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U.S. stocks started modestly higher Thursday with central bank caution tempering investor sentiment following the release of the latest Federal Reserve minutes. On Bay Street, Canada’s main index opened in the black on a boost from financial stocks.

At 9:37 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was up 34.66 points, or 0.21 per cent, at 16,430.95. Seven of the index’s 11 main sectors were in the black. Financials were up 0.4 per cent while energy stocks slid 0.1 per cent on weaker crude prices.

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On Wall Street, the Dow Jones Industrial Average rose 31.05 points, or 0.12 per cent, at the open to 26,188.21. The S&P 500 opened higher 3.71 points, or 0.13%, to 2,891.92. The Nasdaq Composite gained 10.95 points, or 0.14 per cent, to 7,975.20 at the opening bell.

On world markets, MSCI’s all-country index was little changed near six-month highs with European markets shifting into positive territory as trading progressed while Asian markets saw a weaker close.

“The Fed minutes were more hawkish than anticipated," David Madden, markets analyst with CMC Markets U.K., said.

Thursday's analyst upgrades and downgrades

Mr. Madden said, when the Fed held interest rates steady several weeks ago and cut its growth outlook, markets took that as a sign that rates won’t rise again this year. The minutes [on Wednesday], showed that some policymakers would be keen to hike rates should the economy improve, and that took some traders by surprise as they thought a rate hike in 2019 was off the table," he said. “In a way, it was typical of the Fed to give themselves some wiggle room.”

The Fed minutes came after the European Central Bank also left its policy rate and guidance unchanged amid concerns over global economic growth. Trade also continued to factor into the day’s market sentiment. On Wednesday, U.S. Treasury Secretary Steven Mnuchin told MSNBC that the United States and China have largely agreed on a mechanism to police any trade agreement they reach. He also said that progress continues to be made in the talks, including a “productive” call with China’s Vice Premier Liu He on Tuesday night, according to Reuters.

Thursday’s TSX breakouts: This growth stock with a 27% return forecast is nearing oversold levels

In corporate news, shares of Bed Bath & Beyond sank 9 per cent at the open trading after the U.S. retailer topped quarterly profit forecasts but reported an annual loss. Adjusted profit the fourth quarter totalled US$1.20, compared to Wall Street forecasts of US$1.12. For the three-month period, Bed Bath & Beyond had a net loss of US$1.92. The company also reported a loss for the fiscal year of US$137.2-million as sales fell 2.6 per cent. The loss was the first for the company for a fiscal year. The retailer’s results were released after the close on Wednesday.

On Bay Street, earnings are due Thursday from Postmedia Network Canada Corp.

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Shares of U.S.-based Papa Murphy’s were up 31 per cent on news that Montreal’s MTY Food Group would buy the company for about US$190-million including debt, expanding MTY’s position in the U.S. pizza market. “We believe the pizza segment is highly attractive due to its size, fragmented nature and growth potential,”MTY’s CEO Eric Lefebvre said in a statement. MTY shares were down about 6 per cent in Toronto in morning trading.

Overseas, the pan-European STOXX 600 edged up 0.07 per cent after the European Union and the U.K. reached an agreement for a flexible extension for Britain’s exit from the EU until Oct. 31. Gains by airline stocks helped boost European indexes as trading progressed. Britain’s FTSE 100 was up 0.10 per cent. Germany’s DAX added 0.18 per cent and France’s CAC 40 rose 0.56 per cent.

In Asia, major markets finished mixed. Japan’s Nikkei gained 0.11 per cent although the broader Topix ended south of break even. Hong Kong’s Hang Seng fell 0.93 per cent. The Shanghai Composite Index lost 1.60 per cent. Overnight, new figures out of China showed producer inflation picking up for the first time in nine months. Consumer price inflation, meanwhile, rose to a five month high on higher pork prices.

Commodities

Crude prices were down in early going, sideswiped by higher U.S. inventories although tighter global supply put a floor under the declines. The day range on Brent crude was US$71.12 to US$71.68. The range for the day so far on West Texas Intermediate is US$63.92 to US$64.49.

“A second large inventory build in two weeks, reported by EIA (U.S. Energy Information Administration) on Wednesday, has seen the oil rally stutter just as it was getting going,” OANDA analyst Craig Erlam said. “A break through an important resistance zone last week looked to have been the catalyst for another pop higher in WTI, with the price having jumped from around US$63 to US$65 in just a couple of days but already we’re seeing consolidation around these levels and momentum appears to have waned.”

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The EIA figures showed that U.S. crude stocks jumped by 7 million barrels to a 17-month high of 456.6 million barrels last week. At the same time, U.S. production remains at a record 12.2 million barrels a day.

Mr. Erlam also noted that the inventory increase came alongside new economic projections from the International Monetary Fund suggesting slowing global growth.

“Reports that Russia may be contemplating raising production and refusing to partake in OPEC+ cuts beyond the current June deadline may also have contributed to oil quickly losing its appeal,” he said. "There remains numerous supportive factors for oil prices though, with clashes in Libya drawing much attention despite current production being uninterrupted."

In other commodities, gold prices were down slightly although still near their best levels in two weeks as global growth concerns persist. Spot gold was down 0.2 per cent at US$1,304.63 per ounce. Gold touched its highest since March 28 at US$1,310.50 on Wednesday. U.S. gold futures were about 0.4 per cent lower at US$1,308.50 an ounce. Spot prices have rebounded from a near 10-week low touched last week at US$1,280.59, Reuters reports.

“We’re seeing some profit taking in gold early in the day on Thursday, with the yellow metal coming on the back of four winning days in the last five,” Mr. Erlam said. “That’s an impressive run of form considering only a week ago we were seeing US$1,280 – which is increasingly becoming an important support area – being tested by sellers only for it to be successfully defended once again.”

