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Equities
Canada’s main stock index opened higher Thursday as crude prices advanced alongside optimism over global demand. On Wall Street, the Nasdaq and S&P 500 started at record highs, helped by strong tech results and a positive reading on U.S. economic growth.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 82.87 points, or 0.43 per cent, at 19,439.82.
On Wall Street, the Dow Jones Industrial Average rose 35.3 points, or 0.10 per cent, at the open to 33855.64. The S&P 500 rose 23.0 points, or 0.55 per cent, at the open to 4206.14, while the Nasdaq Composite rose 153.5 points, or 1.09 per cent, to 14204.515 at the opening bell.
“The record-smashing rally on Wall Street is likely to continue in the short-term,” Axi market analyst Milan Cutkovic said. “The U.S. Federal Reserve kept rates unchanged as expected while also signaling that it’s nowhere close to ending its super-easy monetary policy.”
“While there were no surprises, the Fed reiterating its dovish stance should keep the positive market sentiment intact,” he said.
The U.S. Commerce Department also painted a positive picture of the U.S. recovery, reporting that GDP in the first quarter grew at an annual rate of 6.4 per cent. That was the biggest first-quarter increase since 1984 and was driven by consumer spending.
On the corporate side, shares of Apple Inc. edged higher in early trading while Facebook stock jumped 6 per cent just after the North American open.
After Wednesday’s close, Apple reported sales and profit ahead of Wall Street forecasts but also cautioned that the global chip shortage could hit iPad and Mac sales. Apple also announced a US$90-billion share buyback. That came one day after Google-parent Alphabet said it would repurchase US$50-billion in stock.
Facebook, meanwhile, also topped profit and revenue expectations, although it warned that privacy changes by Apple could make it more difficult to target ads. Total rose 48 per cent to US$26.17-billion in the first quarter ended March 31, beating analysts’ average estimate of US$23.67-billion, according to IBES data from Refinitiv.
After Thursday’s close, markets will get results from Amazon and Twitter.
In this country, investors got results ahead of the start of trading from BCE Inc. The Globe’s Alex Posadzki reports that the telecom company beat analysts’ forecasts for both profit and revenue in the most recent quarter. After adjusting for items such as severance and acquisition costs, Bell had earnings of 78 cents per share, down from 79 cents per share during the first quarter of 2020. BCE had $5.71-billion of revenue for the three-month period ended March 31, up 1.2 per cent from a year ago. Analysts had been expecting revenue of $5.62-billion and adjusted earnings per share of 73 cents, according to the consensus estimate from market researcher S&P Capital IQ.
BCE shares gained more than 1 per cent in early trading in Toronto.
Elsewhere, Transat AT confirmed it has reached an agreement with the federal government to borrow up to $700-million in additional liquidity under Canada’s Large Employer Emergency Financing Facility. The announcement comes after Air Canada dropped its plan earlier this month to buy Transat. Transat shares were up 7 per cent in morning trading.
Overseas, the pan-European STOXX 500 was up 0.20 per cent by afternoon. Britain’s FTSE 100 rose 0.49 per cent. France’s CAC 40 advanced 0.36 per cent while Germany’s DAX fell 0.53 per cent.
In Asia, Hong Kong’s Hang Seng rose 0.80 per cent. Markets in Japan were closed for a public holiday.
Commodities
Crude prices advanced as optimism over the rebound in demand offset the impact of rising COVID-19 cases in India and some other regions.
The day range on Brent is US$67.13 to US$67.88. The range on West Texas Intermediate is US$63.65 to US$64.40. Thursday marked the third consecutive day of gains for both benchmarks.
“It appears that much of the negative news regarding higher OPEC+ output and India’s Covid-19 situation is now baked into prices,” OANDA senior analyst Jeffrey Halley said.
“The fall of the U.S. dollar post-FOMC lifted oil markets which are myopically focused on the upside of the U.S. recovery and the start of the US summer driving season.”
Earlier this week, members of the OPEC+ group agreed to hold to their current plan to begin dialing back production curbs starting next month.
Meanwhile, the U.S. Energy Information Administration said crude stockpiles edged higher last week as refiners increased production.
Crude inventories rose by 90,000 barrels in the week ended April 23 to 493.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 659,000-barrel rise.
In other commodities, gold prices pulled back.
Spot gold was down 0.1 per cent at US$1,780.10 per ounce. U.S. gold futures rose 0.4 per cent to US$1,780.50 per ounce.
“The fact that the Fed was optimistic about the economic recovery means that gold will find it difficult to break higher immediately. In the United States, the economic momentum has also meant that yields have an upward bias, which will keep gold capped,” Harshal Barot, a senior research consultant for South Asia at Metals Focus, told Reuters.
Currencies
The Canadian dollar was trading above 81 US cents in early going as its U.S. counterpart bounced off nine-weeks lows against a group of world currencies.
The day range on the loonie is 81.15 US cents to 81.38 US cents.
There were no major Canadian economic reports due Thursday. Markets will get a reading on February GDP on Friday from Statistics Canada.
On global markets, the U.S. dollar index, which weighs the greenback against a group of currencies, edged up from a nine-week low at 90.645, well below the rally peak of 93.439 hit at the end of March.
“Overnight, USD has stabilized, consolidating the small losses that came in the immediate wake of the FOMC [Federal Open Market Committee] announcement,” RBC chief currency strategist Adam Cole said.
“The FOMC statement was almost entirely unchanged from the previous version and the reaction largely reflects some disappointment that [Fed chair Jerome] Powell did not drop stronger hints on the start of tapering in the press conference.”
The U.S. dollar also shed much of the week’s gain against the yen, falling back to 108.55 from Wednesday’s top of 109.07, according to figures from Reuters.
The euro hit its highest since late February at US$1.2150, before steadying at US$1.2121.
More company news
Heavy equipment maker Caterpillar Inc reported a rise in adjusted first-quarter profit, as equipment demand picked up after a pandemic-led slump last year. The company reported an adjusted profit of US$2.87 per share in the quarter ended March 31, compared with US$1.65 per share a year earlier.
McDonald’s Corp beat Wall Street estimates for comparable sales. U.S. sales at restaurants open for more than a year rose 13.6 per cent, beating expectations of 9.25 per cent, according to analysts polled by Refinitiv IBES data. First-quarter global comparable sales growth of 7.5 per cent also surpassed pre-pandemic 2019 levels, with many countries, including the United States, easing restrictions on dining out, Chief Executive Officer Chris Kempczinski said. Those numbers topped expectations of a 4.71-per-cent growth.
Mastercard Inc reported a 5.6-per-cent drop in first-quarter profit on Thursday, mainly driven by a steep decline in cross-border spending on its cards because of a slump in international travel due to the COVID-19 pandemic. Net income, excluding exceptional items, fell to $1.7-billion, or $1.74 per share, from US$1.8-billion, or US$1.83 per share, a year earlier. Analysts on average had expected a profit of US$1.57 per share, according to Refinitiv IBES data.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of April 24.
(8:30 a.m. ET) U.S. real GDP for Q1.
(10 a.m. ET) U.S. pending home sales for March.
With Reuters and The Canadian Press
Terry Weber