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Equities
Canada’s main stock index was moving sideways early Thursday with gains in material shares offset by declines in the energy sector. On Wall Street, the Dow and S&P both started in the red as investors optimism over advances in the search for a COVID-19 vaccine gave way to concerns over how a treatment would be rolled out.
At 09:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 0.05 points at 16,774.19.
In the U.S., the Dow Jones Industrial Average fell 165.72 points, or 0.56 per cent, at the open to 29,231.91.
The S&P 500 opened lower by 9.99 points, or 0.28 per cent, at 3,562.67, while the Nasdaq Composite gained 16.07 points, or 0.14 per cent, to 11,802.50 at the opening bell.
Early this week, Pfizer Inc. said trials had shown that its COVID-19 vaccine was 90 per cent effective, triggering a broad market rally but also a rotation out of tech shares, which have benefitted from the stay-at-home trend. Since then, however, investors have questioned the speed and logistics of a potential rollout of any potential vaccine.
“Now that a couple of days have gone by and we’ve had more time to absorb the enormity of this week’s announcement, we are now starting to hear some more discerning voices make their presence felt, in terms of the logistical difficulties involved in the distribution of this vaccine, as well as how effective the vaccine is likely to be on a longer-term basis,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“This would suggest that there is probably a lot of wishful thinking going in with respect to how quickly any new vaccine is likely to get rolled out. In other words, investors run the risk of getting ahead of themselves, running the risk of a sharp pullback.”
Early Thursday, Wall Street also got the weekly reading on jobless claims. The U.S. Labor Department said initial claims for state unemployment benefits last week totalled 709,000, down from 757,000 the week before. That’s their lowest level since March but still above pre-pandemic record levels. Markets had been expecting a number closer to 731,000.
In this country, investors got earnings from Loblaw Cos. Ltd. and Brookfield Asset Management.
Loblaw Cos reported a nearly 7-per-cent rise in quarterly revenue on Thursday, boosted by online sales. Net earnings attributable to shareholders rose to $345-million, or 96 cents per share, in the third quarter ended Oct. 3, from $334-million, or 90 cents per share, a year earlier. Revenue rose to $15.67-billion from $14.66-billion.
After Wednesday’s close, Manulife Financial Corp. topped analysts' forecasts for third-quarter core profit, helped by growth in its Asian and wealth and asset management businesses.
Manulife reported underlying profit, excluding one-time charges, of $1.45-billion, or 73 cents a share, in the three months through September, from $1.53-billion, or 76 cents, a year earlier. Analysts had expected 70 cents. Net income attributed to shareholders rose to $2.1-billion from $723-million a year earlier.
South of the border, markets will get results from Walt Disney Co. after the close.
Overseas, Europe’s major markets were down. The pan-European STOXX 600 fell 0.97 per cent. Britain’s FTSE 100 fell 0.95 per cent. Numbers released Thursday showed that Britain’s economy grew by a record 15.5 per cent in the third quarter but still remains below levels seen at the end of last year. Germany’s DAX fell 1.45 per cent. France’s CAC 40 lost 1.66 per cent.
In Asia, Japan’s Nikkei closed up 0.68 per cent. Hong Kong’s Hang Seng fell 0.22 per cent.
Commodities
Crude prices steadied following early declines after the International Energy Agency raised questions about how quickly a coronavirus vaccine would impact energy markets.
The day range on Brent is US$43.30 to US$44.26. The range on West Texas Intermediate is US$41 to US$41.94. Both benchmarks had jumped through the early part of the week on positive headlines about Pfizer’s COVID-19 vaccine.
However, the IEA said in a report early Thursday it was unlikely that global crude demand would get a significant boost from the rollout of vaccines until well into next year.
“It is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021,” the Paris-based IEA said in its monthly report.
“The poor outlook for demand and rising production in some countries ... suggest that the current fundamentals are too weak to offer firm support to prices.”
Sentiment, however, got some support from continuing speculation that OPEC and its allies could extend current production cuts to continue supporting prices.
