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Equities
Canada’s main stock index started lower Thursday as crude prices added to the previous session’s losses. South of the border, Wall Street saw a mixed start with the S&P 500 and Nasdaq gaining on positive economic news while investors await results from some of the world’s biggest tech names after the close.
The S&P/TSX composite index was down 34.34 points at 15,552.23 just after the open.
In the U.S., the S&P 500 opened higher by 6.54 points, or 0.20 per cent, at 3,277.57 and the Nasdaq Composite gained 59.60 points, or 0.54 per cent, to 11,064.47 at the opening bell.
The Dow Jones Industrial Average fell 38.97 points, or 0.15 per cent, at the open to 26,480.98.
“When the pandemic set in, medical experts warned that even if the virus is controlled during the summer months, the crisis is likely to pick-up in severity as winter approaches,” CMC Markets analyst David Madden said.
“That is exactly what we’re are seeing at the moment. The fear in the markets is nowhere near as bad as it was back in February and March, but the mood music is the worst it has been since spring.”
On Thursday, investors will get results from some of Wall Streets biggest tech companies. Amazon, Apple, Facebook and Google-parent Alphabet are all scheduled to report after the closing bell.
“Starting with Apple, today’s Q4 numbers in terms of product, like handsets and tablets aren’t expected to rip up any trees, though investors will still want to see further inroads with respect to its services revenues, which slipped back a little in Q3,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“Today’s guidance will be crucial in terms of whether we see a rebound in the share price from the highs we saw earlier this month,” he said. “Early indications do look positive with pre orders for the new iPhone in China looking strong.”
For Amazon, he said, the company saw a big jump in costs in the second quarter as the company boosted hiring. Management has said they expected to spend another US$2-billion in the third quarter, with sales seen coming in between US$87-billion and US$93-billion, Mr. Hewson said in a note.
Facebook, meanwhile, has been "circumspect about its third quarter performance, saying it expects to see revenue growth around 10 per cent, he said. In the second quarter, Facebook generated revenue of US$18.7-billion with profit nearly doubling to US$5.18-billion.
In this country, resource stocks are in focus with earnings from TC Energy, Cenovus and Husky Energy. Early this week, Cenovus announced a $3.8-billion deal to acquire Husky. The company has said it expects to cut up to 25 per cent of the combined work force of the two companies after the transaction is complete.
After Wednesday’s close, Suncor reported a loss in the latest quarter and said it would accelerate a previously announced job reduction program.
Elsewhere, Shopify’s third-quarter revenue topped market forecasts. Revenue, for the quarter ended Sept. 30, came in at $767.4-million, well ahead of analysts' estimate of $663.4-million, according to IBES data from Refinitiv.
On the economic side, the U.S. Commerce Department said U.S. GDP rebounded at a 33.1-per-cent annualized rate in the third quarter as pandemic relief fuelled consumer spending. That was the fastest pace since the government started keeping records in 1947 and followed a historic shrinkage rate of 31.4 per cent in the second quarter, according to Reuters.
Separately, the U.S. Labor Department said weekly jobless claims totalled 751,000 last week, slightly better than market forecasts.
Overseas, the pan-European STOXX 600 slid 0.37 per cent by late morning. Britain’s FTSE 100 fell 0.07 per cent. Germany’s DAX shed 0.32 per cent. France’s CAC 40 was down 0.90 per cent.
In Asia, Japan’s Nikkei closed down 0.37 per cent while Hong Kong’s Hang Seng fell 0.49 per cent. The Shanghai Composite Index edged up 0.11 per cent.
Commodities
Crude prices added to the previous session’s losses with new coronavirus restrictions around the world continuing to hammer sentiment.
The day range on Brent is US$38.15 to US$39.45. The range on West Texas Intermediate is US$36.41 to US$37.76. Both benchmarks fell about 5 per cent on Wednesday.
Yesterday, France said it would require people to stay home except for essential activities while Germany announced it would shut bars, restaurants and theatres starting early next month.
The return of the ‘sudden stop’ economic nightmare will play a considerable role in the oil market’s mindscapes over the next few weeks, and it is this fear that keeps traders awake at night," Axi chief global market strategist Stephen Innes said.
“Sadly, for oil bulls like myself, the reality is oil prices are not going anywhere until we get a vaccine, and even then, the bottom line for oil is relatively straightforward.”
Concerns about market oversupply were highlighted by new figures Wednesday from the U.S. Energy Information Administration which showed U.S. crude stockpiles rose by 4.3 million barrels last week, a bigger build than markets had been expecting.
