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Equities

Canada’s main stock index edged higher in early trading Thursday with gains in materials stocks on the back of higher gold prices offsetting weakness in energy shares. On Wall Street, the S&P 500 started at record levels, helped by dovish comments from the Federal Reserve.

At 9:37 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 8.37 points, or 0.04 per cent, at 19,137.44.

Materials stocks, which include precious and base metals mining companies, were up 1.3 per cent. The energy sector slid 1.1 per cent.

The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.3% as gold futures rose 0.5% to $1,748.7 an ounce to hit a three-week peak. Financials slid 0.7 per cent.

In the U.S., the Dow Jones Industrial Average rose 23.6 points, or 0.07 per cent, at the open to 33,469.89. The S&P 500 rose 10.0 points, or 0.25 per cent, at the open to 4,089.95, while the Nasdaq Composite rose 108.0 points, or 0.79 per cent, to 13,796.892 at the opening bell.

On Wednesday, the U.S. Federal Reserve’s minutes from the central bank’s most recent meeting indicated that that any move to tighten policy remains far down the road, saying it would likely be “some time” before economic conditions improved enough for the Fed to consider reducing its current support.

“The latest set of Fed minutes delivered yet another reminder of [Fed chair] Jerome Powell’s determination to let the U.S. economy run hot rather than move too early on rate rises, and this dawning realization has been reflected in the strength of growth stocks such as those of the Nasdaq, which have made up plenty of lost ground in recent weeks as the shift from growth to value goes into reverse,” IG chief market analyst Chris Beauchamp said.

“Still, the ‘steady as she goes’ mantra from the Fed is likely to be positive for most parts of the market, and even banks will benefit from the rebounding global economy, even if their margins remain squeezed thanks to low interest rates.”

Later in the day, Mr. Powell is scheduled to participate in a panel discussion for the 2021 World Bank/IMF spring meetings.

Before the North American open, investors got the latest reading on hiring in the U.S. economy. Weekly claims for initial state unemployment benefits rose to 744,000, up from 728,000 the week before. Markets had been expecting to see a number closer to 680,000.

In this country, increased COVID-19-related restrictions continue to weigh after Ontario announced a four-week stay at home order along with a decision to close in-person shopping for non-essential retailers as of Thursday. The province had previously closed restaurants to all but takeout and delivery service.

The Globe’s Chris Hannay reports that Ontario restaurant owners are growing increasingly frustrated, saying the shifting public-health orders are costing them money and driving them deeper into the debt hole COVID-19 has dug for them.

Food services and drinking places have been one of the industries hit hardest by public-health restrictions. Indoor dining has been banned in Toronto for 306 days, according to the Canadian Federation of Independent Business. Statistics Canada data show employment in the sector has dropped 27.5 per cent between February, 2020, and February, 2021.

On the corporate side, retailer Roots reported fourth-quarter sales of $99.4-million, down from $127.5-million in the same period a year earlier. Earnings per share in the most recent quarter totalled 29 cents compared with a loss of $1.06 in the same period a year earlier. Adjusted earnings per share for the fourth quarter was 39 cents.

Overseas, European markets were positive in early afternoon trading with the pan-European STOXX 600 up 0.41 per cent. Britain’s FTSE 100 rose 0.45 per cent. Germany’s DAX gained 0.04 per cent and France’s CAC 40 advanced 0.36 per cent.

In Asia, Japan’s Nikkei closed down 0.07 per cent. Hong Kong’s Hang Seng added 1.16 per cent.

Commodities

Crude prices fell in the wake of a drop in U.S. oil inventories but a rise in gasoline stocks.

The day range on Brent is US$62.52 to US$63.34. The range on West Texas Intermediate is US$59.05 to US$59.82.

The U.S. Energy Information Administration said on Wednesday that oil inventories fell by 3.5 million barrels last week to nearly 502 million barrels, although gasoline stocks increased by 4 million barrels, against expectations of a decline, to just over 230 million barrels.

“As usual, no shortage of moving parts in oil markets, mixed US inventory data on Wednesday, and some worrying COVID-19 news have kept the oil price’s pressure despite a generally positive macro backdrop,” Axi chief market strategist Stephen Innes said in an early note.

