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Equities

Canada’s main stock index started lower Thursday as global risk sentiment pulled back. Wall Street’s main indexes also started in the red as the shift out of tech shares continued and investors reacted to weaker-than-expected jobless claims figures.

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At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 84.63 points, or 0.46 per cent, at 18,290.15.

In the U.S., the Dow Jones Industrial Average fell 54.4 points, or 0.17 per cent, at the open to 31558.6. The S&P 500 fell 15.5 points, or 0.39 per cent, at the open to 3915.86, while the Nasdaq Composite dropped 150.8 points, or 1.08 per cent, to 13814.666 at the opening bell.

“Dealers became a little nervous about the move in yields as it could be interpreted the markets are anticipating higher inflation down the line. It also might reflect the view that growth prospects are optimistic too,” CMC Markets analyst David Madden said.

“Either way, it could put the Federal Reserve in a difficult position as higher yields could lead to chatter about hiking rates, but the central bank has talked about maintaining rates near zero until 2023.”

Minutes from the latest Fed meeting, released Wednesday afternoon, suggested the central bank is eager to maintain accommodative monetary policy.

Early Thursday, the U.S. Labor Department reported that initial claims for state unemployment benefits jumped to 861,000 last week, from a revised 848,000 the week before. Economists had been expecting to see a decline to about 765,000 claims.

Also on Thursday, the chief executives of Robinood and Reddit are scheduled to appear before the U.S. House Financial Services Committee to discuss the retail-fuelled rally that gripped the markets earlier this year that resulted in massive volatility.

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In testimony released ahead of the appearance, the CEOs along with Wall Street hedge fund managers and a YouTube streamer known as Roaring Kitty defended their roles in the rally. They insisted that while the market turmoil around the stock was unprecedented, there was no foul play, according to a Reuters report.

In this country, investors have a heavy earnings day with results released by Canadian Tire, TC Energy and Teck Resources among others.

U.S.-listed shares of B.C.-based cannabis company Tilray Inc. jumped more than 4 per cent in early trading after the company topped market forecasts in the latest quarter.

Tilray Inc., which struck a deal to merge with competitor Aphria Inc., posted a US$2.9-million loss in its latest quarter, down from the US$219.1-million net loss it reported during the same quarter the year prior.

The loss for the period ended Dec. 31 amounted to 2 US cents per share, which compared with a loss of US$2.14 per share the year before. Financial markets data firm Refinitiv said analysts had expected Tilray to report a loss of 14 US cents per share in the latest quarter. The results were released after Wednesday’s close.

On Wall Street, investors got results from retail giant Walmart Inc ahead of the open. The company topped expectations for same-store sales growth but also said it was expecting fiscal 2022 net sales to grow in low-single digits, with earnings per share estimated to be flat to slightly up.

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Walmart shares were down about 5 per cent in morning trading.

Overseas, markets were mixed with the pan-European STOXX 600 edging up 0.02 per cent. Britain’s FTSE 100 slid 0.17 per cent. Germany’s DAX added 0.18 per cent while France’s CAC 40 dipped 0.13 per cent.

In Asia, Japan’s Nikkei ended down 0.19 per cent. Hong Kong’s Hang Seng fell 1.58 per cent. The Shanghai Composite Index rose 0.55 per cent with markets in China going back to business after the Lunar New Year holiday.

Commodities

Crude prices continued to hold near their best levels in more than a year as a winter cold snap in Texas raises concerns about a supply disruption and new inventory figures showed a bigger-than-expected weekly decline.

The day range on Brent is US64.48 to US$65.52. The range on West Texas Intermediate is US$61.29 to US$62.26. Both hit their best levels since January 2020 early in the session.

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“Energy markets are focusing more on the deep freeze that is curtailing U.S production by a third and less on Saudi Arabia’s plan to ramp up production in the coming months,” OANDA senior analyst Ed Moya said in a note.

“Despite a strong dollar and expectations the Saudis will quickly take back their surprise 1 million barrel a day production cut, oil prices continue to creep higher.”

