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Canada’s main stock index opened lower with weaker crude prices weighing on energy shares. Investors south of the border also took a breather after a multi-day rally as new figures showed a continued decline in weekly jobless claims, although the numbers remain elevated.
At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 35.4 points, or 0.23 per cent, at 15,539.71. Despite the early declines, the index remains near its best levels in three months.
In the U.S., the Dow Jones Industrial Average fell 43.40 points, or 0.17 per cent, at the open to 26,226.49.
The S&P 500 opened lower by 11.31 points, or 0.36 per cent, at 3,111.56. The Nasdaq Composite dropped 33.26 points, or 0.34 per cent, to 9,649.65 at the opening bell.
“It seems almost surreal that at a time when the U.S. is facing its highest unemployment rate in decades, that U.S. stocks are retesting, and in some cases setting new all-time highs,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“While a lot of the recent rebound in stock markets is down to optimism that the worst in terms of economic damage may be in the rear-view mirror, even if the visibility on the data is not, there have also been some data surprises which have encouraged this view.”
Ahead of the open, Wall Street got a reading on weekly jobless claims. The U.S. Labor Department said claims for initial state unemployment benefits rose 1.88 million last week. Markets had been expecting an increase of about 1.8 million. The latest figure was down from 2.1 million the week before but still suggested a heavy economic toll from the pandemic. It was the first time claims have fallen below 2 million since March.
In this country, markets will get results from Saputo Inc. with an analyst conference call to follow on Thursday afternoon.
Overseas, major European markets were lower after the ECB raised the size of its Pandemic Emergency Purchase Program to 1.35 trillion euros (US$1.52-trillion) from 750 billion euros. It also extended the program to June 2021. The pan-European STOXX 600 was down 0.53 per cent. Germany’s DAX fell 0.57 per cent. France’s CAC 40 lost 0.53 per cent. Britain’s FTSE 100 was down 0.33 per cent.
Asia had a mixed session. Japan’s Nikkei gained 0.36 per cent. The Shanghai Composite Index slid 0.14 per cent. Hong Kong’s Hang Seng ended up 0.17 per cent.
Crude prices were weaker on market uncertainty over OPEC’s expected extension of current production cuts.
The day range on Brent so far is US$39.04 to US$39.74. The range on West Texas Intermediate is US$36.38 to US$37.08.
Earlier in the week, Russia and Saudi Arabia agreed to support an extension of current production curbs of 9.7 million barrels a day, which now run through to the end of this month. However, they also failed to agree to a Thursday meeting to discuss the extension because of concerns over the level of compliance by some other OPEC members with the current caps.
Reuters reported Thursday that Saudi Arabia, Kuwait and the United Arab Emirates are not planning to extend voluntary additional output cuts of 1.18 million barrels a day after June, indicating that crude supply could rise next month regardless of any OPEC+ decision.
The most recent U.S. inventory numbers also weighed on prices. The U.S. Energy Information Administration said Wednesday that gasoline stocks rose by 2.8 million barrels last week, far more than analysts had forecast. Distillate stocks rose by 9.9 million barrels, also higher than market expectations.
Ipek Ozkardeskaya, senior Analyst at Swissquote Bank, said both inventories and OPEC uncertainty are tempering prices in the short term but improving conditions should underpin crude.
"Given the optimism on post-Covid economic normalization and joint efforts to curb the global supply glut, price retreats [for WTI] near and below the US$35 mark could be good dip-buying opportunities," she said.
In other commodities, gold prices edged higher as equity markets took a breather.
Spot gold rose 0.2 per cent to US$1,701.02 per ounce after a 1.7-per-cent drop on Wednesday. U.S. gold futures fell 0.1 per cent to US$1,703.70.
The Canadian dollar was trading around 74 US cents after touching its best intraday level in three months during the previous session on the Bank of Canada’s move to pare back some emergency support for financial markets.
The day range on the loonie so far is 73.92 US cents to 74.13 US cents.
On Wednesday, the Bank of Canada kept its key policy rate unchanged and said the global economic impact of the novel coronavirus appeared to have peaked. The central bank also said it would reduce the frequency of its term repo operations to once a week and its program to purchase bankers’ acceptances to bi-weekly operations.
On Thursday afternoon, Deputy Bank of Canada Governor Toni Gravelle is expected to offer more detail on Canada’s economic outlook when he speaks by video conference to the Greater Sudbury Chamber of Commerce. Text of the speech will be made available on the bank’s website at 2 p.m. ET and will be followed later in the afternoon by a press conference.
Markets also got a reading Thursday on how the COVID-19 pandemic affected trade. Statistics Canada said exports in April fell 29.7 per cent to $32.7-billion, the lowest in more than 10 years. Imports fell 25.1 per cent. Canada’s trade deficit widened to $3.3-billion.
Exports fell 29.7% to $32.7 billion in April, the lowest level in more than 10 years. Imports fell 25.1% to $35.9 billion, a value not seen since February 2011. Canada’s merchandise trade deficit with the world widened from $1.5 billion in March to $3.3 billion in April.
On global markets, the U.S. dollar index, which weighs the greenback against a selection of world currencies, was up about 0.3 per cent after sliding last week.
The safe-haven Japanese yen fell to new two-month lows and was down around 0.1 per cent at 109.06 having weakened to as much as 109.150 overnight before steadying in early London trading, according to Reuters.
More company news
EBay Inc raised current-quarter revenue forecast, as people stuck at home due to the COVID-19 pandemic ordered more from the e-commerce platform. The company now expects second-quarter revenue to be between US$2.75-billion and US$2.80-billion, compared with earlier estimate of US$2.38-billion to US$2.48-billion.
LVMH is not considering buying shares in Tiffany on the market, the French luxury goods group said on Thursday. “The Board of Directors of LVMH Moët Hennessy Louis Vuitton, met on Tuesday, June 2, 2020 and notably focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co with respect to the agreement that links the two groups,” LVMH said. “Considering the recent market rumours, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”
German agrochemicals group Bayer AG has been blocked from selling its dicamba herbicide in the United States after an appeals court rejected a federal regulator’s permit for the product. The U.S. Appeals Court said on Wednesday that the U.S. Environmental Protection Agency (EPA) substantially understated the herbicide-related risks and entirely failed to look into other risks related to dicamba.
Jif peanut butter maker J.M. Smucker Co said on Thursday it expected net sales in fiscal 2021 to decrease 1% to 2%, citing a significant and an extended decline in its away-from-home business. The Orrville, Ohio-based company, which posted a 10% rise in fourth-quarter sales, also forecast fiscal 2021 adjusted earnings per share to be between US$7.90 and US$8.30.
ECB holds monetary policy meeting.
(830 a.m.) Canada merchandise trade deficit for April. BMO estimates a $3 billion deficit.
(830 a.m.) U.S. initial jobless claims for previous week. They are expected to decline 223,000 to 1.9 million.
(2 p.m.) Bank of Canada deputy governor Toni Gravelle speaks in Sudbury.
With Reuters and The Canadian Press