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Equities
Canada’s main stock index was treading water in morning trading Thursday with energy stocks turning higher after crude reversed early losses. On Wall Street, indexes continued the previous session’s losses on escalating concerns about the rising number of coronavirus infections in some regions and new figures showing jobless claims remain elevated.
At 9:57 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 16.47 points, or 0.11%, at 15,277.91 in choppy trade.
The energy shares rose 2.8 per cent after crude prices turned higher. Financials gained 0.4 per cent. Industrial stocks slid 0.2 per cent. Materials stocks were down 0.9 per cent.
In the U.S., the Dow Jones Industrial Average fell 80.72 points, or 0.32 per cent, at the open to 25,365.22.
The S&P 500 opened lower by 3.73 points, or 0.12 per cent, at 3,046.60. The Nasdaq Composite dropped 9.81 points, or 0.10 per cent, to 9,899.36 at the opening bell.
In the U.S., Florida, Oklahoma and South Dakota all reported record increases in new cases on Wednesday, while a number of other states saw record highs earlier in the week. Governors in New York, New Jersey and Connecticut ordered visitors from eight other states to quarantine on arrival.
Several companies have already had to reconsider reopening plans as a result. Walt Disney Co. said the reopening of theme parks and resort hotels in California will be delayed until approval has been received from state officials. Disney had planned to reopen its Disneyland Park and Disney California Adventure on July 17.
“It is becoming increasingly difficult for investors to ignore the negative headlines,” Milan Cutkovic, market analyst at AxiCorp, said. “A lot of the positive expectations have already been priced into the market, and there are now rising uncertainties over the on-going pandemic.”
“As if COVID-19 wasn’t bad enough already, there are now concerns that the Trump administration might open a new front in the trade war, as they are considering new tariffs on European goods.”
Ahead of the opening bell, Wall Street also got the latest reading on weekly unemployment claims. The U.S. Labor Department said initial claims for state unemployment benefits came in at 1.48 million last week, down from 1.54 million in the prior week. Markets had been expecting a number closer to 1.3 million in the latest report.
On the corporate side, BlackBerry Ltd. posted a first-quarter loss of US$636-million or $1.14 a share as it cut US$594-million from the value of its Spark device-management platform after integrating it with Cylance, the cybersecurity company it bought in 2018. The loss in the latest quarter compared with a loss of US$41-million or 7 US cents a year earlier. However, excluding one-time items, profit came in ahead of analysts forecasts. BlackBerry’s non-generally accepted accounting principle earnings per share was 2 US cents, beating analyst consensus of a 2-US-cent loss. The results were released after Wednesday’s closing bell.
BlackBerry shares were down more than 2 per cent in early trading in Toronto.
After the close, sportswear giant Nike Inc. reports earnings.
Overseas, major European markets were mixed by afternoon. The pan-European STOXX 600 was up 0.30 per cent.
Britain’s FTSE 100 slipped 0.02 per cent. Germany’s DAX and France’s CAC 40 edged up 0.42 per cent and 0.50 per cent, respectively.
In Asia, Japan’s Nikkei ended the day down 1.22 per cent after Wall Street’s weak hand off. Markets in Hong Kong and China were closed for public holidays.
Commodities
Crude prices changed course and turned higher by late morning despite record high U.S. inventories and market jitters over the rise in coronavirus infections in some regions.
The day range on Brent so far is US$39.47 to US$41.07. The range on West Texas Intermediate is US$37.13 to US$38.72. Both benchmarks were up slightly less than 1 per cent just before 11 a.m. ET after spending much of the morning in the red.
Brent crude fell more than 5 per cent on Wednesday while WTI shed US$2.36 a barrel.
Those declines came after the U.S. Energy Information Administration said weekly U.S. crude stocks rose $1.4-million barrels to a record high.
“The energy market is a good barometer for global demand, and seeing as there are renewed fears of a second wave of COVID-19 cases, it was understandable that oil lost ground,” David Madden, market analyst with CMC Markets U.K., said.
