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Equities
Canada’s main stock index opened down early Thursday with materials shares weighing and investors assessing the last of the results from this country’s big banks. On Wall Street, tech stocks continued to feel the pressure of rising U.S. Treasury yields although a better-than-expected reading on jobless claims underpinned broader sentiment.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 21.77 points, or 0.12 per cent, at 18,462.76.
In the U.S., the Dow Jones Industrial Average fell 5.92 points, or 0.02 per cent, at the open to 31,955.94.
The S&P 500 opened lower by 9.63 points, or 0.25 per cent, at 3,915.80, while the Nasdaq Composite dropped 85.33 points, or 0.63 per cent, to 13,512.64 at the opening bell.
“Yields are rising across the board, a sign of confidence in the global economy to recover powerfully in the post-pandemic world,” OANDA senior analyst Craig Erlam said.
“But it’s also a massive headache for central banks keen to remain extremely accommodative in the early stages of the recovery. They have a job on their hands if we continue to see yields rising as they are.”
Investors will again be keeping an eye on GameStop Corp after the company’s shares surged overnight in Europe and opened up about 30 per cent in New York on Thursday, building on the previous session’s rally.
Analysts could not pinpoint one reason for the sharp move, but at least one ruled out a short squeeze that had fired the “Reddit rally” in January when amateur investors piled into stocks that hedge funds had bet against, according to Reuters.
In this country, investors got results from Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, capping a solid reporting season for Canada’s big banks. On Wednesday, Royal Bank and National Bank both posted profit ahead of analysts’ forecasts.
CIBC said adjusted net income rose to $1.64-billion, or $3.58 a share, in the three months to Jan. 31, compared with $1.5-billion, or $3.24 a share, a year earlier. Analysts had expected $2.81 a share, according to IBES data from Refinitiv.
TD’s adjusted net income rose to $3.4-billion, or $1.83 a share, in the three months to Jan. 31, compared with $3.1-billion, or $1.66 a share, a year earlier. Analysts had expected $1.49 a share, according to IBES data from Refinitiv.
TD shares were down about 1 per cent in morning trading in Toronto. CIBC stock was modestly higher.
In the U.S., investors also got a better than expected reading on weekly jobless claims. The U.S. Labor Department said the number of initial claims for state unemployment benefits fell to 730,000 from 841,000 in the prior week. Economists had been expecting a number closer to 828,000.
“U.S. payrolls have started to look more positive, as has consumer spending with a strong rebound in January retail sales, while weekly jobless claims have started to come back down again,” CMC Markets chief market analyst Michael Hewson said.
Overseas, the pan-European STOXX 600 was up 0.22 per cent. Britain’s FTSE 100 rose 0.34 per cent. Germany’s DAX was flat. France’s CAC 40 gained 0.46 per cent.
In Asia, Japan’s Nikkei ended up 1.67 per cent. Hong Kong’s Hang Seng gained 1.2 per cent.
Commodities
Crude’s rally continued into a fourth session, buoyed by Fed assurances that U.S. rates will stay low for the foreseeable future.
The day range on Brent is US$67.03 to US$67.70. The range on West Texas Intermediate is US$63.06 to US$63.79. Both hit their best levels since January 2020 early in the session.
Prices were also underpinned by a report from the U.S. Energy Information Administration showing that storms last week in Texas resulted in U.S. crude production falling by about 10 per cent or 1 million barrels a day.
“Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher,” OANDA senior analyst Jeffrey Halley said in a note.
OANDA’s Ed Moya also noted that markets shrugged off a surprise 1.28-million barrel increase in weekly U.S. crude inventories. Traders had been expecting to see a sharp decline in crude stocks.
“Expectations were for a 6.7-million-barrel draw, but the surprise increase came from the West and was a result of shocks due to the storm,” Mr. Moya said.
In other commodities, gold prices slid as U.S. Treasury yields held near one-year highs.
Spot gold fell 0.6 per cent to US$1,792.81 per ounce. U.S. gold futures eased 0.4 per cent to US$1,791.60.
“Rising longer dated yields are a primary weighing factor on the precious metals,” DailyFX strategist Margaret Yang said.
Currencies
The Canadian dollar touched a three-year high, topping 80 US cents, as crude prices continue to rally and the U.S. dollar retreats on the latest dovish Fed comments.
The day range on the loonie is 79.86 US cents to 80.15 US cents.
“The Canadian dollar grind higher continues, with spot trading ... above 0.80 cents for the first time in almost exactly three years,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Firmer commodities and narrower US/Canada yield spreads are supporting the CAD’s rise (it is no coincidence that the Bloomberg Commodity index is trading at a new cycle high today and also at its highest level since 2018). If the global reflation trade really is warming up again, we have to expect the CAD to continue to strengthen.”
There were no major Canadian releases on Thursday’s calendar.
The U.S. dollar index, which weighs the greenback against a group of world currencies, was down 0.1 per cent at 89.92 against a basket of currencies.
According to figures from Reuters, the Australian dollar also touched a three-year high against the greenback early Thursday. Early in the session, the Australian dollar was trading at 79.94 US cents.
The euro hit its highest in more than a month versus the U.S. dollar, briefly rising above US$1.22.
Bitcoin was steady around the US$50,000 mark, recouping some of its losses from the start of the week.
More company news
Loblaw Companies Ltd. reported its fourth-quarter profit and revenue rose compared with a year ago, boosted in part by an extra week in the quarter. The grocery and drugstore retailer says it earned net income available to common shareholders of $345-million or 98 cents per diluted share for the 13-week period ended Jan. 2.
Maple Leaf Foods Inc. beat expectations as it reported a fourth-quarter profit of $25.4-million, up from $17.5-million a year ago, and sales that rose more than 10 per cent. The food processing company says the profit amounted to 20 cents per diluted share for the quarter ended Dec. 31, up from 14 cents per share a year earlier. Sales for the quarter totalled $1.13-billion, up from $1.02-billion in the fourth quarter of 2019, as both its meat protein and plant protein groups saw gains.
Boeing Co was planning to replace engine covers on its 777 jets months before a pair of recent serious failures, the Wall Street Journal reported on Thursday, citing an internal Federal Aviation Administration document. The U.S. Federal Aviation Administration (FAA) on Tuesday ordered immediate inspections of the 777 planes with Pratt & Whitney PW4000 engines before further flights, after an engine failed on a United Airlines flight on Saturday.
Best Buy Co Inc signaled a slowdown in the coronavirus crisis-driven demand for remote-work computer equipment on Thursday as it missed holiday-quarter sales estimates, sending its shares down 6% in premarket trading. The consumer electronics retailer forecast full-year comparable sales growth between a fall of 2% and a rise of about 1%, below analysts’ estimates of a 1.6% increase, according to Refinitiv IBES data.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 20.
(8:30 a.m. ET) U.S. real GDP and GDP deflator for Q4.
(8:30 a.m. ET) U.S. durable goods orders for January.
(10 a.m. ET) U.S. pending home sales for January.
Also: Alberta’s budget
With Reuters and The Canadian Press
Terry Weber