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Equities

Canada’s main stock index posted modest gains at Thursday’s open with energy and materials shares helping bolster the advance. U.S. markets started weaker as disappointing economic news out of China and Europe tempered investor sentiment.

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At 09:42 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 6.18 points, or 0.07 per cent, at 16,963.78.

Seven of 11 main subindexes were higher, led by gains in materials stocks on the back of higher gold prices. Energy shares gained 0.4 per cent as crude prices rose. Financial stocks were also modestly higher.

In New York, the Dow Jones Industrial Average fell 26.39 points, or 0.09 per cent, at the open to 27,757.20.

The S&P 500 opened lower by 3.29 points, or 0.11 per cent, at 3,090.75. The Nasdaq Composite dropped 21.04 points, or 0.25 per cent, to 8,461.06 at the opening bell.

New figures showed that Germany’s economy grew by just 0.1 per cent in the third quarter, dodging a mild contraction due to consumer spending. (Germany is the euro zone’s biggest economy.) Meanwhile, reports out of China showed that country’s factory sector slowed more than expected last month and retail sales also missed forecasts.

“The importance of getting some sort of [U.S.-China trade] deal was illustrated this morning by way of the latest Chinese retail sales and industrial production data for October which came in much worse than expected after seeing a bit of a recovery in September,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“Talk of a phased rollback of tariffs in the last few days, which had helped drive to U.S. markets to new record highs, and European markets to new multi-month peaks, appears to have given way to the realization that a deal may be slightly further away than originally believed,” he said.

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On the trade file, China said Thursday that it was lifting restrictions on the import of poultry meat from the United States effective immediately. That move had been announced previously during recent trade talks between the two countries. China’s commerce ministry also said Beijing and Washington are holding “in-depth” discussions on a first-phase deal with cancelling tariffs as an important element of the talks. “China has emphasized many times that the trade war began with additional tariffs and should end with the cancellation of additional tariffs,” ministry spokesman Gao Feng told a regular briefing.

On the corporate side, earnings continue to roll in on both sides of the border.

On Wall Street, shares of retail giant Walmart Inc. rose more than 2 per cent in New York after the company topped profit forecasts in the latest quarter and raised its outlook for the holiday period. In the most recent quarter, Walmart posted adjusted earnings per share of US$1.16. Analysts had been expected a number closer to US$1.09. U.S. same-store sales rose 3.2 per cent, also ahead of market forecasts.

After the close, chip giant Nvidia Corp. reports.

On Bay Street, cannabis stocks will again be front and centre.

Canopy Growth Corp. reported a bigger quarterly loss on restructuring and inventory charges as part of its portfolio review. The company reported a net loss of $374.6-million in the second quarter compared with $330.6-million a year earlier. On per-share basis, the company reported a loss of $1.08 in the latest quarter. Net revenue rose to $76.6-million from $23.3-million a year earlier. Shares were down 11 per cent in early trading in Toronto.

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“The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market,” chief executive officer Mark Zekulin said in a statement.

Aurora Cannabis delivering its latest earnings after the closing bell.

Canadian investors will also get earnings from Cineplex. On Thursday evening, Bank of Canada Governor Stephen Poloz will deliver a speech to the Asian Economic Policy Conference hosted by the Federal Reserve Bank of San Francisco.

Overseas, the pan-European STOXX 600 was down 0.30 per cent in afternoon trading with weakness in auto shares leading the losses. Britain’s FTSE 100 fell 0.42 per cent. Germany’s DAX fell 0.45 per cent. France’s CAC 40 was down 0.16 per cent.

In Asia, Tokyo’s Nikkei lost 0.8 per cent, and Hong Kong’s Hang Seng shed 0.9 per cent, while the Shanghai Composite gained 0.1 per cent.

Commodities

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Crude prices gained on a bigger-than-expected drop in U.S. inventories and comments from an OPEC official about possible lower growth in U.S. shale production next year.

Brent crude has a day range of US$62.49 to US$62.99. The range on West Texas Intermediate is US$57.29 to US$57.73.

The American Petroleum Institute said late Wednesday that weekly crude inventories fell by 541,000 barrels last week. Analysts had been expected an increase of 1.6 million barrels. Gasoline and distillates inventories rose for the week.

Official government numbers from the U.S. Energy Information Administration will be released later Thursday morning.

“Oil prices are a little higher today despite mixed sentiment in the markets and softer Chinese data, after API reported a surprise decline in inventories on Wednesday,” OANDA senior analyst Craig Erlam said. “Brent popped higher following the release and is building on these gains today. The EIA number today will now be eyed with expectations prior to the API release being for a 1.5 million barrel build.”

Crude markets also found some support in comments from OPEC secretary-general Mohammad Barkindo, who said that there would likely be downward revisions to supply going into next year, particularly from U.S. shale. He also said some U.S. shale oil firms see output growing by only 300,000-400,000 barrels per day (bpd). The comments, however, were offset by forecasts from the U.S. Energy Information Administration, which point to record U.S. production in 2019 and 2020.

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In other commodities, weaker economic reports helped boost gold prices.

Spot gold was up 0.2 per cent at US$1,466.51 per ounce, while U.S. gold futures rose 0.3 per cent at US$1,467.10 per ounce.

“Gold is enjoying a third day of gains, although coming on the back of a 4.5-per-cent decline since the start of the month, we shouldn’t get too excited,” Mr. Erlam said.