“There are creeping concerns that lockdown restrictions could become tougher again, which is why WTI and Brent crude fell. The revised growth outlook from the IMF was a factor in the declines too as demand is likely to dip."
On Wednesday, the International Monetary Fund’s latest global forecast predicted a deeper recession that previously expected as world economies struggle to rebound from the pandemic.
Elsewhere, gold held steady after nearing its best level in eight years during the previous session.
Spot gold was up 0.3 per cent at US$1,765.94 per ounce, not far from the peak of $1,779.06 reached on Wednesday. That was its highest level since October 2012.
U.S. gold futures rose 0.1 per cent to US$1,777.20.
“Gold prices continue to be supported by the increase in virus cases globally, raising doubts about the nature of the economic recovery in progress,” National Australia Bank economist John Sharma said.
Currencies
The Canadian dollar slipped in early going, adding to the previous session’s declines, as major global currencies moving in fairly tight ranges.
The day range on the loonie is 73.17 US cents to 73.46 US cents.
There were no major economic releases on the calendar.
On Wednesday, Fitch downgraded Canada’s sovereign debt rating to AA+. The decision was the result of an increase in federal and provincial government debt in response to COVID-19.
“The Canadian dollar only briefly weakened upon the announcement before shrugging off the downgrade as Canada’s fiscal standing is far from being an outlier in the face of the pandemic; IMF projections put Canada’s 2020 government deficit below that of all major advanced nations with the exception of Australia and Germany,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
“While we await news on whether the U.S. will impose tariffs on Canadian aluminum imports, the CAD will trade in line with the broad risk backdrop in markets.”
On global markets, the U.S. dollar edged higher as investors sought out safer holdings.
The U.S. dollar index rose 0.1 per cent to 97.30 but remained below a 2020 high of near 103 in late March.
“A plethora of bad news about the virus led to a major sell-off in risk assets yesterday as volatility returned to financial markets once again,” Deutsche Bank analysts said in a note.
The euro slid to US$1.1242. The British pound fell to US$1.2410, according to Reuters.
Commodity currencies, which had been supported by a rally in oil prices, also slipped. The Australian dollar dropped for a second straight day to 68.61 US cents.
More company news
Shares in Wirecard dropped by 79.68 per cent on Thursday as they re-opened after being suspended because the payments company filed for insolvency. Wirecard said it was filing for insolvency after disclosing a US$2.1-billion financial hole in its accounts, becoming the first sitting member of Germany’s blue-chip share index DAX to go out of business.
Lufthansa shares jumped around 15 per cent on Thursday after its top shareholder dropped his objections to a US$10-billion government bailout for the German airline brought to the brink of collapse by the COVID-19 pandemic. “I will vote for the proposal,” billionaire investor Heinz Hermann Thiele, who recently increased his stake in Lufthansa to 15.5 per cent, told the Frankfurter Allgemeine daily on Wednesday.
Alphabet’s Google on Thursday took a step to resolving its spat with publishers, saying it would pay some media groups in Australia, Brazil and Germany for high-quality content and expects to do more deals with others. The U.S. internet giant has for years tried to fend off demands for payment from news publishers worldwide in return for using their content, with European media groups among their fiercest critics. “Today, we are announcing a licensing programme to pay publishers for high-quality content for a news experience launching later this year,” Brad Bender, Google’s vice-president for news, said in a blogpost.
Macy’s Inc said it would lay off about 3,900 employees in corporate and management positions to help lessen some of the financial strain of dwindling sales due to the COVID-19 pandemic. The department store chain, which had about 123,000 employees at the end of January, said it expects to save about US$365-million in fiscal 2020 and about US$630-million on an annual basis as a result of these layoffs.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of June 20.
(8:30 a.m. ET) U.S. real GDP for Q1.
(8:30 a.m. ET) U.S. durable goods orders for May.
With Reuters and The Canadian Press
Terry Weber