Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index dipped at the start of trading Thursday with crude prices slipping after the International Energy Agency cut its demand forecast. South of the border, the S&P 500 and Dow both struggled at the open even as initial jobless claims fell below 1 million for the first time since March.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 16.67 points, or 0.1 per cent, at 16,558.61.
On Wall Street, the Dow Jones Industrial Average fell 54.33 points, or 0.19 per cent, at the open to 27,922.51 and the S&P 500 opened lower by 7.40 points, or 0.22 per cent, at 3,372.95.
The Nasdaq Composite gained 14.62 points, or 0.13 per cent, to 11,026.86 at the opening bell.
Ahead of the start of trading, the U.S. Labor Department said initial claims for state unemployment last week totaled 963,000. That was the first time they fell below 1 million since the start of the pandemic. However, economists also suggested the decline could reflect the expiration of recent unemployment supplements, resulting in fewer people filing applications.
“Overall, market sentiment remains positive, and investors are hopeful that Democrats and Republicans will soon agree on another U.S. coronavirus aid package,” Milan Cutkovic, market analyst at AxiCorp, said.
“U.S. stock markets could soon reach a new all-time high, which considering the numerous uncertainties, is extremely impressive.”
At this point, investors are still awaiting concrete development in talks in Washington over a coronavirus relief package. Despite the lack of movement, Mr. Cutkovic said investors continue to anticipate massive stimulus measures and are assuming that accomodative monetary policy both in the U.S. and Europe will continue for a long time.
“With markets being flooded with cheap money, stocks remain attractive,” he said. “However, despite or because of the imposing recovery rally, investors should expect occasional volatility spikes and turbulences in the near future.”
In this country, investors got earnings from Brookfield Asset Management and Chorus Aviation.
Elsewhere, shares of Investment dealer GMP Capital rose nearly 4 per cent per cent in early trading in Toronto after reworking the proposed $420-million takeover of its wealth management subsidiary to better reflect the realities of a post-pandemic market.
Overseas, the pan-European STOXX 600 was down 0.50 per cent in afternoon trading. Britain’s FTSE 100 fell 1.18 per cent. Germany’s DAX and France’s CAC 40 fell 0.42 per cent and 0.43 per cent, respectively.
Asian markets had a mixed session with Japan’s Nikkei gaining 1.78 per cent and the Shanghai Composite Index adding 0.04 per cent. Hong Kong’s Hang Seng fell 0.05 per cent.
Commodities
Crude prices slid after the International Energy Agency cut its oil demand forecast, offsetting gains made on the back of bigger-than-expected declines in U.S. inventories.
The day range on Brent so far is US$45.14 to US$45.58. The range on West Texas Intermediate is US$42.40 to US$43.84. Brent gained about 2 per cent on Wednesday while WTI rose 2.6 per cent.
Early Thursday, the IEA cut its 2020 oil demand forecast and said reduced air travel because of the COVID-19 pandemic would lower global oil consumption this year by 8.1 million barrels per day.
In its monthly forecast, OPEC also said it now expects world demand to fall by about 9.06 million barrels a day. That’s more than the 8.95 million-barrel decline the group had predicted a month ago.
However, the negative impact of those reports was blunted by the latest U.S. weekly inventory figures, which showed that oil, gasoline and distillate stocks all fell last week.
The Energy Information Administration said crude inventories fell by 4.5 million barrels last week, more than the 2.9 million-barrel decline markets had been expecting.
Reuters also reports that U.S. fuel demand rose to 19.37 million barrels per day last week, the highest since March while crude output dropped to 10.7 million barrels per day from 11 million bpd.
“Oil remains a very much improved patient after getting thumped by the COVID-19 beat down this year, but OPEC+ has delivered a healthy dose of medicine through the lengthy production cut while introducing the principle of compensation, AxiCorp chief global markets strategist Stephen Innes said in a note.
“The first key question will be how long this solidity can last before some members become more eager to restore output,” he said.
Early Thursday, Russian news agencies reported that Russian Energy Minister Alexander Novak does not expect any quick decisions on output cuts when an OPEC+ group monitoring committee meets next week. The group has been cutting production since May in a bid to shore up prices.
In other commodities, gold rose on Thursday, helped by a weaker U.S. dollar.
Spot gold was up 0.6 per cent at US$1,929.13 per ounce, a day after slipping below the US$1,900 level in choppy trading. Prices hit a record high of US$2,072.50 on Friday. U.S. gold futures eased 0.5 per cent to US$1,938.90.
Currencies
The Canadian dollar edged higher and was trading in the mid-75-US-cent range as the U.S. dollar slipped against world currencies with U.S. stimulus talks remaining deadocked.
The day range on the loonie is 75.43 US cents to 75.63 US cents.
There were no major Canadian economic reports on the calendar.
“After tomorrow’s manufacturing shipments release, CAD domestic drivers are few and far between until next Friday’s June retail sales print,” Shaun Osborne, chief FX strategist with Scotiabank, said. “Thus, the CAD will almost exclusively take its cue from the risk mood in equity markets and crude oil prices.”
Against the euro, the U.S. dollar fell to US$1.1804, continuing the 0.4-per-cent decline seen during the previous session.
The British pound rose 0.15 per cent to $1.3053. The U.S. dollar edged lower against the safe haven Swiss franc to 0.9118, according to Reuters. The U.S. dollar pulled back from a three-week high to trade at 106.78 yen.
The onshore yuan briefly rose to a five-month high before steadying at 6.9421 per dollar. U.S. and Chinese officials are scheduled to meet on Saturday to review the first phase of the trade deal between the two nations.
More company news
Brookfield Asset Management Inc. reported a loss in its latest quarter as it revalued its real estate portfolio lower amid the pandemic. The alternative company said most of its operations continued to generate favourable operating profits, but some of its operating businesses were affected by the economic shutdown in the second quarter. Brookfield said the loss for the quarter attributable to shareholders amounted to US$656-million or 43 US cents per diluted share for the quarter ended June 30. That compared with a profit attributable to shareholders of US$399-million or 24 US cents per diluted share in the same quarter in 2019.
Chorus Aviation Inc. reported its second-quarter profit fell compared with a year ago as the economic impact of COVID-19 took a toll. The company says it earned $29.2-million or 18 cents per diluted share for the quarter ended June 30, down from $38.9-million or 24 cents per diluted share a year ago. Operating revenue fell to $184.2-million compared with $332.5-million in the same quarter last year. On an adjusted basis, Chorus says it earned 13 cents per share for the quarter, down from an adjusted profit of 15 cents per share a year ago.
Cisco Systems Inc forecast first-quarter revenue and profit below Wall Street estimates, as the top network equipment maker struggles with the coronavirus crisis disrupting its supply chains and also forcing clients to hold back spending. Cisco expects current-quarter revenue to fall between 9 per cent and 11 per cent from last year, compared with analysts’ estimate for a 6.87-per-cent drop, according to Refinitiv IBES data. It expects adjusted earnings between 69 cents and 71 cents per share, below estimates of 76 cents. The forecast was released alongside Cisco’s latest quarterly results after Wednesday’s close.
Apple Inc is readying a series of subscription bundles that will let customers sign in for several of the iPhone maker’s digital services at a lower monthly price, Bloomberg News reported on Thursday. The bundles, dubbed “Apple One” inside the Cupertino, California-based company, are planned to launch as early as October alongside the next iPhone line, the report said, citing people with knowledge of the effort.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Aug. 8.
With Reuters and The Canadian Press
Terry Weber