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Equities

Canada’s main stock index opened lower on Thursday, dragged down by shares of energy companies on the back of a 2 percent decline in crude prices.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 27.79 points, or 0.17 per cent, at 16,474.96.

Health care stocks fell 0.8 per cent with Canntrust down 9.3 per cent and Aphria was off 1.8 per cent.

Energy stocks fell 0.5 per cent as oil prices declined. Encana fell 1.9 per cent, Parex Resources was off 1.6 per cent and Cenovus Energy was off 1.3 per cent.

Industrial stocks were off 0.4 per cent and Materials stocks fell 0.3 per cent.

Reporting its latest results, Bombardier said it would combine its corporate and regional jet units into a single operation and shed more non-essential assets by selling its Belfast and Morocco aerostructures businesses. Bombardier posted first-quarter revenue and profit in line with its preliminary results announced last week and reiterated its lowered guidance. Its shares rose 2.2 per cent.

On Bay Street, shares of Manulife Financial could get some attention after Canada’s biggest insurer topped quarterly profit estimates, helped by growth in Asia. The company’s core earnings rose 18.8 per cent to $1.55-billion, or 76 cents per share, in the quarter ended March 31. Analysts on average had expected a profit of 70 cents per share, according to IBES data from Refinitiv. Manulife also said annualized premium equivalent (APE) sales in the first quarter rose 62 per cent in Japan, driven by sales of the company’s corporate-owned life insurance product ahead of a potential change in tax regulations. Its shares edged up 0.12 per cent.

U.S. stocks opened slightly lower on Thursday as investors assessed a mixed batch of earnings, while the Federal Reserve dented hopes of a cut in interest rates.

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The Dow Jones Industrial Average fell 22.99 points, or 0.09 per cent, at the open to 26,407.15.

The S&P 500 opened lower by 1.57 points, or 0.05 per cent, at 2,922.16. The Nasdaq Composite dropped 3.16 points, or 0.04 per cent, to 8,046.48 at the opening bell.

The benchmark S&P 500 index snapped a three-day streak of closing at record highs on Wednesday after Fed Chairman Jerome Powell stuck with the rate outlook and said the relapse in inflation rates was likely temporary.

The Fed signalled little appetite to adjust rates any time soon, taking heart in continued job gains and economic growth and the likelihood that weak inflation will edge higher.

Traders of U.S. short-term interest rate futures trimmed their bets that the central bank would cut rates before the end of the year.

“Probably the market is not going to do much of anything and I say that because earnings are now winding down,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

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“Investors are going to dwell on Powell’s comments. He said there is no need to cut rates anytime soon or indicated that next move might not be a rate cut.”

Over halfway through earnings season, analysts now expect first-quarter earnings to rise 0.5 per cent compared with a 2 per cent fall estimated at the beginning of April, according to Refinitiv data.

Under Armour Inc. gained 7.8 per cent after the sportswear maker posted strong quarterly earnings and raised its full-year profit forecast, benefiting from stronger demand in overseas markets.

Stocks weighing on the Dow Jones Industrial Average included 3M Co., which dropped 0.6 per cent after the industrial conglomerate said it would buy privately held medical device maker Acelity Inc in a deal valued at US$6.7-billion.

Dow Inc., the commodity chemicals division spun off from DowDuPont Inc., slipped 1 per cent after reporting a 24-per-cent decline in core earnings.

Hanesbrands rose 0.5 per cent after the innerwear maker delivered first-quarter profit and sales ahead of analysts’ estimates.

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Shares of Abiomed Inc. slumped 15.3 per cent after the medical device maker reported quarterly revenue below expectations.

Data at 10 a.m. ET will likely show factory goods orders to have increased 1.5 per cent in March after a fall of 0.5 per cent in the month before.

Some hope emerged on the trade front after reports that the United States and China may be nearing a deal that would roll back some of the U.S. tariffs on US$250-billion worth of Chinese goods.

Overseas, European markets were mixed. Britain’s FTSE 100 was down 0.3 per cent as investors weighed the Bank of England’s latest rate decision. The central bank kept rates unchanged but lifted its growth forecasts, although it also cautioned that Brexit continues to cloud its outlook. Germany’s DAX gained 0.11 per cent and France’s CAC 40 slid 0.62 per cent. The-pan European STOXX 600 slid 0.22 per cent.

In Asia, markets in Japan and China were closed for public holidays. Hong Kong’s Hang Seng ended up 0.83 per cent.

Commodities

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Oil prices fell on Thursday, pulled down by record U.S. crude production that led to a surge in inventories.

Brent crude oil futures were at $71.57 per barrel at 0837 GMT, 61 cents below their last close. Brent is set for a weekly loss, which would break its longest string of weekly gains for a year.

U.S. West Texas Intermediate crude futures were down 60 cents at $63.00 per barrel.

U.S. crude stockpiles last week rose to their highest since September 2017, jumping by 9.9 million barrels to 470.6 million barrels as production hit a record high of 12.3 million barrels per day (bpd), government data showed.

