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Equities

Wall Street opened higher Thursday spurred by further signs that trade relations between the United States and China may be thawing and news that the European Central Bank cut its key rate and launched a bond-buying program to stimulate the bloc’s economy. On this side of the border, Canada’s main index was treading water with declines in energy shares weighing.

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At 10:23 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 7.71 points, or 0.08 per cent, at 16,603.43. Energy stocks were down 1.5 per cent, tracking a fall in crude prices. Financials and industrials were also in the red. Materials stocks advanced on rising gold prices.

In the U.S., the Dow Jones Industrial Average rose 60.28 points, or 0.22%, at the open to 27,197.32. The S&P 500 opened higher by 8.15 points, or 0.27%, at 3,009.08. The Nasdaq Composite gained 36.91 points, or 0.45%, to 8,206.59 at the opening bell.

Early Thursday, China’s Commerce Ministry said Chinese companies have started to inquire about prices of U.S. agricultural goods, offering a positive sign in the protracted trade battle between the two nations. That came after China a day earlier exempted some U.S. goods from tariffs and U.S. President Donald Trump said the U.S. would delay imposing tariffs on US$250-billion worth of Chinese goods until Oct. 15. The tariffs had been scheduled to take effect Oct. 1. Mr. Trump called the move a “gesture of good will.”

“It was a small gesture of goodwill, but it sent the right message,” CMC markets analyst David Madden said of U.S. tariff delay.

On global markets, MSCI’s all-country index was up 0.1 per cent after touching its best level since Aug. 1 earlier in the day. The index is now looks set for its seventh straight day of gains.

Ahead of the North American open, the ECB said it would cut its key deposit rate by 10 basis points to -0.5 per cent. It also announced a new bond-buying program aimed at stimulating the block’s flagging economy as Germany teeters on the brink of recession. The bond-buying program will see the central bank restart bond purchases of 20 billion euros a month starting in November. Major banks around the world, including the Federal Reserve, have already started to introduce stimulus as economies contend with thorny trade issues.

“While the ECB appears to exceeded expectations in terms of stimulus, it’s still unclear just how much the measures announced today will do to support economic growth and inflation in the region,” said CIBC World Markets senior economist Andrew Grantham.

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“While the ECB’s earlier [quantitative easing] program did appear to boost growth, that was largely due to stronger exports thanks to the weaker euro,” Mr. Grantham said.

On Bay Street, Aurora Cannabis Inc. shares opened opened down 9 per cent after the company reported revenue of $98.9 million in the latest quarter, up from $19.2 million a year earlier, but still short of early targets set by the company. Last month, Aurora had said it expected revenue in the quarter of between $100-million and $107-million. Aurora’s U.S.-listed shares were down about 8 per cent in premarket trading.

Investors also got earnings from Canadian retailers, Hudson’s Bay Co., Dollarama Inc. and Sobeys-parent Empire Co. Ltd.

HBC shares were trading down more than 2 per cent in early going in Toronto after the company reported a wider second-quarter loss on Thursday, hurt by several shuttered stores and declining sales at its namesake brand. The company’s net loss from continuing operations widened to $462-million, or $2.51 per share in the quarter ended Aug. 3, from $104-million, or 58 cents a year earlier. Total revenue fell to $1.85-billion from $1.86-billion.

On Wall Street, Broadcom releases its latest results after the close of trading.

Overseas, European markets turned mixed in the immediate wake of the ECB decision. The pan-European STOXX 600 was sitting just below break even after the rate cut and bond-buying program was announced. Britain’s FTSE 100 edged up 0.03 per cent. Germany’s DAX added 0.16 per cent and France’s CAC 40 slid 0.02 per cent.

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In Asia, markets finished mostly higher on the positive trade news. The Shanghai Composite Index gained 0.75 per cent. Japan’s Nikkei also rose 0.75 per cent. Hong Kong’s Hang Seng fell 0.26 with shares of Hong Kong Exchanges and Clearing Ltd. sliding after it bid US$37-billion for the London Stock Exchange.