Reuters reported early Thursday that oil had initially rebounded slightly from overnight losses in Asian morning trading on technical support and the prospect of tighter short-term supply as Hurricane Zeta slammed Louisiana. But the hurricane is forecast to weaken into a non-tropical gale-force low by Thursday morning in the United States, and the return of U.S. production will add to existing oversupply, as Libya ramps up output after an eight-month blockade, the news agency said.
Elsewhere, gold inched up on Thursday after a sharp slide in the previous session.
Spot gold rose 0.1 per cent to US$1,879.71 per ounce as some investors took advantage of the previous session’s decline to buy bullion.
U.S. gold futures were up 0.1 per cent at US$1,880.10.
Currencies
The Canadian dollar was trading just above 75 US cents in early going as new global lockdowns and falling crude prices hit risk sentiment.
The day range on the loonie is 75.04 US cents to 75.31 US cents.
“Petrocurrencies are consolidating yesterday’s losses, with the Europeans (Norwegian krone, Russian ruble) harder hit than CAD,” Elsa Lignos, global head of FX strategy with RBC, said.
On Wednesday, the Bank of Canada held interest rates steady but also said it will reduce its Canadian government bond purchases by 20 per cent while shifting toward longer-term bonds, as it recalibrates its quantitative easing as the economy moves into a less certain phase of the recovery.
There were no major releases on the Canadian calendar for Thursday. On Friday, Statistics Canada releases its reading on August GDP and should give an early estimate on September growth.
“The broader risk backdrop continues to be the primary driver of CAD via equities and overall USD direction,” Ms. Lignos said.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, advanced 0.1 per cent.
The euro was down 0.1 per cent against the U.S. dollar at US$1.173 ahead of the latest ECB policy announcement.
The yen was steady against the U.S. dollar at 104.250 after the Bank of Japan trimmed its economic growth and inflation forecasts, but made no changes to its monetary policy.
More company news
Cenovus Energy Inc reported its third straight quarterly loss on Thursday, hurt by a slump in crude prices and crash in fuel demand caused by the COVID-19 pandemic. The Calgary, Alberta-based company recorded a net loss of $194-million or 16 cents per share, for the third quarter ended Sept. 30, compared with a year-ago profit of $187-million, or 15 cents per share.
Precision Drilling said it is proceeding with a 20:1 share consolidation. Shares are expected to begin trading on the TSX and NYSE on a consolidated basis on Nov. 12.
Suncor Energy Inc posted a quarterly loss, hit by a steep decline in oil prices as pandemic-led travel restrictions crushed fuel demand. Suncor also said it would accelerate previously announced workforce reductions of up to 15 per cent over the next 18 months, as it looks to reign in spending. The company posted a net loss of $12-million, or 1 cents per share, in the third quarter ended Sept. 30, compared with a profit of $1.04-billion, or 67 cents per share, a year earlier.
Husky Energy Inc. reported a nearly $7.1-billion loss in its latest quarter as it was hit by $6.7-billion in non-cash impairment charges after taxes related to lower long-term commodity price assumptions and reduced capital investment. The company says the loss amounted to $7.05 per share for the quarter ended Sept. 30 compared with a profit of $273-million or 26 cents per share in the same quarter last year. Revenue totalled $3.33-billion, down from $5.29-billion a year ago.
France’s LVMH will pay slightly less to acquire U.S. jeweler Tiffany & Co after the two companies agreed to end a bitter dispute triggered by the COVID-19 pandemic and salvage the luxury sector’s biggest-ever deal. The new takeover price was set at $131.5 a share, down from $135 in the original deal, the companies said in a statement on Thursday, bringing the total price tag to about $15.8-billion.
Royal Dutch Shell raised its dividend after easily beating quarterly profit forecasts and CEO Ben van Beurden said the group’s oil output probably peaked in 2019 as he spearheads a transition to low-carbon energy. The Anglo-Dutch company hit record earnings from its vast retail division, despite the impact on demand of the COVID-19 pandemic, which it said continued to generate “significant uncertainty.”
Economic news
(8:30 a.m. ET) Canada’s Survey of Employment, Payrolls and Hours for August.
(8:30 a.m. ET) U.S. initial jobless claims for week of Oct. 24.
(8:30 a.m. ET) U.S. Real GDP for Q3.
(10 a.m. ET) U.S. pending home sales for September.
With Reuters and The Canadian Press
Terry Weber