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Equities
Canada’s main stock index started lower Thursday alongside weaker energy and materials shares. On Wall Street, the tech-heavy Nasdaq came under pressure as bond yields rose despite dovish comments from the Federal Reserve.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 53.97 points, or 0.28 per cent, at 18,929.13.
The Dow Jones Industrial Average fell 87.2 points, or 0.26 per cent, at the open to 32928.16. The S&P 500 fell 20.6 points, or 0.52 per cent, at the open to 3953.5, while the Nasdaq Composite dropped 176.0 points, or 1.30 per cent, to 13349.203 at the opening bell.
“Not even a dovish Jerome Powell can stop the appreciation in yields it seems, as the benchmark 10-year Treasury yield tops 1.7 per cent and continues to push higher,” IG chief market analyst Chris Beauchamp said. “The Fed chair continues to reiterate the plan to leave policy in a frozen state until the recovery is fully in place, but even after [Wednesday’s] restatement of this fact markets have continued to assume that things will go much better than expected and that the Fed will have to move sooner than the current forecasts indicate.
“This is in one sense a continuation of the way investors have looked at central banks for years, assuming that rate rises are much closer than policymakers think.”
Despite the Fed’s message, U.S. 10-year Treasury yields hit their highest levels in 13-months in morning, moving above 1.70 per cent for the first time since Jan. 24, 2020, according to figures from Reuters.
Ahead of the opening bell, the U.S. Labor Department reported that weekly jobless claims unexpectedly rose to 770,000 from 725,000 the previous week. Economists had been expecting a number closer to 700,000 in the most recent report.
In this country, Alimentation Couche-Tard Inc. missed market revenue forecasts in the third quarter as a decline in demand for fuel as people stayed home offset gains in food and beverage sales.
Total revenue fell 20.8 per cent to US$13.16-billion from a year earlier, missing market estimates of US$13.74-billion, according to IBES data from Refinitiv.
Net earnings attributable to Couche-Tard shareholders fell to US$607.5-million, or 55 US cents per share, from US$659.9-million, or 59 US cents per share, a year earlier. On an adjusted basis, Couche-Tard earned 56 US cents per share, in line with estimates.
The results were released after Wednesday’s closing bell.
On Wall Street, investors will get results from sportswear giant Nike Inc. after the bell. Analysts are expecting another strong quarter from the company. Analysts polled by Bloomberg expect Nike to report adjusted earnings per share of 75 U.S. cents on revenue of US$11.008-billion in the most recent quarter.
Overseas, the pan-European STOXX 600 edged up 0.08 per cent by afternoon. German’s DAX gained 0.89 per cent while France’s CAC 40 rose 0.04 per cent. Britain’s FTSE 100 was down 0.23 per cent. The Bank of England on Thursday held its key rate and the size of its bond-buying program steady in its latest policy announcement.
In Asia, Japan’s Nikkei gained 1.01 per cent. Hong Kong’s Hang Seng advanced 1.28 per cent.
Commodities
Crude prices declined for a fifth straight session after weekly U.S. inventory figures showed a rise in crude and fuel inventories.
The day range on Brent is US$67.07 to US$68.05. The range on West Texas Intermediate is US$63.76 to US$64.72. Both benchmarks have declined by about 3 per cent over the last five sessions.
On Wednesday, the U.S. Energy Information Administration said U.S. crude inventories increased by 2.4 million barrels last week. Earlier industry estimates had suggested a likely decline in inventories. Gasoline and diesel stocks also rose. Analysts had been forecasting decline.
“The U.S. crude inventories build yesterday has provided an excuse to take profit, pushing [Brent] oil down from recent highs above $68 a barrel,” Axi chief market strategist Stephen Innes said.
“Although the build was a surprise relative to the draw reported on Tuesday by the API, I think investors will remain focused on the ongoing rebalancing of global supply and demand.”
The downside, he added. is “relatively limited unless new negative news forces downward material revisions to estimates for global economic growth this year.”
Crude prices have also been tempered this week by a decision by a number European countries to suspend use of AstraZeneca’s COVID-19 vaccine because of concerns about possible side effects.