“The yellow metal may have got over the first hurdle, US$1,460, but US$1,480 will be a much tougher test should it get to those levels. [Fed chair Jerome] Powell made it clear on Wednesday that the Fed is in no rush to cut interest rates again which could weigh on gold in the near-term.”

Currencies

The Canadian dollar continued to trade near one-month lows in early going as markets await a late-day speech by Bank of Canada Governor Stephen Poloz.

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The day range on the loonie so far is 75.38 US cents to 75.47 US cents.

Mr. Poloz is slated to speak Thursday evening in San Francisco.

“The BoC will be keeping a close eye on U.S.-China trade negotiations - escalating trade tensions and uncertainty were a key issue that had Governing Council contemplating a rate cut in October,” RBC senior economists Nathan Janzen and Josh Nye said in a recent report. “The bank elected to hold rates steady but said the economy’s resilience, particularly in consumer spending and housing, will be increasingly tested in the near-term.”

They noted numbers released last week showed a decline in hiring in October although the unemployment rate remained near multi-decade lows and wage growth was firm. Housing starts and building permits also slipped but remained at relatively strong levels.

“So while the jobs and starts data weren’t as robust as we’ve seen in recent months, they also did little to chip away at the Canadian economy’s resilience,” they said.

On global markets, safe-haven currencies like the Japanese yen and the Swiss franc gained against a broadly weaker U.S. dollar on weaker-than-forecast Chinese economic data and worries about U.S.-China trade talks.

Against the U.S. dollar, the yen gained 0.1 per cent to a nine-day high at 108.70 yen. The Swiss franc rose 0.2 per cent versus the greenback. The U.S. dollar index, which weighs the greenback against a basket of currencies, edged 0.1 per cent lower to 98.30 from a one-month high of 98.45 seen in the previous session.

The big mover in foreign currencies was the Australian dollar, which lost half a percentage point against its U.S. counterpart after weak domestic employment numbers raised concerns that the country’s central bank could cut rates again next year. The Australian dollar traded at 67.98 US cents after the new figures were released. That was its lowest level since the middle of last month.

In bonds, the yield on the U.S. 10-year note was lower at 1.851 per cent. The yield on the 30-year note was also lower at 2.329 per cent.

More company news

Alibaba’s planned US$13.4-billion share sale will be Hong Kong’s first paperless stock market listing, a source with knowledge of the matter told Reuters, breaking with a long-held tradition of investors placing stock orders in bank branches. Companies carrying out initial public offerings in Hong Kong have traditionally placed prospectuses in banks, which would often stay open late or over the weekend, and investors would fill out paper forms to place their stock orders.

Boeing Co. has abandoned a key automation system used to make fuselage sections for its 777 jetliners amid reports of reliability issues, and will instead partially switch back to mechanics, the plane maker said on Thursday. The company began to build 777 fuselages in 2015 in an upright orientation, with robots drilling holes and installing fasteners, an initiative known as fuselage automated upright build (FAUB). The world’s biggest plane maker said it had stopped using the system which, according to industry sources, caused problems with reliability and rework issues.

Tougher emissions rules will hit Daimler’s profits in 2020 and 2021, prompting the German car maker to seek more than 1 billion euros (US$1.1-billion) in savings from cutting staff costs at its Mercedes-Benz business by the end of 2022, it said on Thursday. Daimler shares were down 2.3 per cent in early trading.

Cineplex Inc. reported a third-quarter profit of $13.4-million, up from $10.2-million in the same quarter last year as revenue rose 8.3 per cent helped by the new Lion King and Spider-Man movies. The movie theatre company says the profit amounted to 21 cents per share for the quarter ended Sept. 30 compared with a profit of 16 cents per share a year earlier. Revenue totalled $418.4 million, up from $386.4-million.

American Express said Lisa Kalhans has been named president and chief executive officer of Amex Bank of Canada and Amex Canada Inc. Ms. Kalhans comes to Canada after serving as vice president and general manager of international marketing within the American Express Global Commercial Services organization for nearly two years, the company said.

Cisco Systems Inc forecast second-quarter revenue and profit below estimates as the network gear maker struggles to shift to a software-focused company from its business of selling routers and switches, sending shares down 5 per cent in premarket trading. The company said it expects revenue in the current quarter to drop by 3 per cent to 5 per cent from a year earlier to between US$12.07-billion to US$11.82-billion. Analysts were expecting revenue of US$12.77-billion, according to IBES data from Refinitiv.

Ford Motor Co will start taking reservations for its electric sport utility vehicle, Mustang Mach-E, starting Nov. 17, when the U.S. automaker unveils the vehicle at an event in Los Angeles, the company said on Thursday. The Mustang-inspired electric SUV will be among a more than dozen all-electric automobiles the company plans to launch by 2022 with an investment of $11.5 billion as it moves away from traditional gas-powered cars.

MTV-owner Viacom Inc beat Wall Street estimates for fourth-quarter revenue, helped by a rise in domestic advertising revenue. Net earnings from continuing operations attributable to Viacom fell to US$303-million, or 75 US cents per share, in the fourth quarter ended Sept. 30 from US$386-million, or 96 US cents per share, a year earlier. Total revenue fell to US$3.43-billion from US$3.49-billion, but was above the average estimate of US$3.41-billion, according to IBES data from Refinitiv.

Economic news

U.S. initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 225,000 last week, the highest reading since June 22, the U.S. Labor Department said. Data for the prior week was unrevised.

With Reuters and The Canadian Press

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