Skip to main content

Canada’s main stock index opened higher on Thursday, led by energy shares as crude prices soared after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war.

At just past 11 a.m. (ET), the TSX was up 1.9 per cent and crude oil nearly 23 per cent, a jump of $4.65, to $24.96.

U.S. stocks joined the rally after initially opening lower, after CNBC reported that Trump said he spoke with Russian President Vladimir Putin and Saudi Crown Prince Mohammad Bin Salman, adding that he expects both countries to cut production by about 10 million barrels.

The mood on Wall Street was earlier much more subdued. U.S. weekly jobless claims last week doubled to 6.6 million, which was about twice the average Street forecast. Never has a larger number been seen in the United States, and such a jump is highlighting just how formidable the economic headwinds have become in the era of the coronavirus.

According to the latest Globe and Mail count, coronavirus cases in Canada are now 9,731, with 111 deaths. The virus has infected more than 941,000 people and killed over 47,000 people worldwide, according to a Johns Hopkins University tally.

In Europe, oil and gas stocks gained more than 5 per cent, with Royal Dutch Shell , Total SA and BP jumping between 3.3 per cent and 5 per cent on the rise in oil prices.

U.S. President Donald Trump said he had talked recently with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal within a “few days” to lower production and thereby bring prices back up.

Commodities

Crude oil futures jumped 10% on Thursday after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war. Also supportive were reports that China will speed up its crude purchases for its strategic stockpiles

Trump said he had talked recently with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal to end their price war within a “few days” - lowering production and bringing prices back up.

Trump also said he had invited U.S. oil executives to the White House to discuss ways to help the industry “ravaged” by slumping energy demand during the coronavirus outbreak and the Saudi Arabia/Russia price war.

Currencies and bonds

The Canadian dollar is up slightly against the greenback this morning, hovering just above the 70 cents US mark and finding support by the bounce in crude oil prices. Scotiabank, in a note this morning, was skeptical of any major moves higher in the loonie: “We think investors are right to remain cautious about the modest gain in crude and the broader risk environment for now. We rather think USDCAD is carving out a broad range trade between 1.39/1.40 on the downside and 1.45/1.47 on the topside; uncertainty will limit CAD gains while the expanding Fed balance sheet will curb USD strength. The Federal government support package for the Canadian economy amounts to about C$250-billion now, according to updated figures provided by Finance Minister Morneau Wednesday. This is clearly a very significant plan but the impact on the CAD is likely to be limited, given that other governments are also moving aggressively to offset the virus impact. Equally, the BoC initiating its asset purchases plan yesterday, buying $1-billion in securities of various issues in the five-year sector of the curve, is unlikely to affect the CAD’s performance with other central banks undertaking similar, but relatively larger scale, policies.”

Other corporate news

Canadian integrated oil and natural gas company Cenovus Energy said on Thursday it would reduce its full-year capital spending by another C$150 million ($106 million) and suspend its dividend, citing low global oil prices.

The executive chairman of Barrick Gold Corp, John Thornton, sold $50-million worth of the company’s stock over the last three trading days, erasing half of his stake in the company.

Earnings include: Goodfood Market Corp.; Richelieu Hardware Ltd.; Uranium Participation Corp.; Walgreens Boots Alliance Inc.

Also see: Thursday’s small-cap stocks to watch

Also see: Thursday’s analyst upgrades and downgrades

Economic news

The number of Americans filing claims for unemployment benefits last week shot to a record high for a second week in a row - topping 6 million - as more jurisdictions enforced stay-at-home measures to curb the coronavirus pandemic, which economists say has pushed the economy into recession. Initial claims for unemployment benefits rose to 6.65 million in the latest week from an unrevised 3.3 million the previous week, the U.S. Labor Department said on Thursday. The figures far exceeded the median estimate of 3.50 million in a Reuters survey of economists. Estimates in the survey were as high as 5.25 million.

(8:30 a.m. ET) Canada's merchandise trade balance for February. Estimate is a deficit of $2.7-billion.

(8:30 a.m. ET) U.S. goods and services trade balance for February. Consensus is a deficit of US$39.7-billion, down from US$45.3-billion in January.

(10 a.m. ET) U.S. factory orders for February. Consensus is a decline of 0.4 per cent from January.

With files from Reuters