While the decline in crude inventories was bullish relative to consensus expectations, the rise in gasoline stocks along with a jump in COVID-19 cases in some regions weighed on sentiment, he said.

“Spiking coronavirus case numbers in India plus parts of Canada and Tokyo backtracking into the lockdown abyss, together with reports linking the AstraZeneca COVID-19 vaccine to the higher frequency of blood clots, also caused some concern - all or any of which could lead to lower oil demand,” Mr. Innes said.

In other commodities, spot gold was flat as investors weighed the most recent Fed minutes, sitting at US$1,737.89 per ounce. U.S. gold futures fell 0.1 per cent to US$1,739.20 per ounce.

“The Fed was very assuring about its stand on interest rates, although investors are not convinced,” Michael McCarthy, chief market strategist at CMC Markets, said.

“Investors are expecting the Fed will have to hike interest rates as early as January 2022 as it becomes a huge task once inflation starts going out of control.”

Currencies

The Canadian dollar was little changed as risk sentiment improved modestly and the U.S. dollar held near a two-week low against a group of world currencies.

The day range on the loonie is 79.20 US cents to 79.43 US cents.

“FX markets have traded in tight ranges overnight, modest Australian dollar and New Zealand dollar outperformance the only notable feature,” RBC chief currency strategist Adam Cole said.

“The FOMC meeting minutes last night did not add a great deal, mostly presenting little dissent from the view that policy will need to remain accommodative for an extended period.”

There were no major releases on the Canadian economic calendar Thursday, with investors now looking ahead to the release Friday morning of the latest jobs numbers.

On world markets, the U.S. dollar index, which measures the greenback against a basket of six currencies, edged lower to 92.30 in London trading, after dipping as low as 92.134 on Wednesday for the first time since March 23, according to figures from Reuters.

“The Fed minutes delivered no negative surprise for risk sentiment, with the committee reiterating no need to rush into tightening of monetary conditions and further support the recovery,” said Petr Krpata, chief EMEA FX and interest rates strategist at ING.

“We expect the very accommodative Fed to eventually weigh on USD as we move into the summer - rising inflation, yet no signs of imminent rate hikes will push front-end US real rates further into the deep negative, and coupled with the recovering global economy (which should be of a more synchronized nature in 2H21), should weigh on USD.”

The U.S. dollar weakened to 109.49 yen. The euro was mostly unchanged from Wednesday at US$1.1876, after rebounding from US$1.1704, its lowest in almost five months, touched at the end of March, Reuters reported.

More company news

Canopy Growth says it will buy the Supreme Cannabis Company in a transaction valued at about $435-million, including debt. Under the terms of the agreement, Supreme Cannabis shareholders will get 0.01165872 of a Canopy common share and $0.0001 in cash in exchange for each Supreme Cannabis Share held.

Production of some of Apple Inc’s MacBooks and iPads has been postponed due to a global component shortage, the Nikkei reported on Thursday. Chip shortages have caused delays in a key step in MacBook production, the report said, adding that some iPad assembly was postponed because of a shortage of displays and display components. As a result of the delay, Apple has pushed back a portion of component orders for the two devices from the first half of this year to the second half, the report said, citing sources briefed on the matter.

Amazon.com Inc’s closely watched union election in Alabama had voter turnout of about 55 per cent, and the public vote tally is expected to begin as early as Thursday afternoon, the Retail, Wholesale and Department Store Union (RWDSU) said in a statement. More than 3,200 mail ballots were received by the U.S. National Labor Relations Board (NLRB), in an election open to over 5,800 workers at Amazon’s warehouse in Bessemer, Alabama, the union said. The workers are voting on whether to join the RWDSU and have their warehouse be the first Amazon facility ever to unionize in the United States.

GameStop Corp, which has been part of a recent Reddit-driven trading frenzy, said on Thursday it intends to elect Ryan Cohen, the videogame retailer’s biggest shareholder and board member, as chairman following its annual meeting. The company also said it was nominating six people to stand for election to its board at the annual meeting of stockholders on June 9.

Economic news

(8:30 a.m. ET) U.S. initial jobless claims for week of April 3.

(12 p.m. ET) U.S. Fed Chair Jerome Powell joins a panel on “Debate on the Global Economy” for the 2021 World Bank/IMF Spring Meetings (videoconference)

With Reuters and The Canadian Press

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