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Equities
Major North America stock indexes opened lower Thursday as new figures showing millions of Americans again sought unemployment benefits last week more than offset the positive impact of earnings from tech giants like Facebook Inc. and Microsoft Corp.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 167.22 points, or 1.1 per cent, at 15,060.89.
The Dow Jones Industrial Average fell 48.29 points, or 0.20 per cent, at the open to 24,585.57. The S&P 500 opened lower by 8.60 points, or 0.29 per cent, at 2,930.91, while the Nasdaq Composite dropped 3.69 points, or 0.04 per cent, to 8,911.02 at the opening bell.
On the economics side, Wall Street got another stark reminder of the impact of the virus outbreak with weekly jobless claims totalling 3.839 million.
Heading into the trading day, earnings continue to dominate sentiment, with Apple Inc. set to report after the close of trading.
Shares of Facebook Inc. and Microsoft Corp. were up about 7 per cent and 1.3 per cent, respectively, in early trading. After Wednesday’s close, Facebook said it sees signs of stability after a drop in ad sales as the COVID-19 pandemic set in. Microsoft reported sales and profit ahead of Wall Street forecasts, helped by demand for its Teams chat and meeting app as more people worked from home.
Also lending some support was a gain in Tesla shares, which were up more than 6 per cent after the electric car company posted a profit of US$1.24 per share in the latest quarter. Analysts had expected a loss of 36 US cents per share.
“It’s been really interesting to see investors navigate a potentially huge banana skin of a week,” Craig Erlam, senior market analyst with OANDA, said.
“The normal caution has been replaced by an unshakable belief that bad news is old news and good news is a buying opportunity. Everlasting stimulus from the central banks around the world naturally encourages such behaviour but the approach can seem rather reckless at times.”
In this country, Precision Drilling swung to a loss in the latest quarter on the combined impact of the spread of the coronavirus and spiralling crude prices. It also said it expects weak demand to stretch into next year.
Precision reported a loss of $5.3-million or two cents per diluted share for the quarter ended March 31 compared with a profit of $25-million or eight cents per diluted share a year earlier. Revenue totalled $379.5-million, down from $434-million in the first quarter of 2019.
Overseas, major markets in Europe gave up early gains after the ECB said it would pay more for banks to borrow from it but left much of its current policy unchanged. Ahead of the ECB announcement, new figures showed euro zone GDP contracted a record 3.8 per cent in the first quarter.
The pan-European STOXX 600 was down 0.69 per cent by afternoon.
Britain’s FTSE 100 fell 1.60 per cent. Germany’s DAX fell 0.70 per cent. France’s CAC 40 edged up 0.59 per cent.
In Asia, Japan’s Nikkei jumped 2.14 per cent. The Shanghai Composite Index gained 1.33 per cent. Markets in Hong Kong were closed.
Commodities
Crude prices advanced after new figures showed a small-than-forecast build in U.S. stockpiles while early signs were emerging suggesting improving demand as economies reopen.
The day range on West Texas Intermediate is US$15.45 to US$17.75, with that benchmark up about 14 per cent in the predawn period. The range on Brent is US$22.87 to US$25.
On Wednesday, the U.S. Energy Information Administration said weekly crude inventories rose by 9 million barrels to 527.6 million barrels. Analysts polled by Reuters had been expecting an increase of more than 10 million barrels.
Sentiment also got a lift early Thursday after Reuters reported that China Petroleum & Chemical Corp (Sinopec) said on its daily sales of refined oil products have risen to more than 90 per cent of levels seen before the coronavirus outbreak.
“This is a second straight week of inventory and product demand figures suggesting a bottoming of the U.S. market,” Stephen Innes, chief market strategist with AxiCorp, said.
“Demand has most likely troughed with several large economies now considering ‘exit strategies’ or ‘new normal’ and lifting draconian lockdown restrictions,” he said in an early note. “All the while, OPEC+ quotas are due to kick in on Friday, suggesting short term supply conditions have likely peaked.”
