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Equities

Canada’s main stock index traded higher early Thursday, helped by gains in health-care and energy stocks. In the U.S., Wall Street’s major indexes started weaker as investors await further developments in stimulus talks and weigh the latest jobless claims numbers.

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At 9:44 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 36.6 points, or 0.22 per cent, at 16,538.21.

Heath-care stocks were up 1.1 per cent after Bausch Health announced plans to spin off its Bausch + Lomb eye care unit into a separate publicly traded company. Bausch shares gained roughly 11 per cent Thursday morning on the news.

Energy stocks advanced 0.9 per cent with crude prices adding to recent gains. Materials stocks rose 0.4 per cent on the back of high gold prices.

On Wall Street, the Dow Jones Industrial Average fell 30.70 points, or 0.11 per cent, at the open to 27,170.82.

The S&P 500 opened lower by 4.46 points, or 0.13 per cent, at 3,323.31. The Nasdaq Composite dropped 8.42 points, or 0.08 per cent, to 10,989.98 at the opening bell.

Ahead of the start of trading, the U.S. Labor Department said weekly claims for initial state unemployment benefits fell to 1.19 million from 1.435 million the week before. Economists had been expecting a number closer to 1.4 million in the latest report. Despite the improvement, Thursday’s report still marked the 20th straight week that claims remained above 1 million.

Full reports on Canadian and American hiring in July are due on Friday morning.

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U.S. investors are also looking for signs of movement in talks between White House officials and top congressional Democrats over a new COVID-19 relief package. Political wrangling appears to be stalling progress with few clear indications that a deal is near, despite suggestions from Treasury Secretary Steven Mnuchin earlier in the week that an agreement could be reached by Friday.

“Investors have become increasingly concerned that, having struggled to develop a coherent response to the virus itself, the U.S. will now fumble its plan to save the economy<” IG chief market analyst Chris Beauchamp said.

“Having enacted an effective support program for workers earlier in the year, the U.S. now risks worsening the recession as millions more find themselves unemployed and without income. In such an environment, equities in all geographies look vulnerable to a correction, having rallied in no small part on the assumption that government largesse would continue.”

In this country, earnings will be at the forefront. Before the bell, Bombardier, BCE, Quebecor, Onex, Canadian Tire and Tim Hortons-parent Restaurant Brands International all reported their latest quarterly results. Sun Life reports after the close.

Overseas, the pan-European STOXX 600 was down 0.45 per cent in morning trading. Britain’s FTSE 100 fell 1.42 per cent. Early Thursday, the Bank of England held its key rate unchanged at 1 per cent and said it doesn’t expect the economy to recover to its pre-pandemic levels until the end of next year.

Germany’s DAX lost 0.03 per cent and France’s CAC 40 was off 0.62 per cent.

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In Asia, Hong Kong’s Hang Seng ended down 0.69 per cent. Japan’s Nikkei fell 0.43 per cent.

Commodities

Crude prices held near recent highs with a weaker U.S. dollar and declining U.S. inventories helping offset persistent demand concerns.

The day range on Brent is US$44.84 to US$45.55. The range on West Texas Intermediate is US$41.61 to US$42.45.

“Oil hit its highest level since early March [on Wednesday], when it tumbled on the back of the failed OPEC+ meeting where Saudi Arabia and Russia sparked a brief price war,” CMC Markets analyst David Madden said.

“The push higher in the energy market was driven by inventory reports.”

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On Wednesday, the U.S. Energy Information Administration said weekly U.S. crude stocks fell by 7.3 million barrels, more than forecasts. A day earlier, the American Petroleum Institute also reported a bigger-than-expected draw down in inventories.

“Broadly the move in crude inventories is in line with seasonal [trends], as inventories tend to decline through the end of September,” AxiCorp chief market strategist Steven Innes said. “Additionally, total stock in crude is elevated, so it has some room to catch up.”

Crude also drew some support from recent weakness in the U.S. dollar, which makes the commodity cheaper for holders of other currencies. Reuters reports that the U.S. dollar index logged its biggest monthly percentage fall in a decade in July and a Reuters poll found analysts expected it to continue falling into next year. The dollar index wavered early Thursday after weakness in the two previous sessions.

In other commodities, gold prices again flirted with record highs.

Spot gold was just short of the record high touched in the previous session, up 0.6 per cent at US$2,051.44 per ounce. U.S. gold futures rose 0.8 per cent to US$2,064.60.

“Gold is still receiving two essentials for the rally to extend: debt and liquidity,” Mr. Innes said. “But the further drop in real US yields is critical.”

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Currencies

The Canadian dollar was modestly lower in early going as crude prices dipped after recent gains and risk appetite slips on global markets.

