertainment Inc., the parent company of Global Television, reported a loss in its latest quarter compared with a profit a year ago, as its revenue fell five per cent. The television and radio broadcaster says its loss attributable to shareholders was $15.5-million or eight cents per diluted share for the quarter ended Feb. 28 compared with a profit of $16.2-million or eight cents per diluted share a year earlier. Revenue in what was the company’s second quarter totalled $343.9-million, down from $361.7-million in the same quarter last year. -The Canadian Press
(8:30 a.m. ET) U.S. initial jobless claims for week of April 8.
(8:30 a.m. ET) U.S. PPI Final Demand for March.
(9 a.m. ET) Bank of Canada Governor Tiff Macklem conducts a fireside chat at the IMF Spring Meetings Governor Talks.
With Reuters and The Canadian Press