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Wall Street opened higher Thursday with solid results from retailer Nordstrom Inc. easing concern about consumer spending while investors look ahead to remarks from Federal Reserve chair Jerome Powell. Canada’s main index started little changed with gains in energy shares on the back of higher crude prices being offset by declines in materials stocks.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 4.59 points, or 0.03 per cent, at 16,304.64.
South of the border, the Dow Jones Industrial Average rose 68.91 points, or 0.26 per cent, at the open to 26,271.64. The S&P 500 opened higher by 6.51 points, or 0.22 per cent, at 2,930.94. The Nasdaq Composite gained 18.58 points, or 0.23 per cent, to 8,038.79 at the opening bell.
Monetary policy remains front and centre for markets following the release of the latest Fed minutes and the start of the Jackson Hole Symposium, which sees key central bank figures from around the world convene in Wyoming.
The Fed minutes showed a divide among policy makers over whether to cut rates at the last meeting. The minutes also suggested members were more united on signalling to the markets that a rate cut isn’t necessarily the start of a broader easing cycle.
Attention now turns to Jackson Hole. The highlight for the markets will be remarks scheduled for Friday from Fed chair Jerome Powell, who has been taking heat from U.S. President Donald Trump for not cutting rates as fast and as deep as he would like. Ahead of those remarks, Kansas City Fed President Esther George said in an interview with Bloomberg TV that she would support leaving rates at current levels while the central bank asses how trade tensions are affecting the U.S. economy.
“U.S. stocks are struggling for direction as investors await Fed Chair Powell’s Jackson Hole speech on Friday," OANDA analyst Edward Moya said in and early note. “In the past, central bankers have used the Wyoming summit to announce major policy shifts and many are expecting Powell to walk back some of his commentary from last month’s post-rate decision press conference where he said the rate reduction was merely a ‘mid-cycle adjustment.’”
On this side of the border, bank earnings continue to roll in.
Canadian Imperial Bank of Commerce reported a rise in adjusted profit in the latest quarter with higher provisions for credit losses offsetting gains in retail and commercial banking. Net income attributable to common shareholders, excluding one-off items, rose to $1.38-billion, or $3.10 per share, in the third quarter ended July 31, from $1.37-billion, or $3.08 per share a year earlier. Analysts polled by financial markets data firm Refinitiv had been looking for earnings of $3.06 in the most recent quarter. The bank also hiked its dividend by 4 cents to $1.44 per common share. CIBC shares opened up more than 1 per cent.
On Wall Street, Nordstrom Inc. joined the run of U.S. retailers posting better than expected results, offering markets some reassurance that consumers are still spending. Nordstrom shares started up more than 7 per cent after the company reported net earnings fell to US$141-million, or 90 US cents per share, in the quarter from US$162-million, or 95 US cents per share, a year earlier. Analysts were expecting Nordstrom to report sales of US$3.93-billion and a profit of 75 US cents for the quarter, according to IBES data from Refinitiv. The results were released after Wednesday’s close.
In Europe, the pan-European STOXX 600 clawed back early losses to trade up 0.02 per cent in afternoon trading. Britain’s FTSE 100 was down 0.84 per cent. France’s CAC 40 lost 0.19 per cent and Germany’s DAX rose 0.18 per cent.
In Asia, Japan’s Nikkei ended up a modest 0.04 per cent after a reading on factory activity in that country shrank for the fourth straight month as export orders fell. Hong Kong’s Hang Seng fell 0.84 per cent. The Shanghai Composite Index gained 0.11 per cent.
Crude prices moved higher on a decline in U.S. inventories although continued concern about global economic growth kept the gains in check. The day range on Brent so far is US$59.99 to US$60.86. The range on West Texas Intermediate is US$55.44 to US$56.18.
On Wednesday, the U.S. Energy Information Administration said U.S. crude inventories fell by 2.7 million barrels, more than analysts had been forecasting.