Commodities

Crude prices gave up early gains after a meeting of OPEC and its allies didn’t address deepening production cuts.

The day range on Brent is US$60.27 to US$61.39. The range on West Texas Intermediate is US$55.40 to US$56.34.

Early Thursday, members of OPEC+ met but the discussions centred on bringing Nigeria and Iraq inline with current quotas and not extending production caps.

Saudi Arabia’s new energy minister, Prince Abdulaziz bin Salman, said deeper cuts would not be discussed before a meeting of the Organization of the Petroleum Exporting Countries planned for Dec. 5 and 6, according to a Reuters report. However, he also said Saudi Arabia would continue to keep cutting its production by more than the current agreement.

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On Wednesday, crude prices took a hit after a Bloomberg report said Mr.Trump had discussed easing sanctions to help secure a meeting with Iranian President Hassan Rouhani later this month. The report said former National Security Advisor John Bolton argued against the move. Asked later about the report, Mr. Trump only said: “We’ll see what happens.”

“Oil came under intense pressure on a report that President Trump was mulling easing sanctions on Iran - something Bolton pushed back on,” Stephen Innes, market strategist with AxiTrader, said. “WTI has now given back all the gains from earlier in the week on the story that Prince Abdulaziz bin Salman will assume the top spot in the Saudi Oil complex.”

Oil prices slid more than 2 per cent Wednesday on that news but initially steadied heading into Thursday’s session, helped by news of concessions in the trade row between the United States and China as well as a report showing U.S. crude stockpiles had fallen to their lowest in nearly a year.

The U.S. Energy Information Administration said crude inventories declined for a fourth week, falling by 6.9 million barrels last week, far more than markets had been expecting. At 416.1 million barrels, U.S. crude oil inventories were at their lowest since October 2018, the EIA said.

In a report early Thursday, the International Energy Agency also said global oil demand is holding up despite a slowing global economy, helped by lower prices sparked by abundant supply. The report also noted that booming shale production had allowed the U.S. to briefly overtake Saudi Arabia as the world’s top exporter.

The EIA also maintained its estimate for growth in global oil demand during 2019 at 1.1 million barrels a day and 1.3 million barrels a day for next year.

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In other commodities, gold prices recovered early losses as investors covered short positions ahead of the ECB decision.

Spot gold gained 0.4 per cent to US$1,503.00 per ounce. U.S. gold futures rose 0.5 per cent to US$1,510.80 .

“Gold clawed back some of its recent losses,” CMC Markets analyst David Madden said. “The metal reached a six-year high earlier this month when stocks were in turmoil, but yesterday the commodity bounced back. Golds’ rally yesterday was all the more impressive given the move higher in equities and the rally in the greenback.”

Currencies

The Canadian dollar turned lower as crude prices fell and its U.S. counterpart gained in the wake of the ECB decision. The day range on the loonie so far is 75.66 US cents to 75.88 US cents.

There were no major Canadian economic releases due Thursday leaving the loonie to move alongside world currencies and commodities prices.

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On global markets, the U.S. dollar rose against a basket of currencies and was last up 0.2 per cent at 98.568.

The euro, meanwhile, fell below US$1.10 after the ECB cut interest rates and announced a quantitative easing program as well to boost the region’s economy. According to Reuters, the euro, after initially rising, dropped sharply to as low as US$1.0955, the day’s low and down 0.5 per cent on the session, as investors digested news of the rate cut and relaunch of QE. The euro hit a 28-month low earlier this month of US$1.0926.

China’s yuan and Australia’s dollar, viewed as a bellwether for trade risks, were both higher.

The Australian dollar hit a six-week high of 68.87 US cents and the offshore Chinese yuan rose 0.5 per cent to a three-week high of 7.0737 per dollar. The Japanese yen, seen as a safe-have currency, fell to a six-week low against the greenback. Britain’s pound was little changed.

