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Equities

Canada’s main stock index fell at the start of trading Thursday as concerns the state of the global economic rebound weighed on markets. Wall Street’s main indexes also fell at the open after the latest reading on weekly jobless claims fell short of forecasts.

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At 9:41 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 88.12 points, or 0.56%, at 15,728.99.

In the U.S., the Dow Jones Industrial Average fell 47.04 points, or 0.18 per cent, at the open to 26,716.09. The S&P 500 opened lower by 10.78 points, or 0.33 per cent, at 3,226.14, while the Nasdaq Composite dropped 81.97 points, or 0.77 per cent, to 10,551.02 at the opening bell.

“The stock market recovery was short-lived,” Milan Cutkovic, market analyst with AxiCorp, said.

“The U.S. Federal Reserve unsettled investors with its pessimistic outlook and emphasized that more stimulus measures by the government are necessary to ensure a continuation of the economic recovery.”

However, he said, no agreement between the Democrats and the Republicans is in sight in Washington “and investors are slowly giving up hope that a major stimulus package will be passed ahead of the presidential election in November.”

Ahead of the start of trading, the U.S. Labor Department said weekly claims for initial state unemployment benefits totalled 870,000, up from the prior week’s 866,000 and above the 840,000 markets had been forecasting.

Sentiment was further tempered by comments from U.S. President Donald Trump in which he wouldn’t commit to a peaceful transfer of power if he loses the U.S. election in November.

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In this country, BlackBerry topped analysts' revenue forecasts in the latest quarter.

Total revenue for the second quarter ended Aug. 31 was $259-million, higher than analysts' estimates of $237.6 million, according IBES data from Refinitiv. The company’s net loss narrowed to $23-million, or 4 cents per share, from $44-million, or 10 cents per share, a year earlier.

BlackBerry shares were up more than 6 per cent in morning trading in Toronto.

Investors will also continue to weigh the impact of Wednesday’s Throne Speech. The Globe reports that the Throne Speech pledges largely fell into two categories: how the government plans to manage the health and economic consequences of the pandemic over the coming months; and how it plans to tackle the issue of stimulating an economic recovery as the crisis begins to ease.

“Throne Speeches are normally long on rhetoric and bold statements, and short on specifics, but there was some real meat and hard numbers in today’s effort,” BMO chief economist Douglas Porter said in a note.

“The government avowed that it will be guided by “sustainability and prudence”, but the key takeaway from a near-term perspective is that the “fiscal firepower” will do “whatever it takes” to get the economy through this highly unfortunate episode.”

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Overseas, the pan-European STOXX 600 was down 0.54 per cent in afternoon trading. Britain’s FTSE 100 fell 0.62 per cent. Germany’s DAX and France’s CAC 40 lost 0.17 per cent and 0.31 per cent, respectively.

In Asia, markets closed lower in the wake of Wall Street’s weak handoff. Japan’s Nikkei fell 1.11 per cent. Hong Kong’s Hang Seng ended down 1.82 per cent.

Commodities

Crude prices steadied as economic concerns and the potential impact on demand offset a drop in weekly U.S. inventories.

The day range on Brent so far is US$41.27 to US$41.72. The range on West Texas Intermediate is US$39.12 to US$39.81.

Volatile markets amid rising coronavirus infections and increased restrictions in some countries have sent investors to safer assets like the U.S. dollar, making crude prices less attractive to buyers from other countries because it is priced in that currency.

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“Choppy price action persists as soft lockdowns are a double-edged sword as empowering people to social distance could keep the economy open,” AxiCorp chief global market strategist Stephen Innes said.

“I still think oil prices can shift both ways in this environment, especially with the bullish EIA data inputs, but there is no easy trade out here, so you need to stay on your toes.”

On Wednesday, the U.S. Energy Information Administration said U.S. crude and fuel inventories fell last week. Gasoline inventories fell more than expected, dropping by 4 million barrels, and distillate stockpiles posted a surprise drawdown of 3.4 million barrels.

However, Reuters reports that fuel demand in the U.S. remains subdued as the pandemic limits travel. The four-week average of gasoline demand was 8.5 million barrels per day (bpd) last week, the government data showed, down 9 per cent from a year ago.

Elsewhere, gold fell to its lowest level in more than two months, hit by a strong U.S. dollar.

Spot gold fell 0.3 per cent to US$1,857.36 per ounce. Earlier in the session, it hit its lowest since July 22 at US$1,847.99. U.S. gold futures were down 0.4 per cent at $1,860.70.

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Currencies

The Canadian dollar was weaker, trading below 75 US cents, as crude prices fell and flagging risk sentiment drove investors to the greenback.

The day range on the loonie so far is 74.55 US cents to 74.78 US cents

There were no major Canadian economic releases on the calendar.

“The CAD will remain at the whim of the broad dollar mood for the next few days with only next Wednesday’s Jul/Aug monthly GDP print possibly acting to differentiate the currency from the pack,” Shaun Osborne, chief FX strategist with Scotiabank, said.

On global markets, the U.S. dollar hit its best level in two months as concerns about the economic rebound persist and rising infections around the world help boost the currency’s appeal as a safer holding. U.S. Federal Reserve Vice Chair Richard Clarida said on Wednesday that the U.S. economy remained in a “deep hole” of joblessness and weak demand and called for more fiscal stimulus, Reuters reported.

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Against a basket of six other currencies, the dollar edged up 0.1 per cent to a two-month high at 94.50. The U.S. dollar index is up about 2 per cent so far this week.

“Optimism on the recovery, optimism on the virus, and bets on stimulus were keeping markets well bid, and on all three of these issues, there has been a degree of disappointment this month,” John Velis, an FX and macro strategist at BNY Mellon, said.

The British pound wavered but remained above US$1.27 before an announcement of Britain’s plans to protect jobs and employment later in the session.

More company news

Facebook Inc’s long-delayed independent Oversight Board plans to launch in mid-late October, just before the November U.S. presidential election, although a board member said he did not know whether it would hear cases related to the contest. The board, announced by Facebook in response to criticism of its handling of problematic content, will initially have the power to review decisions to take down posts from Facebook and Instagram, and recommend policy changes.

U.S. motorcycle maker Harley-Davidson said on Thursday it expects to report $75-million in additional restructuring costs for 2020 related to actions including discontinuing its sales and manufacturing operations in India. The company said it now expects total restructuring costs of about$169-million in 2020.

Broadcasting company E.W. Scripps Co will buy entertainment firm ION Media in a $2.65-billion deal, the companies said on Thursday. Shares of E.W. Scripps rose nearly 38% in premarket trading after the Wall Street Journal first reported the deal.

CI Financial Corp. and its Assante Wealth Management (Canada) Ltd. subsidiary have signed a deal to acquire a minority share in Assante’s operation in Dorval, Que. The companies say it’s the first direct equity investment in a regional or local operation for Assante, as the offices are typically owned by an adviser or adviser team. Financial terms of the agreement were not immediately available.

Economic news

(8:30 a.m. ET) Canada’s Survey of Employment, Payrolls and Hours for July.

(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 19.

(10 a.m. ET) U.S. new home sales for August.

With Reuters and The Canadian Press

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