As well, concerns over a third wave of COVID-19 cases has triggered tightened measures in some reasons, again raising concerns about the recovery in demand.
Italy has said it plans a national lockdown while France expects to introduce tougher measures and Germany is reporting a rise in coronavirus cases.
Gold prices, meanwhile, managed a two-week high after the Fed vowed to keep rates low until 2023.
Gold slid 1 per cent on Thursday, retreating from a more than two-week high as rising U.S. Treasury yields and a stronger U.S. dollar hit demand for the safe-haven metal.
Spot gold was down 0.9 per cent to US$1,728.51 an ounce after touching its highest since March 1 at $1,755.25 in the session.
Currencies
The Canadian dollar was steady while the U.S. dollar gained against global counterparts as U.S. Treasury yields rose.
The day range on the loonie is 80.53 US cents to 80.86 US cents.
“Softer crude and the uncertain risk mood are clear headwinds for the CAD intraday but spot is more or less flat on the session, reflecting an awful lot of resilience in the CAD as investors continue to anticipate the BoC tapering asset purchases in April,” Shaun Osborne, chief FX strategist for Scotiabank, said in a note.
There were no major Canadian economic reports due on Thursday. On Friday, investors will get a reading on January retail sales from Statistics Canada. Economists are expecting a decline of about 3 per cent as tough restrictions aimed at curbing the spread of the coronavirus remained in effect in parts of the country.
On world markets, the U.S. dollar index, which measures the greenback against a basket of global currencies, rose as much as 0.4 per cent to 91.671, off a two-week low of 91.300 hit after Wednesday’s Fed meeting, according to figures from Reuters.
The euro slid to US$1.19505, off a one-week high of US$1.19900 hit after rallying 0.6 per cent on Wednesday. Against the yen, the U.S. dollar gained 0.3 per cent to 109.120 yen.
The British pound traded flat at US$1.3963.
More company news
Power Corp. beat expectations as its net profit attributable to shareholders surged in the final quarter of 2020 as its life insurance business benefited from acquisitions. The Montreal-based holding company says it earned $623-million or 92 cents per share, up from $179-million or 42 cents per share a year earlier. Adjusted profit for the three months ended Dec. 31 increased to $627-million or 93 cents per share, compared with $357-million or 84 cents per share in the fourth quarter of 2019. Power was expected to report 82 cents per share in adjusted profits, according to financial data firm Refinitiv.
Hexo Corp. reported a loss of $20.8-million in its latest quarter as its revenue nearly doubled compared with a year earlier. The cannabis company says its loss amounted to 17 cents per diluted share for the quarter ended Jan. 31. The result compared with a loss of $298.2-million or $4.52 per diluted share a year earlier when the company took large one-time charges related to its goodwill and intangible assets. Net revenue in what was Hexo’s second quarter totalled nearly $32.9-million, up from $17-million in the same quarter a year earlier.
Alphabet Inc’s Google said on Thursday it plans to invest over US$7-billion in offices and data centers in the United States this year. Google’s spending includes $1-billion in its home state of California. The move comes at a time when many companies are exiting Silicon Valley after the COVID-19 pandemic triggered a broader shift to remote work, making companies reconsider the state’s higher operational costs and hefty taxes.
Moderna expects to deliver its first COVID-19 vaccines to Britain in April and is on track to meet its supply obligations, a spokesman for the company said after ministers warned the vaccine rollout would be slower than hoped. “Moderna expect to begin deliveries to the UK in April, within the spring delivery window previously communicated. Moderna is on track to meet quarterly contractual commitments,” a spokesman for the U.S. biotech company told Reuters.
Dollar General Corp forecast annual same-store sales below estimates on Thursday, indicating the roll out of vaccines and a reopening economy would lead to a bigger-than-expected slowdown from a pandemic-fueled rush for groceries. The company said it expects full-year same-store sales to fall 4% to 6%, compared with analysts’ estimate of a 1.2% decline, according to IBES data from Refinitiv.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of March 13.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for March.
(10 a.m. ET) U.S. leading indicator for February.
With Reuters and The Canadian Press
Terry Weber