“Oil prices are coming under pressure again today, with this week’s inventory data knocking the stuffing out of oil bulls, especially when combined with record US production figures and a stronger dollar,” Mr. Erlam said in an early note. “WTI had looked toppy for a few weeks prior to the recent difficulties and last Friday’s outsized reaction to Trump’s OPEC phone call claim was a clear signal that traders were looking for a reason to abandon ship.”

Elsewhere, gold fell to its lowest in a little over one week, after comments from U.S. Federal Reserve Chairman Jerome Powell dashed hopes of a near-term rate cut, boosting the dollar and treasury yields. Spot gold shed 0.4 per cent to US$1,271.06 per ounce, having fallen to US$1,270.37, its lowest since April 24, earlier in the session. U.S. gold futures fell 0.9 per cent to US$1,272.60 an ounce.

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Currencies and bonds

The Canadian dollar was holding just below the mid 75-US-cent mark early on as its U.S. counterpart shifted lower on global markets. The day range on the loonie so far is 74.34 US cents to 74.45 US cents.

There were no major Canadian economic reports on the calendar.

The U.S. dollar, meanwhile, resumed its decline, shrugging off Fed Chair Jerome Powell’s relatively confident comments on the U.S. economy as survey figures suggested fears of a broadening economic weakness in Europe could be exaggerated.

The euro gained a fifth of a percent to $1.1219 but was still within sight of a two-year low of US$1.1110 hit last week. The U.S. dollar index was half a per cent above overnight lows against a basket of its rivals while 10-year Treasury yields were seven basis points above overnight lows, according to Reuters.

More company news

SNC-Lavalin Group Inc on reported a 73-per-cent drop in quarterly profit, as the Canadian construction and engineering firm was hit by higher expenses, loss of a mining contract, and delay in claim settlements. The Montreal-based company’s adjusted net income attributable to shareholders fell to $36.9-million, or 21 cents per share, in the first quarter ended March 31, from $136-million, or 77 cents per share, a year earlier. Revenue fell to $2.36-billion from $2.43-billion. Its shares fell 5 per cent in early trading.

BCE Inc. reported its first-quarter profit was up 12 per cent from a year earlier as revenue increased across its major divisions. The company says the profit amounted $740-million attributable to common shareholders or 82 cents per share. That was up from $661-million or 73 cents per share in the first quarter of 2018. The Montreal-based company’s adjusted earnings per share were 77 cents, down from 80 cents per share a year earlier and one cent below the average analyst estimate. Its shares were off 0.5 per cent shortly after the open.

Tesla Inc said it had filed with regulators to launch around $2 billion in fundraising through issues of new shares and debt, with Chief Executive Officer Elon Musk pitching in $10 million of his own money to buy shares. Tesla shares rose 3.7 per cent.

DowDuPont Inc reported a 28 per cent fall in adjusted quarterly profit , hit by a stronger dollar, lower prices and volumes. Adjusted net income fell to US$1.89-billion, or 84 US cents per share, in the first quarter ended March 31, from US$2.63-billion, or US$1.12 per share, a year earlier. Net sales dropped 9 per cent to US$19.65-billion. Its stock fell 2.9 per cent.

Cigna Corp reported quarterly revenue that more than tripled , driven by rising sales in its health services unit, which now includes a pharmacy benefits business acquired from Express Scripts last year. The health insurer said net income rose 49.5 per cent to US$1.37-billion, in the first quarter ended March 31 from US$915-million, a year earlier. Total revenue rose to US$37.95-billion from US$11.41-billion last year. Its shares were down 1.9 per cent.

Dunkin’ Brands Group Inc’s donut chain reported quarterly same-store sales above Wall Street estimates on Thursday, as its refreshed menu and new espresso beverages helped attract diners. Sales at Dunkin’ stores open for at least 13 months in the United States, rose 2.4 per cent. Analysts were expecting growth of 1.43 per cent, according to Refinitiv IBES data. Its shares rose 1.3 per cent

California-based maker of plant-based burgers and sausages will make its debut on the Nasdaq stock exchange Thursday. It’s the first pure-play maker of vegan “meat” to go public, according to Renaissance Capital, which researches and tracks IPOs. Beyond Meat raised about US$240-million selling 9.6 million shares at US$25 each. That values the company at about US$1.5-billion.

Kellogg Co said Chief Financial Officer Fareed Khan was stepping down and would be replaced by Amit Banati, who heads the Froot Loops maker’s Asia Pacific, Africa and Middle East business. Its stock fell 4.6 per cent.

Economic news

Initial claims for U.S. state unemployment benefits were flat at a seasonally adjusted 230,000 for the week ended April 27, the Labor Department said. Claims rose 37,000 in the week before, which was the largest rise since September 2017.

(10 a.m. ET) U.S. factory orders for March. The Street expects a rise of 1.1 per cent from February.

With Reuters and The Canadian Press

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