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Equities
Canada’s main stock index rose Thursday alongside global markets with gains in materials and energy stocks adding to the gains. On Wall Street, key indexes were also higher with optimism over advances in U.S. stimulus talks helping offset a weaker-than-forecast reading on weekly jobless claims.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 91.9 points, or 0.52 per cent, at 17,659.32.
In the U.S., the Dow Jones Industrial Average rose 61.46 points, or 0.20 per cent, at the open to 30,216.00. The S&P 500 opened higher by 12.48 points, or 0.34 per cent, at 3,713.65, while the Nasdaq Composite gained 72.59 points, or 0.57 per cent, to 12,730.78 at the opening bell.
Sentiment was helped by reports that U.S. congressional negotiators were closing in on a US$900-billion COVID-19 aid bill expected to include $600-$700 stimulus cheques to individuals. U.S. Senate Majority Leader Mitch McConnell said that “major headway” had been made toward hammering out a targetted relief package.
That news came as the Federal Reserve vowed to continue its bond-buying campaign to support the U.S. economy as it contends with the impact of the second wave of coronavirus infections.
“Markets overall are still in a positive frame of mind, managing to find the good news in an otherwise dull Fed statement and looking forward to some progress on a U.S. stimulus deal, the major narrative behind this market bounce,” IG chief market analyst Chris Beauchamp said.
Key for the early part of the session will be the latest reading on U.S. jobless claims. The U.S. Labor Department said initial claims for state unemployment benefits totalled 885,000, more than the 818,000 economists had been forecasting.
U.S. markets also get results from FedEx after the close of trading.
“Parcels and logistics companies are generally good bellwethers of an economy, and FedEx is no different,” Michael Hewson, chief markets analyst with CMC Markets, said.
“In September the company reported higher than expected profits as a result of lower fuel costs, and a big rise in shipments as a result of a big increase in e-commerce, as more consumers shopped on-line.”
In this country, The Globe and Mail reports that the federal government has approved design changes to the Boeing 737 Max that will allow the plane to fly again in Canada after it was banned around the world last year following two deadly crashes. Transport Canada informed the U.S. Federal Aviation Administration on Wednesday that it has validated a series of proposed changes to the 737 Max, and expects to make a public announcement in Ottawa on Thursday.
On the earnings front, BlackBerry reports its latest earnings after markets close.
Overseas, the pan-European STOXX 600 rose 0.47 per cent with most sectors in positive territory. Britain’s FTSE 100 was up 0.47 per cent. Germany’s DAX gained 0.75 per cent. France’s CAC 40 advanced 0.44 per cent.
All eyes continue to be on Brexit talks as Britain and the EU attempt to sort out a trade pact before the end of the month. Britain’s Interior Minister said Thursday the two sides were in “tunnel” negotiations but if an agreement is not possible, the country will be prepared.
In Asia, Japan’s Nikkei finished up 0.18 per cent. Hong Kong’s Hang Seng gained 0.82 per cent.
Commodities
Crude prices gained, with Brent touching a nine-month high, as factors including a draw in U.S. inventories, Fed support and optimism over U.S. stimulus talks combining to buoy market sentiment.
The day range on Brent is US$51.10 to US$51.90. The range on West Texas Intermediate is US$47.81 to US$48.59.
“Oil prices are continuing to make steady gains, with the latest boost coming from the Fed’s upbeat economic assessment and the surprise inventory draw on Wednesday,” OANDA senior analyst Craig Erlam said.
“The rally continues to look like it’s low on fuel though and with WTI closing in on historic support and resistance around the US$US49-US$50 mark,”
Mr. Erlam said it’s possible the market is already seeing some profit taking, which could continue through to year’s end.
“OPEC+ has made its move; now it’s time to wait and see how the next couple of months of the virus unfolds,” Mr. Erlam said.
On Wednesday, the U.S. Energy Information Administration said weekly crude inventories fell by 3.1 million barrels. Analysts had been looking for a more modest decline of 1.9 million barrels.
In other commodities, gold prices gained as the U.S. dollar weakened on news that a U.S. stimulus deal could be close.
Spot gold climbed 0.4 per cent to US$1,872.20 per ounce, having hit a more than one-week high of US$1,873.76 earlier in the session. U.S. gold futures were up 0.9 per cent at US$1,875.50.
“Gold prices were surprisingly buoyed by the Fed announcement, despite the lack of new action,” Mr. Erlam said.
“The [U.S.] dollar index breaking below 90 and languishing at two-and-a-half year lows isn’t doing gold any harm either.”
Currencies
The Canadian dollar was higher, edging closer to 79 US cents, as its U.S. counterpart fell to its lowest level in more than two years.
The day range on the loonie is 78.43 US cents to 78.74 US cents. The dollar was last near the upper end of that spread at last check.
There were no major Canadian economic releases on Thursday’s calendar. The next big release comes Friday when Statistics Canada delivers its report on retail sales in October. Markets are expecting to see a modest decline of 0.1 per cent for the month.
On world markets, the U.S. dollar index continued to retreat, falling to 89.88 against a basket of major currencies after breaking below 90 for the first time since April 2018, according to figures from Reuters. The U.S. dollar also slid to 103.20 yen.
“While we expect stocks to benefit further from positive news on vaccine rollouts and U.S. fiscal support, the same cannot be said for the U.S. dollar”, said Mark Haefele, chief investment officer at UBS GWM. “Safe-haven demand for the dollar is being eroded by a broadening global recovery.”
Elsewhere, Britain’s pound benefitted from optimism over Brexit talks, rising to US$1.3578, its highest level since May 2018.
The euro traded at US$1.2238, its highest since April 2018.
Bitcoin, meanwhile, continued its run. The cryptocurrency touched a record high after passing US$20,000 for the first time on Wednesday.
Early Thursday bitcoin jumped 10.5 per cent to US$23,655, taking its gains this year past 220 per cent.
“The question now is where will it stop?” OANDA’s Craig Erlam said.
“These are extraordinary gains in such a short period of time and bitcoin has a history of doing well amidst the hype. Can US$30,000 be on the cards by Christmas? Why not.”
More company news
Rio Tinto Ltd said on Thursday it would appoint its current chief financial officer, Jakob Stausholm, as its next chief executive, effective Jan. 1, 2021. Peter Cunningham will be appointed as the interim chief financial officer, the miner said in a statement.
CI Financial Corp. does not support a $2.1-billion takeover bid for Great Canadian Gaming Corp. and will vote against the deal, putting the proposed private-equity buyout in limbo one week before its scheduled shareholder vote, The Globe’s Tim Kiladze reports. CI is a major shareholder of Great Canadian with a 14.1-per-cent stake and in a statement late Wednesday the money manager said it is “not supportive of the proposed plan of arrangement” between private-equity giant Apollo Global Management Inc. and Great Canadian.
General Mills Inc beat second-quarter sales estimates on Thursday, as people confined to their homes due to the COVID-19 pandemic boosted sales of its pet foods and baking products. The company’s overall net sales climbed to $4.72-billion in the quarter ended Nov. 29 from $4.42-billion a year ago, beating market estimate of $4.65-billion, according to Refinitiv IBES. Excluding items, General Mills earned $1.06 per share, beating analysts’ expectation of 97 cents.
Economic news
(8:30 a.m. ET) Canada’s ADP National Employment Report for November.
(8:30 a.m. ET) U.S. initial jobless claims for week of Dec. 12.
(8:30 a.m. ET) U.S. housing starts for November.
(8:30 a.m. ET) U.S. building permits for November.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for December.
With Reuters and The Canadian Press
Terry Weber