In other commodities, gold recovered from early losses with the Federal Reserve signalling its intention to keep its key policy rate near zero for the forseeable future.
Spot gold rose 0.3 per cent to US$1,715.84. U.S. gold futures rose 1 per cent to US$1,730.30 per ounce.
“The massive support we’re getting from the Fed is underpinning the general trend of support for gold... Gold is going to look very attractive as it doesn’t cost anything to hold it right now,” Mr. Innes said.
Currencies
The Canadian dollar was holding around the 72-US-cent mark as crude prices posted early gains.
The day range on the loonie so far is 71.96 US cents to 72.15 US cents.
“Broader focus for the Canadian dollar remains on crude prices and risk appetite at present and we think trends here suggest the CAD should be able to push a little higher still in the near term,” Shaun Osborne, chief FX strategist for Bank of Nova Scotia, said.
On the economics calendar, markets get a February reading on GDP growth in Canada, although that number has already been overtaken by an early estimate on March and first-quarter growth, which showed sharp contraction as the Canadian economy contended with the impact of the novel coronavirus.
On global markets, the U.S. dollar struggled against a basket of currencies after the Fed’s latest comments and positive trial results from Gilead’s possible COVID-19 treatment helped boost risk sentiment.
Against a basket of currencies, the U.S. dollar hit a two-week low before recovering somewhat to advance 0.1 per cent.
The greenback also came close to six-week lows versus the yen in early London trading, before starting to recover, and was last at 106.63, according to Reuters.
More company news
McDonald’s Corp reported a 16.7-per-cent slide in quarterly profit on Thursday as most of its restaurants across the globe limited their services to deliveries and take-aways to halt the spread of the coronavirus pandemic. The world’s largest fast-food company said about 75 per cent of its about 39,000 restaurants around the world were operational, including almost all of its nearly 14,000 restaurants in the United States.
Twitter Inc said that its ads sales had slightly rebounded in Asia after a plunge due to the coronavirus outbreak and that it had accelerated work on tools to attract key advertisers, becoming the latest tech company to report a lighter blow from the pandemic than forecast. The San Francisco-based social media company announced greater first-quarter revenue and a smaller loss than financial analysts had expected. Daily users who can view ads grew 24% to 166 million, about 2 million above estimates, as people looked to Twitter for information related to the virus.
Dow Inc posted a drop in adjusted quarterly profit on Thursday as a fall in crude prices hurt selling prices for its chemicals, while demand for some of it products were hammered by a fall in industrial activity due to the coronavirus pandemic. Net operating income, which excludes certain items, fell to $439-million, or 59 cents per share, in the first quarter ended March 31 from $729-million, or 98 cents per share, a year earlier.
Zoom video conferencing app does not have 300 million daily active users, the company admitted on Thursday to the Verge, saying it “unintentionally” referred to daily meeting participants as users in a blog post. The Zoom blog from April 22, in which the video conferencing app announced a 50% jump in users over three weeks, has now been edited to say that the company had surpassed “300 million daily Zoom meeting participants” instead of “more than 300 million daily users”. “When we realized this error, we adjusted the wording to ’participants’,” the company told the Verge, adding, “this was a genuine oversight on our part.”
Cigna Corp reported better-than-expected quarterly profit and stuck to its profit target for the year as it benefited from strong sales at its Express Scripts pharmacy benefits business (PBM). Cigna said it continues to expect 2020 adjusted income from operations to be between US$18 and US$18.60 per share. Analysts were expecting US$18.32 per share, according to Refinitiv IBES data.
Economic news
Statistics Canada says GDP in February was unchanged. Early estimates have already suggested that the Canadian economy contracted by 9 per cent in March amid the impact of the COVID-19 pandemic.
U.S. initial jobless claims for the week ended April 25 totalled 3.838 million, down from 4.442 million a week earlier.
The U.S. Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 7.5 per cent in March after rising 0.2 per cent in February. Economists polled by Reuters had forecast consumer spending falling 5.0 per cent in March.
(9:45 a.m. ET) U.S. Chicago PMI for April.
With Reuters and The Canadian Press
Terry Weber