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Equities

Canada’s main stock index turned lower Thursday as falling crude prices hit energy shares. On Wall Street, markets also fell into the red as investors weighed events in Washington after the release of a whistleblower complaint that triggered an impeachment inquiry into U.S. President Donald Trump.

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South of the border, the Dow Jones Industrial Average was down 10.98 points, or 0.04 per cent, at 26,959.73, the S&P 500 was down 6.94 points, or 0.23 per cent, at 2,977.93. The Nasdaq Composite was down 39.05 points, or 0.48 per cent, at 8,038.33 at 10 a.m. ET.

On Thursday, U.S. House of Representatives Intelligence Committee released a declassifed version of the report made by the whistleblower, which ultimately prompted House Speaker Nancy Pelosi to launch a formal impeachment inquiry into the Republican president. “I am deeply concerned that the actions described below constitute ‘a serious or flagrant problem, abuse, or violation of law or executive order’ that ‘does not include differences of opinion concerning public policy matters,’ consistent with the definition of an ‘urgent concern’,” the report said.

Earlier, investors drew some solace from suggestions from Mr. Trump that U.S.-China trade talks could be headed toward a resolution.

Overseas, markets in Europe started the day higher while Asia finished mix. Ahead of further U.S.-China trade talks next month, Mr. Trump suggested that China wants to make a deal “very badly” and that an agreement may be reached faster than anticipated.

“It is unsure how the ongoing impeachment inquiry would impact Trump’s mood in October trade negotiations, but we believe that he [Mr. Trump] may concentrate his efforts in sealing a much-desired trade deal with China to divert the market’s attention from his impeachment inquiry and get the stock markets racing higher,” Ipek Ozkardeskaya, senior market analyst with London Capital Group, said.

Early Thursday, officials with China’s commerce ministry said China and the U.S. are now discussing details about the upcoming trade talks in October. Chinese commerce ministry spokesman Gao Feng also said Chinese firms have made significant purchases of U.S. soybeans and pork. Both are exempt from U.S. tariffs.

Other positive trade news came with an agreement between the United States and Japan. The two countries signed a limited trade agreement on Wednesday. The deal gives U.S. agriculture producers greater access to the Japanese market.

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On the corporate front, Wall Street gets earnings Thursday from Carnival Corp. and Vail Resorts Management Co. Micron Technology reports after the close.

McDonald’s Corp. says it will test a new plant-based burger using Beyond Meat’s patties in 28 restaurants in Southwestern Ontario starting Monday. The McDonald’s vegan burger will be called a P.L.T., standing for plant, lettuce and tomato. As plant-based products grow in popularity, markets had been speculating which company the fast-food giant would partner with for its foray into that area. Beyond Meat shares were up more than 9 per cent in morning trading.

Overseas, major European markets were higher in early trading. The pan-European STOXX 600 was up 0.80 per cent, bolstered by trade optimism. Britain’s FTSE 100 gained 1.28 per cent in afternoon trading. One of London’s biggest movers was educational publisher Pearson, which saw its shares plunge more than 18 per cent after cutting its full-year profit outlook. Germany’s DAX added 0.55 per cent and France’s CAC 40 rose 0.71 per cent.

In Asia, markets finished mixed. The Shanghai Composite Index fell 0.89 per cent. Hong Kong’s Hang Seng gained 0.37 per cent helped by a nearly 1 per cent gain in shares of tech giant Tencent. Japan’s Nikkei rose 0.13 per cent bolstered by news of the trade pact between the U.S. and Japan.

Commodities

Crude prices fell after a choppy night as a faster-than-expected recovery in production in Saudi Arabia offsetting early optimism over U.S.-china trade talks.

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The day range on Brent so far is US$62.06 to US$62.72. The range on West Texas Intermediate is US$56.17 to US$56.82.

Suggestions from China that it was in talks with the U.S. about next month’s resumption of negotiations helped prices advance after wavering through much of the predawn period. U.S. President Donald Trump helped fan optimism around the talks by suggesting on Wednesday that a deal could come sooner than markets are expecting.

“Signs of easing trade tension has overshadowed the bearish raft of indicators that saw oil prices topple head over heels this week,” Stehen Innex, Asia Pacific strategist with AxiTrader, said. "Investors have been clamouring for any positive sign from President Trump on the trade war front, so the calming trade news flow may be convincing enough for traders to take even more bearish chips off the table."

He also noted that headlines indicating Saudi Arabia is making fast progress on restoring output after attacks on facilities earlier in the month is adding pressure to price moves.

“So, with the supply risk premiums evaporating and the oil fear factor but a distant memory, demand worries are back competing for attention after the global manufacturing slump worsened this week after the German PMI point to and economy on the edge of recession,” he said.

Gold prices, meanwhile, steadied after Wednesday’s 2-per-cent drop as bargain hunters returned to the market.

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Spot gold rose 0.3 per cent at US$1,507.86 per ounce early Thursday. U.S. gold futures were up 0.2 per cent at US$1,514.80 per ounce.

“Yesterday’s 2-per-cent fall is a very good opportunity to buy gold,” Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade, told Reuters.

“Given the uncertainties surrounding geopolitical headlines such as the U.S.-China trade spat and Trump’s impeachment inquiry, the market is not leaving any opportunity to buy gold if they see any correction.”