Traders are now looking ahead to Mr. Powell’s remarks Friday at the Jackson Hole summit for signals about future rate moves and the state of the global economy. Mr. Powell’s comments are important for crude markets because they could affect movement in the U.S. dollar. A lower greenback tends to support crude prices.
“Traders are not putting much weight ( volume) behind any of today’s pre-Jackson Hole position squeezes and wisely keeping the bulk of their powder dry to aggressively put into action on Chair Powell messaging ... that is if there is a messaging as this whole set up could end up being a complete dud,” Stephen Innes, managing partner at VM Markets, said in an early note.
Gold prices, meanwhile, slipped in early going as investors shifted their attention from the Fed minutes to Mr. Powell’s remarks.
Spot gold was down 0.2 per cent at US$1,498.37 an ounce. U.S. gold futures dipped 0.5 per cent to US$1,508 an ounce.
“The markets are waiting for Jackson Hole. After prices failed to stay above the important $1,500 mark, it’s not surprising that investors are taking the chips off the table,” Commerzbank analyst Eugen Weinberg told Reuters.
“Geopolitical tensions, trade uncertainties and above all, developments in financial markets... will support gold. Interest rates world-wide keep falling and in this environment, gold emerges as a solid investment.”
The Canadian dollar was up slightly as a more risk averse market affected the loonie as well as the Australian and New Zealand currencies. The day range on the loonie so far is 75.10 US cents to 75.28 US cents.
“FX markets had a risk-off tone through the Asian session, AUD and NZD being the notable under performers, but with no particular catalyst,” Adam Cole, chief currency strategist for RBC, said.
He noted that the U.S. dollar firmed slightly immediately after the release of the Fed minutes, which reaffirmed the notion that the most recent rate cut amounted to a “mid-cycle adjustment.” However, he also noted that the minutes already look somewhat dated given events since the last Fed meeting.
“They are really in the shadow of Powell’s appearance in Jackson Hole tomorrow, when he will have an opportunity to update his thinking,” he said.
For the loonie, the lone economic report was June’s wholesale trade figures. Statscan says trade for the month rose 0.6 per cent, better than the 0.2-per-cent decline most economists had been forecasting. The loonie held early gains and traded near the top of the day range after the release of the numbers.
“Overall, a solid print from wholesaling and attention will now move to retail sales, the final piece of the puzzle before monthly/quarterly GDP is released next week,” CIBC economist Royce Mendes said.
On broader markets, the euro was weaker against the U.S. dollar after a survey of euro zone business activity showed services expanded and manufacturing contracted at a slower pace but trade war concerns put future expectations at their weakest in six years.
The euro slipped 0.1 per cent to US$1.1072, nearing an Aug. 1 low of US$1.1027. Against a basket of six other currencies, the U.S. dollar was little changed at 98.324.
More company news:
All Ryanair flights to and from British and Irish airports have departed without disruption so far on Thursday, the airline said, adding it also expected no impact for the rest of the day from a strike by some of its pilots based in Britain. Ryanair unions in Ireland, Britain, Spain and Portugal have been planning strikes over various grievances that began with a five-day cabin crew walkout in Portugal on Wednesday and continued with a 48-hour strike by some UK pilots on Thursday.
Volkswagen on Thursday denied a media report which suggested that the German car maker was interested in buying a stake in United States electric car manufacturer Tesla. “The speculation about buying a stake in Tesla made by Manager Magazin is without merit,” a Volkswagen spokesman said in a written statement to Reuters.
7-Eleven Canada says it will add a Beyond Meat pizza to its current Hot to Go menu.
Statistics Canada says wholesale trade rose 0.6 per cent in June. The market had been expecting a decline of about 0.2 per cent. Sales were higher in four of seven categories, the agency said.
Initial claims for U.S. state unemployment benefits dropped 12,000 to a seasonally adjusted 209,000 for the week ended Aug. 17, the U.S. Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.
With Reuters and The Canadian Press