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Equities

North American indexes sought direction at the start of trading Thursday with U.S. investors weighing a better-than-expecting reading on jobless claims against the continued rise of coronavirus infections in some regions.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 3.5 points, or 0.02%, at 15,632.69.

In the U.S., the Dow Jones Industrial Average rose 27.64 points, or 0.11 per cent, at the open to 26,094.92. The S&P 500 opened higher by 6.23 points, or 0.20 per cent, at 3,176.17, while the Nasdaq Composite gained 71.22 points, or 0.68 per cent, to 10,563.72 at the opening bell.

Ahead of the open, the U.S. Labor Department said initial claims for state unemployment benefits totalled 1.314 million last week, better than market expectations although still elevated. Continuing claims, which offer a look at how many people are collecting ongoing benefits, also came in below expectations.

“The stock markets are increasingly shifting away from the underlying economic fundamentals. The valuations are now strongly driven by stimulus expectations,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.

She said bad news is perceived as good for more stimulus and supports the rally in big U.S. stocks.

“The certainty that money will continue pouring into the financial markets give a piece of mind to risk investors,” she said.

In this country, investors will get retail earnings when Aritzia Inc. reports its latest quarterly results after the close of trading. The Vancouver-based clothing company has already said, even with buoyant e-commerce sales during the lockdown, it expects revenue to dip by 45 per cent in the quarter. Aritzia said previously that it expects first-quarter revenue to be in the range of $105-million to $110-million.

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Overseas, major European markets were mostly higher by afternoon. The pan-European STOXX 600 rose 0.34 per cent. Britain’s FTSE 100 dipped 0.47 per cent. On Wednesday, British Finance Minister Rishi Sunak announced a fresh stimulus package to bolster the economy which included bonuses for business calling employees back to work and restaurant discounts to encourage people to eat out from Monday to Wednesday through to August.

Germany’s DAX gained 1.53 per cent. France’s CAC 40 rose 0.22 per cent.

In Asia, Chinese stocks continued their winning streak. The Shanghai Composite Index ended up 1.39 per cent.

Hong Kong’s Hang Seng gained 0.31 per cent. Japan’s Nikkei advanced 0.4 per cent.

Commodities

Crude prices were steady in early going as rising coronavirus infections in the U.S. and other countries raise concerns about the pace of the recovery in demand and investors look ahead to next weeks meeting of OPEC members and their allies.

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The day range on Brent is US$43.02 to US$43.37. The range on West Texas Intermediate is US$40.61 to US$40.99.

AxiCorp chief market strategist Stephen Innes noted WTI managed to hold above the psychologically important US$40 mark despite a rise in weekly inventories.

The U.S. Energy Information Administration reported that crude stocks last week rose by 5.7 million barrels. However, gasoline inventories fell 4.8 million barrels on a week-to-week basis as the summer driving season begins.

“It is not about the soft rolling lockdowns per se,” he said. “It is about consumers fighting fear when it comes to the virus, which is arguably best viewed through gasoline demand.”

Spiking virus infections in some regions of the U.S. has raised the possibility of renewed lockdowns that could hamper the recovery in demand.

Meanwhile, markets are now looking ahead to the July 15 meeting of OPEC and its allies, which is expected to address current production cuts. The cuts run through to the end of this month.

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In other commodities, gold held above US$1,800.

Spot gold was little changed at US$1,812.35 per ounce, after rising to its highest since September 2011 at US$1,817.71 on Wednesday. U.S. gold futures inched up 0.1 per cent to $1,822.10.

Currencies

The Canadian dollar was trading above 74 US cents early Thursday as its U.S. counterpart lost ground against world currencies.

The day range on the loonie so far is 73.94 US cents to 74.10 US cents.

“All of the developed currencies are up vs the U.S. dollar as July gets underway, but Canadian dollar is the clear laggard,” RBC FX strategy associate Daria Parkhomenko said in an early note.

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On the Canadian economic calendar, Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts rose 8.3 per cent in June to 211,681. The rate of urban starts rose by 8.7 per cent. The loonie showed little reaction to those numbers.

On global markets, Reuters reports that the rally in global equities and commodities has put a dent in safe-haven demand for the greenback.

China’s yuan rose to a four-month high against the U.S. dollar, extending recent gains as investors increased positions in Chinese stocks due to growing signs of a recovery in that economy, the news agency said. The Chinese yuan rose to 6.9808 in the offshore market and was last up 0.2 per cent against the U.S. dollar .

The euro was up 0.2 per cent at US$1.1355. The British pound rose 0.3 per cent to US$1.2647, a three-week high.

More company news

France’s TGV high-speed train maker Alstom on Thursday offered to sell a French rail factory and make other concessions to win European Commission approval for its planned purchase of Bombardier Inc’s transportation business. The commitments also included selling Alstom’s Coradia Polyvalent - a range of regional trains - and divesting a Bombardier commuter trains division and the production facilities attached to that at its Hennigsdorf site in Germany.

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German state prosecutors are investigating Wirecard for suspected money laundering, a spokeswoman for the Munich prosecutor’s office said on Thursday. “We are investigating suspected money laundering,” the spokeswoman told Reuters, saying the inquiry was directed at individuals from Wirecard. She said it followed a number of criminal complaints this year and last.

The Globe and Mail reports two Toronto investors are proposing to offer about $58-million for the company that publishes the Toronto Star newspaper in a competing bid that would up the ante on a friendly deal by about 14 per cent, according to sources familiar with the situation. Matthew Proud, chief executive officer of Dye & Durham Corp., and his brother Tyler Proud, CEO of technology company Avesdo Inc., have approached the board of Torstar Corp. through a holding company they control with a proposal to pay 72 cents a share, the sources said. They added that the pair hope to beat an agreed offer of 63 cents from Jordan Bitove’s and Paul Rivett’s NordStar Capital.

Walgreens Boots Alliance Inc reported a loss for the third quarter compared with a profit a year earlier, hurt by non-cash impairment charges of US$2-billion as COVID-19 dirupted business at its Boots UK division. Net loss attributable to Walgreens was US$1.71-billion, or US$1.95 per share, in the quarter ended May 31, versus a profit of US$1.03-billion, or US$1.13 per share, a year earlier. Revenue rose marginally to US$34.63-billion.

Economic news

Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts rose 8.3 per cent in June to 211,681. The rate of urban starts rose by 8.7 per cent.

U.S. initial claims for state unemployment benefits totalled a seasonally adjusted 1.314 million for the week ended July 4, down from 1.413 million in the prior week, the U.S. Labor Department said. Economists polled by Reuters had forecast 1.375 million applications in the latest week.

(10 a.m. ET) U.S. wholesale trade for May. Estimate is a decline of 1.2 per cent from April.

With Reuters and The Canadian Press

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