In bonds, the yield on the U.S. 10-year note was little changed at 1.725. The yield on the 30-year note sat at 2.203 per cent at last check.

More company news:

The Globe’s Eric Atkins reports that airline and tour operator Transat AT Inc.’s third-quarter loss more than doubled due to fees and executive compensation related to its deal to be taken over by rival Air Canada. For the three months ending on July 31, Montreal-based Transat said it lost $11-million, or 29 cents a share, compared with a loss of $5-million or 13 cents in the same period of 2018.

Dollarama Inc reported a 2-per-cent rise in quarterly profit, boosted by higher comparable-store sales and opening of new stores. The Montreal-based company’s net income rose to $143.2-million, or 45 cents per share, in the second quarter ended Aug. 4, from $140.4-million, or 42 cents, a year earlier. Sales rose to $946.4-million from $868.5-million. Dollarama also raised its guidance for comparable-store sales growth to a range of 3.5 to 4.5 per cent compared with earlier expectations for between 3.0 and 4.0 per cent.

Empire Co. Ltd. says it earned a profit of $130.6-million in its latest quarter, up from $95.6-million in the same quarter last year. The parent company of the Sobeys grocery chain says the profit amounted to 48 cents per share for the 13 weeks ended Aug. 3. That’s compared with a profit of 35 cents per share in the same period a year earlier. On an adjusted basis, Empire says it earned 49 cents per share for the quarter, up from 37 cents a year ago. Analysts on average had expected a profit of 48 cents per share, according to financial markets data firm Refinitiv.

French Finance Minister Bruno Le Maire said on Thursday Facebook’s Libra cryptocurrency cannot operate in Europe under current conditions, citing systemic financial risks, risks for sovereignty, and the potential for abuse of market dominance. “All these concerns about Libra are serious. I therefore want to say with plenty of clarity: in these conditions we cannot authorize the development of Libra on European soil,” Mr. Le Maire said.

Shares in French train manufacturer Alstom fell on Thursday after its leading shareholder Bouygues shed half its stake in a business that has become less compatible with its focus on construction and telecoms. The sale follows years of setbacks and strategy shifts for the Bouygues conglomerate as Alstom’s leading investor.

Anheuser-Busch InBev is planning to raise about US$5-billion from a revived float of its Asian operations after the world’s largest beer maker shelved a Hong Kong IPO in July, Reuters reports, citing people with knowledge of the matter. AB InBev, which had aimed to raise as much as US$9.8-billion through an IPO of Budweiser Brewing Company APAC Ltd to help with its heavy debt burden of over $100 billion, aims to re-launch the float as soon as next week, the report said.

Kroger Co’s quarterly same-store sales growth beat analysts’ estimates. Sales at supermarkets open for more than a year, excluding the impact of fuel prices, rose 2.2 per cent in the second quarter ended Aug. 17. Analysts were expecting 1.91-per-cent increase, according to IBES data from Refinitiv. Net earnings attributable to Kroger fell to US$297-million, or 37 US cents per share, in the quarter, from US$508-million, or 62 US cents per share, a year earlier.

Economic news

Initial claims for U.S. state unemployment benefits fell 15,000 to a seasonally adjusted 204,000 for the week ended Sept. 7, the lowest level since April, the U.S. Labor Department said. The drop in claims was the largest since May.

The U.S. Labor Department said its consumer price index excluding the volatile food and energy components gained 0.3 per cent for a third straight month. The so-called core CPI was boosted by a surge in healthcare costs and increases in prices for airline tickets, recreation and used cars and trucks. In the 12 months through August, the core CPI increased 2.4 per cent, the most since July 2018, after climbing 2.2 per cent in July. Economists polled by Reuters had forecast the core CPI rising 0.2 per cent in August and up 2.3 per cent on a year-on-year basis.

With Reuters and The Canadian Press

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