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Equities

Canada’s main stock index bounced back from early losses Thursday helped by strength in energy stocks. On Wall Street, indexes put in a tentative start as investors kept a close eye on bond yields and awaited midday comments from Federal Reserve chair Jerome Powell.

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At 9:43 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 33.82 points, or 0.18%, at 18,354.49.

Energy stocks were up more than 1 per cent as crude prices rallied.

In the U.S., the Dow Jones Industrial Average rose 18.9 points, or 0.06 per cent, at the open to 31289.01. The S&P 500 fell 1.2 points, or 0.03 per cent, at the open to 3818.53, while the Nasdaq Composite dropped 43.8 points, or 0.34 per cent, to 12953.986 at the opening bell.

“Attention today is squarely on Fed Chair Powell when he speaks later,” OANDA market analyst Sophie Griffiths said. “Up to now, Powell has considered the rise in yields and inflation expectations a sign of better economic prospects. Any sense from the Chief himself that the Fed is not comfortable with the latest bond market developments could give way to intervention.”

Early Thursday, the yield on the U.S. 10-year Treasury was 1.467 per cent. Last week, yields touched their highest level in a year at 1.614 per cent on bets on a strong economic recovery aided by government stimulus and progress in vaccination program.

Mr. Powell is set to speak just after noon on Thursday and markets will be watching closely for comments on the recent bonds selloff and concerns about inflation.

“Rising yields increase the cost of borrowing, damaging economic prospects and lessening demand for equities,” IG senior market analyst Joshua Mahony said.

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“The volatility seen in stock markets of late does serve to highlight the potential detrimental impact if yields are allowed to rise rapidly over the near-term. Thus today’s appearance from Powell provides a perfect platform to prepare markets for a potential shift in asset purchases.”

Ahead of those remarks, U.S. investors also got a reading on hiring in the U.S. economy. The U.S. Labor Department said weekly jobless claims held relatively steady at 745,000 last week,, up from 736,000 the prior week but slightly below the 750,000 that economists had been expecting.

In this country, Canadian Natural Resources saw a higher fourth-quarter profit compared with the third quarter, helped by a steady recovery in crude prices.

On an adjusted basis, the Calgary, Alberta-based company posted a profit of $176-million, or 15 cents per share, in the quarter ended Dec. 31, compared with $135-million, or 11 cents, in the third quarter. Analysts had been looking for earnings per share, excluding one-time items, of 13 cents in the latest quarter, according to Refinitiv data. The company also raised its quarterly dividend to 47 cents per share payable on April 5, compared with the 42.5 cents dividend it paid on Jan 5.

Overseas, major European markets were weaker. Britain’s FTSE 100 fell 1 per cent. Germany’s DAX lost 0.46 per cent and France’s CAC 40 declined 0.26 per cent.

In Asia, Japan’s Nikkei dropped 2.13 per cent. Hong Kong’s Hang Seng lost 2.15 per cent.

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Commodities

Crude prices recouped early losses as markets wait for to see if OPEC and its allies will ease production cuts or hold at current levels.

The day range on Brent is US$63.41 to US$64.88. The range on West Texas Intermediate is US$60.57 to US$61.98.

Members of the OPEC+ group were meeting Thursday and were expected to discuss future production moves. Reports this week suggested the group was considering rolling over current production cuts into April instead of raising production, citing the still fragile nature of the current recovery.

Markets had been expecting the group to ease production cuts by about 500,000 barrels a day from April and Saudi Arabia to end its voluntary production cut of an extra 1 million barrels.

“The event is planned as a one-day event, which seems optimistic unless the Russian/Saudi positions are closer together than recently indicated by public comments,” Axi chief market strategist Stephen Innes said.

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“I think volume risk is to the upside of what markets are pricing now, therefore oil price risk is to the downside.”

Price sentiment was also tempered by the latest U.S. inventory figures, which showed a record surge of more than 21 million barrels in crude stocks last week as refining capacity fell during a devastating winter storm in Texas.

In other commodities, Gold prices rose, although rising U.S. Treasury yields continue to weigh.

Spot gold rose 0.5 per cent to US$1,719.21 per ounce, having dropped to its lowest since June 9 at US$1,701.40 on Wednesday. U.S. gold futures was up 0.1 per cent to US$1,717.50.

Currencies

The Canadian dollar was trading around 79 US cents as its U.S. counterpart held recent gains against a group of U.S. currencies.

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The day range on the loonie is 78.90 US cents to 79.16 US cents.

There were no major Canadian economic releases due on Thursday. The next big headline is due Friday with the release of international trade figures for January.

Meanwhile, a new Reuters poll says forecasts for the Canadian dollar have been raised by strategists as the loonie continues to benefit from rising commodity prices as the global economy reopens.

The median forecast of nearly 40 analysts in the March 1-3 poll was for the Canadian dollar to edge 0.4 per cent higher to 1.26 per U.S. dollar, or 79.37 US cents, in three months, compared with a 1.27 forecast in February’s poll.

On global markets, the U.S. dollar hit its best level in seven months against the yen ahead of Jerome Powell’s midday speech. It also managed a five-month high against the Swiss franc, according to figures from Reuters.

The U.S. dollar rose to 107.28 yen, the highest since July last year. The U.S. currency bought 0.92090 Swiss franc in early trading in London, its highest against the franc since Oct. 2.

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The British pound steadied at US$1.3942, while the euro traded at US$1.2043, down 0.15 per cent.

The U.S. dollar index stood at 91.120 against a basket of six major currencies, holding on to a 0.32 per cent gain from Wednesday.

More company news

Bombardier said on Thursday it is betting on demand for aftermarket services to help hit an estimated $7.5 billion revenue target in 2025, as the company holds its first investor day since becoming a pure play business jet maker. Bombardier said in a statement it expects to generate more than $500-million in free cash and $1.5-billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025, while growing margins and slashing debt.

Britain’s competition regulator said on Thursday it has opened an investigation into Apple Inc after complaints that the iPhone maker’s terms and conditions for app developers are unfair and anti-competitive. The probe will consider if Apple has a dominant position in the distribution of apps on its devices in the UK, the Competition and Markets Authority (CMA) said.

General Motors Co is looking to build a second battery factory in the United States with South Korean joint-venture partner LG Chem Ltd, the Wall Street Journal reported on Thursday, citing people familiar with the matter. The companies are close to completing a decision to locate the plant in Tennessee, the report said. GM did not immediately respond to a Reuters request for comment.

Economic news

(8:30 a.m. ET) Canadian labour productivity for Q4.

(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 27.

(8:30 a.m. ET) U.S. productivity for Q4.

(10 a.m. ET) U.S. factory orders for January. Consensus is an increase of 1.1 per cent from December.

With Reuters and The Canadian Press

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