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Equities
Canada’s main stock index opened higher Thursday with rising crude prices bolstering energy stocks. In the U.S. major indexes also traded up at the opening bell with investors becoming increasingly optimistic about U.S. stimulus talks.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 53.57 points, or 0.33 per cent, at 16,481.87.
The Dow Jones Industrial Average rose 45.40 points, or 0.16 per cent, at the open to 28,348.86.
The S&P 500 opened higher by 14.83 points, or 0.43 per cent, at 3,434.28, while the Nasdaq Composite gained 78.75 points, or 0.69 per cent, to 11,443.35 at the opening bell.
Initially markets had been rattled by a tweet from U.S. President Donald Trump that he was halting stimulus talks until after the election. However, subsequent tweets raised the prospect of more piecemeal approach, including a possible airline relief bill. U.S. House Speaker Nancy Pelosi signaled openness to such a measure. Early Thursday, Mr. Trump indicated that the two sides are starting to have some “very productive” talks.
“If the last 24 hours has taught us anything about financial markets, it is that the U.S. presidential election and its evolution is becoming the most critical driver of volatility in the markets,” OANDA senior market analyst Jeffrey Halley said.
“With Election Day less than four weeks away, we can expect market volatility to increase and economic data to be overshadowed by election noise. Traders should be ready for much more two-way volatility in the next weeks and much less omnidirectional price action.”
Wednesday night, investors also got the debate between U.S. Vice-President Mike Pence and Democrat challenger Kamala Harris, with the U.S. response to the coronavius among key topics.
"The vice presidential debate was widely seen as much more balanced than the Trump-Biden clash. RBC chief currency strategist Adam Cole said. “Although post-debate polls have Harris as the ‘winner’, election betting markets changed little, with the probability of a Democrat victory unchanged and close to recent highs (65%).”
Ahead of the start of trading, U.S. markets also got the latest reading on U.S. jobless claims. The U.S. Labor Department said initial claims for state unemployment benefits edged lower to 840,000 last week, from a revised 849,000 the prior week. Economists had been expecting to see a modest decline.
On the corporate side, shares of IBM were up about 7 per cent in early trading after the company said it would spin off the managed infrastructure services unit of its Global Technology Services division into a new public company. The company said it aims to become more focused on cloud software and solutions as a result of the move.
In this country, the economy will be at the forefront. Bank of Canada governor Tiff Macklem said in a speech to the Global Risk Institute that the next few months will be crucial in gauging how Canadian households and businesses weather the COVID-19 crisis. He also said that early policy response was necessary but also leaves the economy and financial system exposed to economic shocks.
Overseas, the pan-European STOXX 600 gained 0.39 per cent with travel stocks among the gainers. Britain’s FTSE 100 slid 0.14 per cent. Germany’s DAX and France’s CAC 40 rose 0.41 per cent and 0.21 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.96 per cent. Hong Kong’s Hang Seng slid 0.2 per cent.
Commodities
Crude prices gained with supply issues in focus amid output shutdowns in the Gulf of Mexico and a strike in Norway affecting production.
The day range on Brent is US$41.86 to US$42.65. The range on West Texas Intermediate is US$39.76 to US$40.51. Both benchmarks lost more than 1 per cent after the U.S. Energy Information Administration reported a weekly rise in crude inventories.
Prices on Thursday drew some support from reports that workers have withdrawn from offshore U.S. Gulf production facilities as Hurricane Delta was forecast to intensify into a Category 3 storm. Nearly 1.5 million barrels of daily output was halted, according to Reuters.
A continued strike in the sector in Norway also factored into this morning’s action, raising the possibility of production outages in the North Sea.
The Johan Sverdrup field, the North Sea’s largest, will have to shut production unless the strike ends by Oct. 14.
In other commodities, gold prices gained on a weaker U.S. dollar and optimism over the prospect of U.S. coronavirus stimulus.
Spot gold rose 0.3 per cent to US$1,892.01 per ounce. U.S. gold futures were up 0.3 per cent at US$1,896.
“The dip in the [U.S.] dollar yesterday helped silver and gold,” CMC Markets analyst David Madden said. “It is worth noting that gold suffered a sizeable fall on Tuesday so it was starting from a relatively low base.”
Currencies
The Canadian dollar was firmer in early going, bolstered by improved risk sentiment, as its U.S. counterpart slid on world markets amid improving optimism over the prospect for a new government stimulus.
The day range on the loonie was 75.34 US cents to 75.57 US cents. The loonie was last near the upper end of that spread.
“FX markets are quiet overnight, without a clear theme to trade off,” RBC chief currency strategist Adam Cole said.
For the loonie, the key event of the day will be remarks by Bank of Canada Governor Tiff Macklem. He speaks by teleconference at the Global Risk Institute on the evolution of risks during the pandemic. The speech is scheduled for 8:30 a.m. ET.
On global markets, the safe-haven yen fell to a three-week low of 106.11 against the U.S. dollar as risk sentiment improved.
Against a basket of currencies, the U.S. dollar was down 0.1 per cent. The euro edged up to US$1.1782. The risk-sensitive Australian dollar rose 0.3 per cent to $0.7163, according to figures from Reuters.
The New Zealand dollar was the biggest loser among G10 currencies, falling as much as half a percent after central bank officials again hinted that negative interest rates are possible. It recovered in early trading in London to gain 0.1 per cent against the U.S. dollar.
“NZD is a marginal underperformer as RBNZ Chief Economist [Yuong] Ha said the Bank would rather deliver too much stimulus than too little,” Mr. Cole said.
More company news
Samsung Electronics Co Ltd said its third-quarter profit likely jumped 58 per cent to the highest in two years, beating analysts' estimates as U.S. restrictions on China’s Huawei boosted the South Korean tech giant’s phone and chip sales. U.S. action against Huawei Technologies Co Ltd has dampened demand for its phones outside of China, giving Samsung a leg up, analysts said. The Chinese firm has also hurried to order more chips from Samsung after Washington moved to choke its access to commercially available chips from mid-September.
Morgan Stanley said on Thursday it will acquire investment management firm Eaton Vance Corp for about US$7-billion in a cash-and-stock deal.
French appeals court on Thursday confirmed the country’s antitrust authority’s order to U.S. tech firm Google to pay French publishing companies and news agencies for their content. France’s competition authority ruled in April that Google had to pay French publishing companies and news agencies for re-using their content.
Activist investor Daniel Loeb on Wednesday urged Walt Disney Co to forgo paying a dividend and use the cash to make and buy more programming for its Disney+ streaming service as it battles tech giants Netflix and Amazon. Loeb, whose hedge fund Third Point bought into Disney during the second quarter, said the company could double the programming budget for Disney+ by reallocating a dividend of a few dollars per share.
McDonald’s Corp global sales improved in the third quarter versus the second quarter, down just 2.2% year over year, as drive-thru orders surged and special promotions lifted sales to double-digit percentage increases in September, the company said on Thursday. Comparable sales had plunged nearly 24% the previous quarter as dining rooms shut and U.S. customers stayed home during the early months of the coronavirus pandemic.
Economic news
Canada Mortgage and Housing Corp. says the seasonally adjusted annual rate of housing starts for all areas in Canada was 208,980 units in September, a decrease of 20.1 per cent from 261,547 units in August.
The U.S. Labor Department said initial claims for state unemployment benefits edged lower to 840,000 last week, from a revised 849,000 the prior week.
With Reuters and The Canadian Press
Terry Weber