In other metals, silver gained 0.2 per cent to US$17.94. Palladium and platinum rose 0.5 per cent to US$1,650.51 and US$929.75 per ounce respectively.

Currencies

The Canadian dollar was slightly firmer - trading in a day range of 75.37 US cents to 75.49 US cents - as its U.S. counterpart steadies against a group of world currencies.

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“In an absence of domestic data, the broader risk backdrop, and oil prices in particular, will serve as key drivers for the Canadian dollar,” RBC chief currency strategist Adam Cole said.

Mr. Cole also noted that the USMCA trade deal is back in the news with some suggestions that the Trump impeachment inquiry could distract Democrats from the pact.

“Mexican President [Andrés Manuel López Obrador] yesterday said ‘we don’t know’ the impact of the impeachment on USMCA, but that it would be better if USMCA were resolved ahead of the U.S. election,” Mr. Cole said. “In practical terms, the implications are not that great as trade continues on NAFTA terms in the interim, even if USMCA is unresolved by the 2020 U.S. election.”

On world currency markets, the U.S. dollar was a touch lower against a basket of world currencies although still close to recent highs. The U.S. dollar index was last down 0.1 per cent at 98.985, Still that was near a two-week high and the two-year peak of 99.37 hit earlier this month.

Mr. Cole said the main mover on world markets was the New Zealand dollar which gained on comments from the head of that country’s central back suggesting that rate cuts “are working” and the bank is unlikely to resort to unconventional policy. The New Zealand dollar was last up 0.4 per cent at 62.97 US cents.

Elsewhere, a relatively quiet night on currency markets saw the euro rise 0.1 per cent to US$1.0947. The Japanese yen, perceived as a safe haven currency, rose 0.1 per cent to 107.68 yen per US dollar.

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More business news:

Conagra Brands Inc reported a 30.3-per-cent rise in quarterly sales, citing strong demand for frozen food brands including Banquet, Healthy Choice and Reddi-Wip. Net earnings attributable to the company fell to US$173.8-million, or 36 US cents per share, in the first quarter ended Aug. 25, from US$178.2-million, or 45 US cents per share, a year earlier. Net sales rose to US$2.39-billion from US$1.83-billion.

Cruise operator Carnival Corp cut its full-year profit forecast on Thursday as it expect to take a hit from higher fuel prices. The company said it now expects adjusted earnings of US$4.23 to US$4.27 per share in 2019, down from an earlier forecast of US$4.25 to US$4.35 per share. “Due to an $0.08 impact from the recent spike in fuel prices caused by geopolitical events, we are reducing our full year guidance for 2019 by $0.05 per share.” Chief Executive Officer Arnold Donald said in a statement.

Imperial Brands expects full-year profit and revenue to take a hit from a regulatory crackdown on vaping in the United States, kicking its shares 11% down on Thursday in the latest fallout for tobacco firms from the U.S. health crisis. The warning by the British maker of myblu e-cigarettes, Winston and Gauloises cigarettes, comes a day after U.S. tobacco firms Philip Morris and Altria axed their merger talks in the face of the backlash against vaping.

Ryanair is not interested in taking over any of the airlines of travel firm Thomas Cook, which has gone into liquidation, its chief executive said on Thursday. Thomas Cook’s independent airline units Condor and its Nordic Ving group have both said they are looking for new owners. “Ryanair has no interest in buying another airline,” said Michael O’Leary at a news conference in Vienna.

Pearson expects its full-year profit to come in at the bottom of its guided range, the British education company warned on Thursday, blaming weaker-than-expected trading in its U.S. higher education courseware business. Pearson, former publisher of The Economist magazine and Financial Times newspaper, had forecast adjusted operating profit of 590-640 million pounds. The provider of textbooks, courseware and testing has been hit in recent years by changes in the U.S. market as students sought to save money by buying second-hand books, hammering its sales and profit. The group said it still expected overall revenue to stabilise this year.

Mobile telecoms gear maker Ericsson will take a 12 billion crown (US$1.2-billion) hit to third-quarter results from long-running U.S. investigations into past corruption allegations, it said on Thursday. The investigations by the U.S. Securities and Exchange Commission and the Department of Justice have been running since 2013 and 2015 respectively, and are linked to Ericsson’s compliance with the U.S. Foreign Corrupt Practices Act (FCPA). The Swedish company said it estimated a monetary sanction of $1 billion, along with additional related costs, to settle the investigations, taking the total to US$1.2-billion.

Unilever gets a tiny fraction of its sale from Amazon.com as most of its products sold on the website are priced below $10, the company’s chief financial officer said at a conference. “People are surprised that our Amazon business is only a couple of hundred million,” CFO Graeme Pitkethly said at the Bernstein conference in London, adding that the company generated less than 200 million pounds ($246.32 million) in sales from the online behemoth last year. “No one makes money on Amazon if you sell below $10 ... and a lot of our business is in products below $10,” he said.

Economic news

Initial claims for U.S. state unemployment benefits rose by 3,000 to a seasonally adjusted 213,000 for the week ended Sept. 21, 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.

U.S. GDP grew at an annual rate of 2 per cent in the second quarter, matching market forecasts. Thursday’s report was the final reading on GDP for the quarter.

(10 a.m. ET) U.S. pending home sales for August. Consensus is an increase of 1 per cent from July.

With Reuters and The Canadian Press

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