The day range on the loonie is 75.25 US cents to 75.50 US cents

The next big economic release for the loonie will be Friday’s July jobs report from Statistics Canada. Economists are expecting to see a gain of about 350,000 new jobs in the report.

On world markets, the U.S. dollar index was weaker overnight, touching a two-year low of 92.495, before edging up 0.1 per cent to 92.713 early Thursday.

“Although we are off the worse-for-wear levels, the USD remains on the defensive, although it is unclear whether this reflects the ‘risk-on’ mood or general USD disdain, the truth likely lies somewhere in the middle,” Mr. Innes said in an early note.

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The euro, meanwhile, reached a two-year high of US$1.1916 towards the end of the Asian session, then slipped back to US$1.1876, according to figures from Reuters. The euro got a lift Wednesday from new PMI figures showing a return to expansion in the euro zone.

The Australian dollar slid 0.1 per cent against the greenback to 71.905 US cents and the New Zealand dollar fell 0.2 per cent to 66.39 US cents.

More company news

The Globe’s Alexandra Posadzki reports that BCE Inc. saw its second-quarter profit plunge 64 per cent to $294-million due to higher expenses, including impairment charges related to some of its Bell Media TV and radio properties. The earnings amounted to 26 cents per share, down from 85 cents per share a year ago and below the consensus analyst estimate of 64 cents per share from S&P Capital IQ. On an adjusted basis, BCE earned 63 cents per share, down 32 per cent from a year ago and below the consensus analyst estimate of 69 cents per share.

Bausch Health Companies Inc said it would spin off its eye care unit, Bausch + Lomb, into a separate publicly listed company, seven years after acquiring it for nearly $9-billion. The company’s shares were up more than 11 per cent in early trading in Toronto.

Canadian Natural Resources Ltd posted a quarterly loss compared with a year-ago profit, as the oil and gas producer suffered from a slump in crude prices and demand due to the COVID-19 pandemic. The company reported a net loss of $310-million, or 26 cents per share, in the second quarter ended June 30, from a profit of $2.83-billion, or $2.36 per share, a year earlier.

Bombardier Inc reported a loss for the second quarter on Thursday, as the Canadian plane and train maker was hit by fewer business jet deliveries due to the COVID-19 pandemic. The company, which is expecting to be cash-flow positive in 2020, said its free cash outflow rose to about $1.04-billion in the quarter ended June 30, from $429-million a year earlier. Adjusted loss before interest, taxes, depreciation and amortization was $319-million, compared with a profit of $312-million a year earlier.

Restaurant Brands International Inc reported a 36.6% fall in quarterly profit, as the COVID-19 pandemic led to a fall in demand for breakfast and coffee at the company’s Tim Hortons chain of restaurants. Net income attributable to the company’s shareholders fell to $163-million, or 35 cents per share, in the second quarter ended June 30, from $257-million, or 55 cents per share, a year earlier. Total company revenue fell to $1.05-billion from $1.40-billion, in line with analysts’ estimates, according to IBES data from Refinitiv.

Retailer Canadian Tire Corp Ltd reported a quarterly loss on Thursday, as coronavirus-led closures, including at its Mark’s, Sport Chek and Helly Hensen stores, hit the company’s retail segment. It posted a net loss attributable to the company shareholders of $20-million in the second quarter ended June 27, compared with a profit of $177.4-million a year earlier. On a per share basis, it posted a loss of 33 cents, compared with a profit of $2.87 per share, a year ago.

Canadian drugmaker Bausch Health Companies Inc said it would spin-off its eye care unit Bausch + Lomb into a separate publicly listed company. Bausch Health, previously known as Valeant, said the spin off would create two companies, one focused on eye health and the other on treatments.

Germany’s Lufthansa said it does not expect air travel demand to return to pre-crisis levels before 2024 as a steep drop in revenue pushed it to its worst-ever quarterly operating loss of 1.7 billion euros (US$2.02-billion). The airline said the collapse in demand for air travel due to the COVID-19 pandemic meant it carried 96% fewer passengers between April and June than a year earlier, leading to an 80% drop in second-quarter revenue to 1.9 billion euros.

Glencore became the first major mining company to scrap its dividend this year, saying on Thursday that the economic outlook was too uncertain because of the coronavirus pandemic and it would instead focus on cutting its debt. The company said its net debt jumped to US$19.7-billion in the first half of the year from $17.6-billion at the end of 2019, mainly because of a fall in oil prices, and that it was also booking a $3.2-billion charge.

Economic news

U.S. weekly jobless claims fell to 1.9 million from 1.435 million in the prior week

With Reuters and The Canadian Press

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