Reports this week suggested that Saudi Arabia is eager to increase output when the global economy recovers. The Wall Street Journal reported that Saudi Arabia is expected to announce plans to raise output when OPEC and allied oil producers meet next month. However, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said Wednesday that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

Prices also drew support from new figures from the American Petroleum Institute, which showed that crude stocks fell by 5.8 million barrels last week. Analysts had been expecting a draw of about 2.4 million barrels.

More official figures are due later Thursday morning from the U.S. Energy Information Administration.

In other commodities, gold prices rebounded from their lowest levels in more than two months, helped by a softer U.S. dollar and easing U.S. Treasury yields.

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Spot gold rose 0.6 per cent to US$1,786.81 per ounce, having dropped to its lowest since Nov. 30 at US$1,768.60 on Wednesday. U.S. gold futures advanced 0.8 per cent to US$1,786.20.

“The dollar (has) started quiet so we are seeing a bit of short-covering or perhaps even a bit of bargain hunting on gold,” CMC’s David Madden said.

Currencies

The Canadian dollar was higher in early going, buoyed by rising crude prices, while its U.S. counterpart slipped against a basket of global currencies but still held near recent highs.

The day range on the loonie is 78.64 US cents to 78.85 US cents.

There were no major Canadian releases on Thursday’s calendar.

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“While the supply disruption in the U.S. is helping keep prices elevated at the moment, $60+ for WTI seems very likely to see global producers look to up their own output in the coming weeks or months,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Still, the CAD is not fully reflecting recent gains in commodity prices generally (note that energy prices have under-performed relative to non-energy commodities since March) at this point; domestic terms of trade have improved significantly over the past year.”

On global markets, the U.S. dollar index was down 0.15 per cent at 90.748 on Thursday in morning trade in London after strengthening 0.2 per cent overnight, according to figures from Reuters.

The index is up about 1 per cent this year after sliding nearly 7 per cent in 2020.

The euro gained 0.2 per cent to US$1.2065 after sliding 0.5 per cent overnight, the most in two weeks.

Britain’s pound traded above US$1.39 against the U.S. dollar.

More company news

Teck Resources reported a better-than-expected quarterly profit, powered by a buoyant copper business on higher prices of the metal. Adjusted profit attributable to shareholders rose over 11% to $248-million, or 46 cents per share, in the quarter. Analysts had expected a profit of 35 cents, according to Refinitiv I/B/E/S data.

Barrick Gold Corp reported a quarterly adjusted profit that more than doubled, helped by a jump in gold prices due to coronavirus-induced economic uncertainty. Net income nearly halved to $685-million as the company had gains related to some assets and acquisitions in the year-earlier quarter. On an adjusted basis, profit rose to $616-million, or 35 cents per share, in the fourth quarter ended Dec. 31, from $300-million, or 17 cents per share, a year earlier.

TC Energy Corp. says it expects to take a “substantive” charge when it reports its first-quarter results for 2021 due to the decision by U.S. President Biden to revoke the presidential permit for its Keystone XL pipeline. The company says it couldn’t yet say what the size of the charge will b, which it expects to be predominantly non-cash, would be, but that it was assessing its options.

Canadian Tire Corp Ltd reported a 13% rise in quarterly revenue on Thursday, helped by strong demand for kitchenware, tools and seasonal products during the COVID-19 pandemic. The retailer’s revenue rose to $4.87-billion in the fourth quarter ended Jan. 2, from $4.32-billion a year earlier. The company also posted net income attributable to its shareholders of $488.8-million, or $7.97 per share, up from $334.1-million, or $5.42 per share, a year earlier. Shares were up more than 2 per cent in morning trading.

Economic news

(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 13.

(8:30 a.m. ET) U.S. housing starts for January.

(8:30 a.m. ET) U.S. building permits for January.

(8:30 a.m. ET) U.S. Philadelphia Fed Index for February.

With Reuters and The Canadian Press

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