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Equities
Canada’s main stock index slipped at the start of trading Thursday with weaker crude prices weighing on energy stocks. South of the border, indexes wavered in early trading with a better-than-forecast reading on U.S. jobless claims helping underpin sentiment.
The Toronto Stock Exchange’s S&P/TSX composite index was down 17.84 points just after the start of trading, or 0.1 per cent, at 19,125.41.
In the U.S., the Dow Jones Industrial Average fell 27.43 points, or 0.08 per cent, at the open to 34,109.88.
The S&P 500 opened lower by 2.96 points, or 0.07 per cent, at 4,170.46, while the Nasdaq Composite gained 2.35 points, or 0.02 per cent, to 13,952.57 at the opening bell.
“The swings that we are seeing in the market this week reflect the fact that investors are grappling with many conflicting factors,” OANDA market analyst Sophie Griffiths said.
“There are significant differences over the vaccine rollout and COVID caseloads globally. India is hitting grim milestones on an almost daily basis, and Japan is also on the brink of lockdown. Meanwhile, corporate America and Europe are showing signs the economic recovery is broadly on the right path.”
On Thursday, earnings continue to influence trading on Wall Street with AT&T, Southwest and American Airlines all reporting before the North American open. After the bell, Intel, Snap and Mattel post results.
On the economic side, markets also got a better-thank-forecast reading on the U.S. jobs market. Weekly claims for initial state unemployment totalled 547,000 last week, down from 586,000. Economists had expected to see about 610,000 claims.
In this country, Canadian Pacific Railway Ltd.’s CEO Keith Creel signalled that he has no plans to get into a bidding war after rival CN Rail launched a counterbid for Kansas City Southern earlier in the week. He told analysts during a conference call that he believes CP’s lower offer has a better chance of winning regulatory approval. The comments came as CP reported a 47-per-cent increase in first quarter profit. The company said net income rose to $602-million, or $4.50 per share, in the first quarter ended March 31, from $409-million, or $2.98 per share, a year earlier.
Overseas, the pan-European STOXX 600 was up 0.49 per cent after the ECB said it was leaving stimulus in place.
Britain’s FTSE 100 rose 0.07 per cent by early afternoon. Germany’s DAX added 0.53 per cent and France’s CAC 40 gained 0.69 per cent.
In Asia, Japan’s Nikkei ended up 2.38 per cent after two days of declines. Hong Kong’s Hang Seng added 0.47 per cent.
Commodities
Crude price declines extended into a third session on a surprise rise in weekly U.S. inventories and concern over rising COVID-19 cases in India and Japan.
The day range on Brent is US$64.58 to US$65.26. The range on West Texas Intermediate is US$60.61 to US$61.27. Both benchmarks are down about 3 per cent for the week so far after losing roughly 2 per cent on Wednesday.
“A lack of buyers of this dip regionally potentially indicates that regional buyers feel the sell-down has more to go,” OANDA senior analyst Jeffrey Halley said.
“Given how quickly bullish momentum has faded this week, it is hard to argue with that premise.”
Investors were disappointed with the latest weekly inventory report from the U.S. Energy Information Administration, which showed crude stocks rose by 594,000 barrels last week. Analysts had been expecting a drop of about 3 million barrels.
As well, markets have also been nervously watching spiking coronavirus cases in regions, including India, which is the world’s third biggest consumer of oil.
India reported on Thursday 314,835 new cases of the coronavirus over the previous 24 hours, the highest daily increase recorded anywhere, according to Reuters. Japan, the world’s No.4 oil importer, is expected to issue a third state of emergency on Tokyo and three western prefectures that could last for about two weeks, the news agency said.
In other commodities, gold prices held near a two-month high, helped by easing U.S. Treasury yields.
Spot gold was little changed at US$1,792.66 per ounce, after hitting its highest since Feb. 25 at US$1,797.67. U.S. gold futures were flat at US$1,793 per ounce.
“A strong US 20-year bond auction saw U.S. yields fall slightly overnight, and that was enough to propel both gold and silver to another powerful intra-day rally,” Mr. Halley said.
Currencies
The Canadian dollar was little changed, hovering around 80 US cents, after hitting its best level against the U.S. dollar in about six weeks in the wake of the Bank of Canada’s suggestion that rates could start to rise next year.
The day range on the loonie is 79.92 US cents to 80.17 US cents.
In addition to issuing an optimistic economic forecast and hinting at coming rate increases, the Bank of Canada also became the first Group of Seven central bank to begin tapering bond purchases.
“The biggest downside risk remains the third wave currently hitting Canada, with record cases and hospitalizations,” Elsa Lignos, global head of FX strategy with RBC, said in a note.
“The BoC is looking through the short-term impact for now. The experience of countries like the U.S. and the U.K. that are ahead in vaccinations suggests that is probably a reasonable approach to take.”
On world markets, the euro was quoted at US$1.2033, up 0.1 per cent on the day and not far from its strongest since March 3, according to figures from Reuters. The common currency has risen as much as 3 per cent against the U.S. dollar since the start of April.
The British pound bought US$1.3938, up 0.1 per cent.
The onshore yuan rose to 6.4820 per dollar to reach its strongest level since March 12.
More company news
American Airlines Group Inc reported a smaller quarterly loss as rising vaccination rates prompted more people to opt for air travel. The company posted a net loss of $1.25-billion, or $1.97 per share, for the first quarter ended March 31, compared with a loss of $2.24-billion, or $5.26 per share, a year earlier.
Dow Inc reported a 69% rise in first-quarter profit on Thursday, as prices for its chemicals used in plastics and packaging rose on the back of tighter supply and high demand. The company posted net operating income, which excludes certain items, of $1.02-billion, or $1.36 per share, in the three months ended March 31, compared with a profit of $607-million, or 81 cents per share, in the fourth quarter.
AT&T Inc’s wireless subscriber additions more than doubled first-quarter estimates, as the reopening of the U.S. economy after months of pandemic-led restrictions boosted its smartphone sales and media business, pushing revenue past Street targets. The company said on Thursday it added 595,000 net wireless phone subscribers in the quarter, compared with estimates of 268,800, according to research firm FactSet.
Southwest Airlines Co posted a smaller-than-expected quarterly adjusted loss and forecast lower cash burn in the second quarter as rising vaccination rates and pent-up demand for leisure travel signal an “optimistic summer.” Excluding items, the Dallas-based company reported a net loss of $1.02-billion, or $1.72 per share, in the first quarter ended March 31, compared with a net loss of $77-million, or 15 cents per share, a year earlier. Total operating revenue fell 51.5% to $2.05-billion.
Economic news
830 a.m. (ET) U.S. initial jobless claims for the week of April 17.
10 am. (ET) U.S. existing home sales for March.
10 a.m. (ET) U.S. leading indicator for March.
With Reuters and The Canadian Press
Terry Weber