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.
Canada’s main stock index started higher Thursday, helped by a positive reading on this country’s factory sector. South of the border, major indexes also opened up with optimism over a new COVID-19 stimulus plans and an improving employment bolstering investor sentiment.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 61.74 points, or 0.38%, at 16,183.12.
In the U.S., the Dow Jones Industrial Average rose 158.93 points, or 0.57 per cent, at the open to 27,940.63.
The S&P 500 opened higher by 22.87 points, or 0.68 per cent, at 3,385.87, while the Nasdaq Composite gained 124.49 points, or 1.11 per cent, to 11,291.99 at the opening bell.
“Investors are still hopeful that Republicans and Democrats will be able to agree on another massive stimulus package before the recovery loses momentum,” AxiCorp market analyst Milan Cutkovic said. "Time is running out, and the longer the negotiations drag on, the greater the risk to the economy.
“However, the latest economic figures are reassuring investors to some degree and signal that it is not too late to take decisive measures to support the economy.”
On Wednesday, U.S. Treasury Secretary Steven Mnuchin said talks with House Speaker Nancy Pelosi made progress on COVID-19 relief legislation, and the House of Representatives postponed a vote on a US$2.2-trillion Democratic coronavirus plan to allow more time for a bipartisan deal to be negotiated.
Ahead of the open, investors will also got a better-than-expected on weekly U.S. jobless claims. The U.S. Labor Department said 837,000 people applied for first-time state unemployment benefits last week down from 873,000 the week before. Markets had been expecting a number closer to 850,000 in the latest report.
Meanwhile, new figures in this country showed that Canadian manufacturing activity expanded in September at its fasted pace in more than two years. The IHS Markit Canada Manufacturing Purchasing Managers' index (PMI) rose to a seasonally adjusted 56.0 in September, its highest level since August 2018, from 55.1 in the prior month. A reading above 50 indicates expansion in the sector.
Overseas, a hardware failure shut down trading on the Tokyo Stock Exchange on Thursday. It was the worst outage on record for the world’s third biggest stock market. The delay marked the first full-day suspension since the exchange began all-electronic trading in 1999. The exchange is expected to reopen on Friday.
Elsewhere in Asia, markets in Hong Kong and China were closed for holidays.
In Europe, the pan-European STOXX 600 edged up 0.40 per cent in afternoon trading. Britain’s FTSE 100 gained 0.06 per cent. Germany’s DAX slid 0.08 per cent and France’s CAC 40 added 0.57 per cent.
European markets drew support from a new survey showing that he euro zone manufacturing recovery gathered pace last month, largely driven by strength in Germany. IHS Markit’s final Manufacturing Purchasing Managers' Index climbed to 53.7 in September from August’s 51.7, in line with an earlier flash reading and its highest level since August 2018. Anything above 50 indicates growth.
Crude prices slid as an increase in OPEC output and continued demand concerns weighed on sentiment, although signs of progress in U.S. stimulus talks helped put a floor under declines.
The day range on Brent so far is US$41.83 to US$42.56. The range on West Texas Intermediate. The range on West Texas Intermediate is US$39.72 to US$40.47.
A Reuters survey found that supply from OPEC members rose 160,000 barrels per day from August.
The increase was mainly the results of higher supplies from Libya and Iran. Both are exempt from the current supply agreement between OPEC and its allies.
Meanwhile, rising coronavirus infections around the globe continue to raise concerns about the recovery in crude demand.
“It’s hard to see a scenario in the near-term where travel gets back to pre-pandemic levels, and even with a vaccine in the pipeline (several of them, actually), there are genuine concerns that ‘normal’ as we knew it before February, isn’t coming back any time soon,” AxiCorp chief global market strategist Stephen Innes said in a note.
Still, Mr. Innes also noted that markets are getting some support from the latest developments in the U.S. stimulus talks.
“Global risk appetite, to which oil prices remain very much tethered, is benefiting from positive noises around a stimulus deal from Washington,” he said.