On Wednesday, Algeria’s energy minister said the OPEC+ group could extend cuts of 7.7 million barrels a day into 2012 or deepen them, if necessary. The group is now scheduled to increase production by 2 million barrels a day in January.
“Oil appears to be consolidating its recent impressive gains at these levels,” OANDA senor analyst Jeffrey Halley said.
“Although OPEC+ continue making noises about tweaking the production cut agreements to support prices, if oil continues to trade sideways for the next session or two, momentum will fade."
In other commodities, gold prices gained as vaccine optimism faded.
Spot gold was up 0.4 per cent at US$1,871.41 per ounce, while U.S. gold futures were 0.4 per cent higher at US$1,869.80.
Currencies
The Canadian dollar was little changed, trading near the mid-76-US-cent point, as is U.S. counterpart holds steady on global markets.
The day range on the loonie is 76.30 US cents to 76.59 US cents.
There were no major Canadian economic reports on the calendar. Bank of Canada senior deputy governor Carolyn Wilkins is scheduled to speak Thursday afternoon on the topic of “exploring life post-COVID.”
“With no domestic data to reflect on this week, the CAD will remain a slave to short-term flows, technical factors, and the broader market tone,” Shaun Osborne, global head of FX strategy for Scotiabank, said.
On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, wavered between flat and up 0.1 per cent in early trading in Europe, according to figures from Reuters.
The euro advanced about 0.1 per cent while risk-sensitive currencies like the Australian and New Zealand dollars slid about 0.2 per cent.
“G10 FX is trading in relatively tight ranges,” Daria Parkhomenko, FX strategy associate with RBC, said in an early note.
Britain’s pound last traded down 0.3 per cent to the U.S. dollar at US$1.3182.
More company news
Brookfield Asset Management says it is looking to grow its reinsurance business with the creation of a new entity, BAM Reinsurance. The company says it plans to pay a special dividend in the form of a fraction of a share of BAM Reinsurance for a given number of class A shares of Brookfield. The announcement came as Brookfield reported net income attributable to shareholders of US$172-million or 10 U.S. cents per share for the quarter ended Sept. 30, compared with a profit of US$947 or 61 U.S. cents per share a year ago.
The Globe’s Alexandra Posadzki reports that Telus Corp. is launching a new business focused on digitizing the world’s food-supply system, bringing together several companies it’s acquired in the burgeoning agricultural-technology industry. The Vancouver-based telecom has bought seven companies in the sector over the past two years to create its Telus Agriculture division. which aims to help feed a growing global population by using technology to reduce food waste, increase crop yields and improve quality and safety.
Calfrac Well Services Ltd. cut its capital budget as it reported a $50-million loss in its latest quarter. The company says its capital budget for this year has been reduced to $40-million from $55-million. Calfrac’s loss for the quarter amounted to 34 cents per diluted share compared with a loss of $29.4-million or 20 cents per diluted share in the same quarter last year. Revenue for the three-month period ended Sept. 30 totalled $127.8-million, down from $399.2-million a year earlier.
Revlon Inc said on Thursday that enough bondholders had taken part in its debt restructuring program for the cosmetics maker to stave off bankruptcy. The company had warned earlier this month that it may be forced to file for chapter 11 bankruptcy protection if a certain amount of its bonds worth $342.8 million were still outstanding by mid-November, as it would trigger the accelerated repayment of other debts.
Auto parts maker Martinrea International Inc. says it hopes to benefit from recent Canadian investments announced by Detroit-based U.S. automakers as it recovers from the COVID-19 pandemic. Martinrea says it has so far booked $45 million in new business making propulsion systems for Fiat Chrysler and General Motors, and $10 million for electric vehicle platforms with General Motors. The Vaughan, Ont.-based company says it had third-quarter sales of $971 million, down from $974.4 million in the third quarter of 2019.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Nov. 7.
(8:30 a.m. ET) U.S. consumer price index for October.
(1:30 p.m. ET) Bank of Canada Senior Deputy Governor Carolyn Wilkins speaks to the Munk School of Global Affairs and Public Policy on “Exploring Life Post-COVID”
(2 p.m. ET) U.S. treasury budget for October.
With Reuters and The Canadian Press
Terry Weber