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Equities

Canada’s main stock index was higher Thursday with materials shares gaining on strong gold prices. South of the border, markets were also positive helped by gains by Microsoft Corp. as as investors weigh the Federal Reserve’s latest policy announcement, which gave few hints about future moves.

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At 9:58 a.m. ET, TSX was up 58.04 points, or 0.35 per cent, at 16,858.33 with most sectors trading in positive territory. Materials stocks were up 0.8 per cent on gains gold minders Iamgold Corp. and Barrick Gold.

On Wall Street, the Dow Jones Industrial Average rose 38.97 points, or 0.14 per cent, at the open to 27,186.05.

The S&P 500 opened higher by 3.63 points, or 0.12 per cent, at 3,010.36. The Nasdaq Composite gained 16.20 points, or 0.20 per cent, to 8,193.59 at the opening bell.

World shares were up slightly after the Bank of Japan kept to the sidelines but also hinted that it could expand stimulus as early as its October meeting.

On Wednesday, the Fed delivered its second rate cut of the year, although the move wasn’t unanimous among members of the Federal Open Markets Committee. Michael Hewson, chief market analyst with CMC Markets U.K., notes that Esther George of the Kansas City Fed and the Boston Fed’s Eric Rosengren pushed back against the cut, like they did in July, while James Bullard of the St. Louis Fed argued for a deeper move of 50 basis point move.

“As such there was no clear commitment to cut rates further this year, and given how recent data has played out why should there be, after all as President Donald Trump keeps telling us the U.S. economy is in good shape,” Mr. Hewson said.

“The statement wasn’t too much different from the July one with the only notable differences being references to weaker exports, a slight dig in Trump’s direction perhaps, and slightly stronger household spending, which prompted the Fed to lower its GDP forecast ever so slightly from 2.2 per cent to 2.1 per cent.”

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Thursday’s analyst upgrades and downgrades

Mr. Trump, who has pushed the Fed to take more dramatic action, again criticized the central bank and its chair Jerome Powell following Wednesdy’s policy decision, saying they had '“No ‘guts,’ no sense, no vision!”

On Thursday, the U.S.-China trade dispute also comes back into focus as American and Chinese trade deputies meet in Washington to resume face-to-face talks. The negotiations are aimed at laying out the groundwork for higher level talks expected to take place next month.

On Bay Street, Canadian mutual fund company AGF Management Ltd. scored a $320-million windfall early Thursday from the planned merger of two large British money managers. London-based Smith & Williamson, which is 33.6-per-cent owned by AGF, announced early Thursday that it will join forces with rival Tilney Group Ltd. in an transaction that will create one of Britain’s biggest independent wealth managers, with £45-billion ($74-billion) in assets. AGF shares jumped more than 10 per cent in early trading.

South of the border, shares of Microsoft Corp. were up more than 1 per cent after the company announced Wednesday that its board had approved a new share repurchase program of as much as US$40-billion. Microsoft also raise its quarterly dividend.

Overseas, European markets were positive in afternoon trading. The pan-European STOXX 600 was up 0.52 per cent. Britain’s FTSE 100 gained 0.61 per cent after the Bank of England kept its key policy rate unchanged ahead of a deadline next month to exit the European Union. Germany’s DAX gained 0.46 per cent. France’s CAC 40 rose 0.62 per cent.

In Asia, Japan’s Nikkei added 0.38 per cent after the Bank of Japan kept rates steady but also said it would “reexamine economic and price developments” at its next meeting.

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Hong Kong’s Hang Seng ended down 1.07 per cent. The Shanghai Composite Index ended up 0.46 per cent.

Commodities

Crude prices were higher in early going as a volatile week continues to play out.

The day range on Brent so far is US$63.46 to US$64.44. The range on West Texas Intermediate is US$58.08 to US$58.60.

Saudi Arabia has said it expects to have full output restored by next month after weekend strikes on production facilities. Brent prices posted their biggest gain since the Gulf war on Monday following news of the attacks but has veered sharply through the rest of the week as the extent of the damage became clear. At this point, tensions in the Middle East remain elevated with Saudi Arabia indirectly blaming Iran for the attacks. U.S. President Donald Trump has said that he has told the U.S. Treasury to substantially increase sanctions on Tehran, which has denied involvement in the incident.

“The main focus for energy prices will remain how will Iran react to the mounting US sanctions,” OANDA senior market analyst Edward Moya said. “If we see another drone attack or vessel seized in the Persian Gulf, we could quickly see energy prices return back towards the highs made at the start of the trading week.”

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On Wednesday, markets also got a fresh reading on U.S. crude stocks. The U.S. Energy Information Administration said U.S. inventories rose by 1.1 million barrels last week. Analysts had been expecting a decline of about 2.1 million barrels. However, stocks in Cushing, Oklahoma, the delivery point for benchmark futures, fell to the lowest since October 2018.

