Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index started higher Thursday as crude prices steadied following a sharp drop during the previous session. South of the border, markets were mixed with weekly U.S. jobless claims again spiking but also hinting that the numbers have peaked as the COVID-19 crisis slams the economy.
At 9:47 a.m. ET, the S&P/TSX Composite Index was up 14.68 points or 0.11 per cent at 13,973.26.
In the U.S., the Dow Jones Industrial Average rose 39.31 points, or 0.17 per cent, at the open to 23,543.66.
The S&P 500 opened higher by 15.98 points, or 0.57 per cent, at 2,799.34. The Nasdaq Composite gained 85.93 points, or 1.02 per cent, to 8,479.11 at the opening bell.
Ahead of the open, the U.S. Labor Department reported that 5.24 Americans applied for unemployment benefits last week. Over the past month, roughly 20 million people have filed jobless claims over the last month. Still, the latest number was also below the previous week’s 6.615 million claims.
“Initial claims remained highly elevated, but with the 5.2 million print coming in slightly below the 5.5 million consensus, and down from 6.6 million the prior week, today’s data suggest that weekly increases in claims seem to be past their peak,” CIBC economist Andrew Grantham said.
“Also, for the third week in a row, the print for continuing claims (lagged one week versus initial claims) came in below the consensus expectation.”
On Wednesday, the combination of a record drop in March U.S. retail sales and disappointing U.S. bank earnings hit indexes, with the S&P 500 falling more than 2 per cent.
“This is going to be a good test of the new-found optimism, as equities bounced back strongly from one of the sharpest sell-off’s in decades,,” OANDA senior analyst Craig Erlam said.
“Should the dip be bought and the prior lows remain in-tact, it may well mark a bottom in these crazy markets and spur a new wave of optimism among investors.”
He noted investors are now seeing favourable trends in more countries in terms of the spread of the virus, particularly in new cases, as well as huge amounts of stimulus which are naturally inflating the markets.
“Earnings season has got off to a rocky start and will no doubt be sobering but investors will be looking for any signs of encouragement,” he said. "It is one of many tests in the coming months but an important one that will add further colour to the wide-ranging forecasts that are out there."
Globally, indications that easing restrictions in some countries also lent some support. Germany says it is proposing to reopen schools and some shops starting May 4. In the U.S., President Donald Trump suggested the United States has “passed the peak” of the outbreak with some states targetting a May 1 date to begin reopening their economies. Business leaders, however, continued to urge caution.
In this country, Bank of Canada Governor Stephen Poloz and Deputy Governor Carolyn Wilkins will follow up Wednesday’s policy announcement with an appearance on Parliament Hill later in the afternoon. Yesterday, the central bank left rates unchanged but bolstered its bond-buying programs. In its quarterly monetary policy report, the bank also made the unusual step of forgoing formal forecasts, citing the unprecedented uncertainty brought on by the coronavirus outbreak.
Mr. Poloz and Ms. Wilkins are scheduled to appear before the House of Commons finance committee starting at 4 p.m. ET.
Overseas, Europe’s main markets were positive with the pan-European STOXX 600 advancing 0.98 per cent by afternoon.
Britain’s FTSE 100 dipped 0.52 per cent. Germany’s DAX rose 1.12 per cent and France’s CAC 40 advanced 0.58 per cent.
Asian markets ended mixed, following Wall Street’s weak hand off. Japan’s Nikkei ended down 1.33 per cent. Hong Kong’s Hang Seng lost 0.58 per cent. The Shanghai Composite Index finished up 0.31 per cent.
Commodities
Crude prices steadied but held near recent lows as declining crude demand continues to offset producers’ efforts to shore up through production curbs.
The day range on Brent is US$27.35 to US$28.64. The range on West Texas Intermediate is US$19.77 to US$20.53. During the previous session, WTI fell to its lowest level since 2002 while Brent shed 6 per cent.
On Wednesday, the International Energy Agency said global oil demand will fall by 9 per cent this year while storage will be full by the middle of 2020.
“It again comes back to the simple equation of too much offer versus a tumbling demand,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in an early note.
“But oil producers don’t want to hear a word of it, at least this is what we conclude after the leading oil suppliers failed to come up with a strong commitment to reduce their joint production.”
Still, she said, the market always adjusts itself.
“With oil prices this low, many oil producer nations will need to back off for a while, given that pumping oil below US$20 a barrel is economically unviable for most of them,” she said.