In other commodities, gold rose, helped by an easing U.S. dollar.
Spot gold rose 0.7 per cent to US$1,898.79 per ounce, starting October on a positive note after recording its biggest monthly drop since late November 2016 in September.
U.S. gold futures were 0.3 per cent at US$1,902.00 per ounce.
“There’s a bit of relief that the [U.S.] dollar rally has for the most part ended and it seems many investors are more focused on the headwinds ahead of the global economic recovery,” Edward Moya, a senior market analyst at OANDA in New York, said.
The Canadian dollar gained in early going as its U.S. counterpart pulled back against global currencies amid increased optimism over a possible deal on a new U.S. coronavirus stimulus package.
The day range on the loonie is 75.04 US cents to 75.30 US cents.
“The CAD has made a little further progress against the softer USD through the overnight session, rising on the back of positive risk sentiment that has helped the CAD’s commodity cousins—the AUD and NZD—a little more relatively once again,” Shaun Osborne, chief FX strategist with Scotiabank, said in an early note.
On world markets, the U.S. dollar fell to a nine-day low as investors shifted to riskier holdings. The U.S. dollar index, which weighs the greenback against a selection of global currencies, slid to 93.61, its weakest since Sept. 22.
The euro was last trading at US$1.1735, up 0.1 per cent on the day.
The Australian dollar rose 0.3 per cent at US$0.7186, having earlier touched US$0.7197, its highest since Sept. 22. The Norwegian crown increased to the same milestone, before giving back some of those gains to trade up 0.3 per cent at 9.2930, according to figures from Reuters.
The British pound fell 0.3 per cent against the U.S. dollar at US$1.2881. It also shed 0.2 per cent against the euro to trade at 91.08 pence.
More company news
PepsiCo Inc forecast full-year profit above market expectations, as consumers buy more of its snacks such as Doritos and Cheetos while staying indoors due to the COVID-19 pandemic. The company said net revenue rose to $18.09-billion from $17.19-billion in the third quarter ended Sept. 5. Analysts had expected revenue of $17.23-billion, according to IBES data from Refinitiv. It forecast full-year core earnings of $5.50 per share, above expectations of $5.36.
Goldman Sachs Group Inc plans to move forward with “a modest number of layoffs”, a company spokesperson said on Wednesday, months after the Wall Street bank paused job cuts due to the COVID-19 pandemic. Bloomberg News, which first reported about the layoffs, said the bank was looking to cut about 400 jobs, or roughly 1 per cent of its workforce, citing people familiar with the matter.
Volkswagen is drawing up plans to set up Lamborghini as a more independent unit, and is discussing long-term supply deals that could make it easier to list it on the stock exchange, two sources familiar with the matter told Reuters. “Volkswagen is in the process of carving out Lamborghini, and to organize future supply and technology transfer deals,” one of the sources familiar with the matter told the news agency.
H&M plans to close hundreds of stores next year as the coronavirus crisis drives more shoppers online, the world’s second biggest fashion retailer said on Thursday, after reporting a smaller than expected drop in third-quarter profit. H&M, which over decades expanded its network of shops around the world, will aim to cut their number by a net 250 next year, representing 5% of its current network.
(8:30 a.m. ET) Canadian building permits for August.
(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 26.
(8:30 a.m. ET) U.S. personal spending for August.
(8:30 a.m. ET) U.S. personal income for August.
(8:30 a.m. ET) U.S. Core PCE Price Index for August.
(9:30 a.m. ET) Canada’s Markit Manufacturing PMI for September.
(9:45 a.m. ET) U.S. Markit Manufacturing PMI for September.
(10 a.m. ET) U.S. ISM Index for September. Consensus is 56.0, unchanged from August.
(10 a.m. ET) U.S. construction spending for August. The Street expects a rise of 0.8 per cent from July.
With Reuters and The Canadian Press