However, he also said gold bulls should “put the celebrations on hold” because prices have now fallen short of the previous peak for the second time since it topped out in mid-February. "That’s not to say we won’t see another run at it in the coming sessions but a failure to break through the March peak – around US$1,325 – may reinvigorate the sellers and see US$1,280 quickly come under pressure again," he said.

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Currencies and bonds

The Canadian dollar was lower early Thursday near the low end of the day range of 74.65 US cents to 75.11 US cents as investors seek direction in the absence of any key economic reports ahead of Monday’s business outlook survey from the Bank of Canada. A firmer U.S. dollar and dipping oil prices also put downward pressure on the loonie.

Sue Trinh, head of Asia FX strategy for RBC, noted that Bank of Canada senior deputy governor Carolyn Wilkins is participating in a FinTech panel later in the day, although that’s unlikely to result in any relevant policy information ahead of Monday’s report.

On the broader markets, she said, foreign exchange held in fairly tight ranges overnight although the U.S. dollar was a bit softer.

“Risk appetite has held up well with U.S. and China agreeing to establish trade deal enforcement offices,” she said. “On Brexit, the U.K. has been granted an extension, as expected, but it is shorter than the 9-12 months most had thought. The new exit date is October 31, with a ‘review’ in June.”

The U.S. dollar index, meanwhile, rose 0.17 per cent to 97.107 by midmorning after a pair of U.S. economic releases showed producer prices rose the most in five months in March while weekly jobless claims fell to their lowest since 1969.

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The euro last held at US$1.1276, recovering from Wednesday’s low of US$1.12295.

In bonds, the yield on the U.S. 10-year note edged higher at 2.479 per cent as investors weigh the Fed minutes. The yield on the 30-year note was slighly lower at 2.902 per cent.

Stocks set to see action

The Globe’s Christine Dobby reports Canadian wireless providers spent more than $3.5-billion in a federal auction for cellular airwaves as they race to build next-generation 5G networks. Rogers Communications Inc. spent more than $1.7-billion, while Telus Corp. shelled out $931-million, far exceeding estimates from financial analysts. The two incumbents were forced to spend heavily as the process was designed to help smaller carriers acquire airwaves at a discount to further Ottawa’s goal of stoking competition.

Quebecor Inc. has pulled TVA Sports off the air for Bell subscribers as the NHL playoffs begin, The Globe’s Susan Krashinsky Robertson reports. The move came despite warnings from the CRTC that such a move would violate regulations. The dispute is over the terms under which Bell carries the TVA Sports channel.

Walt Disney Co on Thursday will unveil a family-friendly streaming service with TV shows and movies from some of the world’s most popular entertainment franchises in a bid to challenge the digital dominance of Netflix. The ad-free monthly subscription called Disney+ is set to launch later this year. In addition to Disney films and TV shows, it will feature programming from the Marvel superhero universe, the “Star Wars” galaxy, “Toy Story” creator Pixar animation and the National Geographic channel. Disney is hosting Wall Street analysts at its Burbank, Calif., headquarters to showcase the Disney+ app and provide additional details about its online media strategy.

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Royal Dutch Shell has agreed to sell its stake in the Caesar Tonga field in the Gulf of Mexico for $965 million (£737 million) in cash to a subsidiary of Israel’s energy conglomerate Delek Group. Company unit Shell Offshore will sell its 22.45 per cent non-operated interest in a deal, which is likely to close by the end of the third quarter of 2019, Shell said in a statement.

Amazon.com Inc Chief Executive Officer Jeff Bezos on Thursday challenged rival retailers to increase their minimum wages to US$16 an hour. “Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage,” the billionaire entrepreneur said in a letter to shareholders. “Do it! Better yet, go to US$16 and throw the gauntlet back at us.” The online retailer giant raised its minimum wage to US$15 per hour for U.S. employees from November, giving in to critics of poor pay and working conditions at the company.

Uber Technologies Inc. may face a cooler reception from investors than expected when it prices its initial public offering next month since smaller U.S. ride-hailing rival Lyft Inc’s aggressive stock launch and subsequent fall, Reuters reports. Lyft’s IPO priced at the top end of its upwardly revised range last month, assigning it a valuation of more than $24-billion in an offering that raised $2.34-billion. But the stock has languished since debuting on the Nasdaq on March 29, as concerns about the startup’s potential for profitability have become more prominent. Lyft shares ended on Wednesday down 11 per cent at US$60.12, well below their US$72 IPO price. Lyft was the first in a string of technology IPOs expected this year, including food delivery service Postmates and smart exercise bike Peleton.

Panasonic Corp is studying further investments in battery production at its Gigafactory venture with Tesla Inc, the company said, responding to a media report that the two companies had frozen previous plans. Tesla said it would continue to invest in the Nevada plant as need be but believed more output could be gained from its existing resources than previously thought. Tesla shares were down about 3 per cent in early trading.

More reading:

Thursday’s small-cap stocks to watch

Economic news

Initial claims for U.S. state unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended April 6, the lowest level since early October 1969. Claims have now declined for four straight weeks.

The U.S. Labor Department said its producer price index for final demand rose 0.6 per cent last month, lifted by a surge in the cost of gasoline. That was the largest increase since last October and followed a 0.1-per-cent gain in February. In the 12 months through March, the PPI rose 2.2 per cent after advancing 1.9 per cent in February.

Also: Ontario’s budget is released; G20 finance ministers and central bank governors meet in Washington (through Friday)

With Reuters and The Canadian Press

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