OPEC and its allies have agreed to cut production by 9.7 million barrels a day. Markets had hoped other countries, including the U.S., could add another 10 million barrels a day to that number, although analysts aren’t convinced that will happen.
“Given the scale of demand destruction this quarter, OPEC+ cuts will fall short of bringing the market to balance anytime soon, and this is reflected in the price weakness seen since the OPEC+ deal,” ING bank said in a note.
In other commodities, weak economic reports through the weak contributed to gold’s safe-haven appeal, pushing the metal higher.
Spot gold rose 0.4 per cent to US$1,722.27 per ounce.
U.S. gold futures rose 0.9 per cent to US$1,755.20.
Currencies
The Canadian dollar was relatively steady alongside stabilizing crude prices following the previous session’s sell off.
The day range on the loonie so far is 70.74 US cents to 70.98 US cents.
On Wednesday, the loonie dropped to its lowest level in a week after crude prices sank of oversupply concerns and early economic figures showed this country’s economy contracted a record 9 per cent in March.
“With equity markets firmer and crude up modestly, the window for modest improvement in the Canadian dollar seems to be opening but the market is reluctant to jump through it at the moment,” Shaun Osborne, chief FX strategist for Scotiabank, said.
“The CAD remains a slave to markets flows as trading conditions remain thin and somewhat illiquid it appears.”
In other currencies, the U.S. dollar edged up 0.1 per cent to 99.774 against a basket of world currencies. The gains continue those seen during Wednesday’s session, when the U.S. dollar index ended a four-day losing streak.
The euro, meanwhile, was down about a quarter of a percentage point against the greenback at US$1.0882.
The yen also fell a quarter of a per cent against the U.S. dollar, as media reports suggested Japan was preparing to extend a state of emergency beyond major cities.
More company news
Barrick Gold Corp said it expects first-quarter gold production of 1.25 million ounces, lower than its output in the year-ago period. Chief Executive Officer Mark Bristow said the figure puts Barrick on course to meet its outlook for the year despite the impact of the coronavirus-led lockdowns.
Chartwell Retirement Residences is withdrawing its 2020 outlook due to the uncertainty surrounding the COVID-19 pandemic. The company, which owns and operates seniors living residences, says restrictions on residence visits during the pandemic are expected to hurt occupancy levels as it is not permitting visits by prospective residents. Chartwell says it believes occupancy in its retirement residences will be temporarily affected as a result of reduced move-in activity.
Morgan Stanley posted a 32-per-cent decline in quarterly profit on as its advisory and wealth management businesses took a hit from the economic fallout of the COVID-19 pandemic. The bank said earnings attributable to common shareholders fell to US$1.59-billion, or US$1.01 per share, in the first quarter ended March 31, from US$2.34-billion, or US$1.39 per share, a year ago.
Alphabet Inc’s Google will slow hiring for the rest of the year, Chief Executive Officer Sundar Pichai told the company’s staff in a memo on Wednesday. “We’ll be slowing down the pace of hiring, while maintaining momentum in a small number of strategic areas, and onboarding the many people who’ve been hired but haven’t started yet,” a Google spokesperson told Reuters.
Ford Motor Co said on Thursday that its China vehicle sales in the first three months this year fell 34.9 per cent from a year earlier to 88,770 units, as the novel coronavirus epidemic hit demand in the world’s biggest auto market. The Dearborn, Michigan-based company said, however, all its dealers in China had resumed work and its sales in March had returned to 75% of the same period last year.
BlackRock Inc, the world’s largest asset manager, reported a 23-per-cent drop in quarterly profit, as investors pulled money out of its marquee funds and preferred cash management services, while costs rose amid a global economy hit by the coronavirus pandemic. The New York-based company’s net income fell to US$806-million, or US$5.15 per share, in the first quarter ended March 31, from US$1.05-billion, or US$6.61 per share, a year earlier. The company ended the quarter with US$6.47-trillion in assets under management, down from US$6.52-trillion a year earlier.
Pizza Pizza Royalty says it is cutting its monthly dividend from $0.0713 a share to $0.05 a share.
Economic news
Statistics Canada says factory sales rose 0.5 per cent to US$56.2-billion in February, after five consecutive monthly decreases. The growth was mainly due to higher sales in the transportation equipment industry, the agency said.
U.S. jobless claims totalled 5.24 million last week, the U.S. Labor Department said.
U.S. housing starts fell 22.3 per cent in March to 1.216 million.
With Reuters and The Canadian Press
Terry Weber