Elsewhere, gold prices breached the key US$1,500 level after the OECD cut its global growth forecast, again raising concerns about the state of the world economy. Spot gold was up 0.6 per cent at US$1,502.53 per ounce, after falling on Wednesday to US$1,484.16, a one-week low.

“Traders are disappointed by the divergence of future rate cut path and the market is unwinding expectations of a few more cuts in the months to come,” Margaret Yang Yan, a market analyst at CMC Markets, told Reuters.

Currencies

The Canadian dollar was essentially flat and moving in a fairly narrow range of 75.15 US cents to 75.30 US cents.

For the loonie, there were no major economic reports on tap meaning crude prices will probably continue to offer direction for the currency.

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“Oil prices will remain a focus, with the about 9-per-cent decline in WTI over the past three days keeping USD/CAD above $1.3200 (75.76 US cents),” RBC’s Elsa Lignos said in an early note.

On world currency markets, the U.S. dollar index slid dipped slightly as it struggled to gain despite a more hawkish than forecast tone from Wednesday’s Federal Reserve meeting. The U.S. central bank, on a 7-3 vote, lowered the Fed funds target rate to a range of 1.75 per cent to 2.00 per cent “in light of the implications of global developments for the economic outlook”.

“The message from the [Fed’s] update suggested that further rate cuts are not definitely in the pipeline,” David Madden, market analyst with CMC Markets U.K., said. "The division among central bankers indicates there is no clear direction about the next move from the Fed."

In other world central banks, the Bank of Japan kept policy steady but also signalled the possibility of further stimulus later in the year. The yen rose to as high as 107.79 yen per U.S. dollar before settling at 108.06, up 0.4 per cent for the day.

In bonds, U.S. debt prices rose after the Fed failed to clearly signal another rate cut. The yield on the 10-year note was little changed at 1.791 per cent. The yield on the 30-year note was down slightly at 2.236 per cent.

More company news:

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Home rentals giant Airbnb said it plans to list on stock exchanges in 2020, making it one of the most high-profile market debuts next year. Earlier this week, Airbnb said that it took in more than US$1-billion in revenue for the second quarter of 2019. Reuters had reported in June that Airbnb was considering a direct listing.

Air France-KLM pulled back from a rescue bid for Aigle Azur on Thursday, missing an overnight court deadline to improve its earlier offer for part of the collapsed budget carrier’s operations and staff. An Air France spokeswoman confirmed it had decided against submitting an expected joint bid with long-haul niche carrier Air Caraibes “because our conditions for doing so weren’t met.”

CannTrust Holdings Inc. said Thursday that it has been told the Alberta Gaming, Liquor and Cannabis Commission that about $1.3-million worth of CannTrust products will be returned. Earlier this week, CannTrust said Health Canada had suspended its cultivation, sales and processing licences after the agency found the company had grown cannabis in unlicensed rooms. CannTrust said the AGLC operates independently of Health Canada. Health Canada has not ordered a recall in respect of any of the company’s products, CannTrust said in a statement.

India’s aviation safety regulator may ask Boeing to set up simulators in India to train pilots on the 737 MAX planes once it clears the aircraft as safe for flying, a senior official with direct knowledge of the matter told Reuters. The 737 MAX, the fastest-selling plane in Boeing’s history, has been grounded the world over since March in the aftermath of two fatal crashes in five months that killed 346 people.

An investment management company that controls about 4.8 per cent of the shares of Canfor Corp. says it will vote against the proposal by a Jim Pattison Group company to take the lumber company private. Letko, Brosseau & Associates Inc. charges in a news release the offer by Great Pacific Capital Corp. is “opportunistic and significantly undervalues the company.” The $16 per share bid to buy the 49 per cent of Canfor that Great Pacific doesn’t already own represented an 81.8 per cent premium to the prior closing price when made in August.

Economic news

The trade war between the United States and China has plunged global growth to its lowest levels in a decade, the OECD said on Thursday as it slashed its forecasts. The Organization for Economic Cooperation and Development said that the global economy risked entering a new, lasting low-growth phase if governments continued to dither over how to respond. The global economy will see its weakest growth since the 2008-2009 financial crisis this year, slowing from 3.6% last year to 2.9% this year before a predicted 3.0% in 2020, the OECD said.

The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed that Canadian home prices rose 0.4 per cent last month from July. It was the fourth consecutive monthly increase.

U.S. initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 208,000 for the week ended Sept. 14, the U.S. Labor Department said on Thursday. Data for the prior week was revised to show 2,000 more applications received than previously reported.

(10 a.m. ET) U.S. existing home sales for August.

(10 a.m. ET) U.S. leading indicator for August.

With Reuters and The Canadian Press

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