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Stocks on both sides of the border opened little changed Thursday with weaker crude prices weighing on energy shares in this country while U.S. investors look ahead to key employment numbers at the end of the week.
At 9:31 a.m. E, the Toronto Stock Exchange’s S&P/TSX composite index was down 5.49 points, or 0.03 per cent, at 19,305.25.
In the U.S., the Dow Jones Industrial Average rose 14.77 points, or 0.04 per cent, at the open to 34,245.11.
The S&P 500 opened higher by 1.55 points, or 0.04 per cent, at 4,169.14, while the Nasdaq Composite dropped 24.60 points, or 0.18 per cent, to 13,557.83 at the opening bell.
“Investors appear optimistic that the recent sell-off was only a temporary setback rather than the beginning of a deeper correction,” Axi market analyst Milan Cutkovic said.
“Despite efforts from central banks to downplay inflation fears, market participants remain nervous about the risk of an overheating U.S. economy and the US Federal Reserve being forced to hike rates earlier than expected.”
Ipek Ozkardeskaya, senior analyst with Swissquote, said the markets’ next big challenge will be the release of April U.S. employment figures, due Friday morning. (Canadian numbers for the same month will also be released on Friday.)
“Yesterday’s ADP data was weaker than expected but still showed that the U.S. economy added some 742,000 jobs in April, more than the previous month,” she said. “And the expectation is a touch below a million nonfarm job additions during the same month. If nothing, the possibility of a strong NFP print should keep investors on track for more reflation.”
Ahead of that report, markets got a better-than-expected reading on U.S. weekly jobless claims. The number of claims for initial state unemployment benefits fell below the 500,000-mark, hitting 498,000. Economists had been expecting an improvement from the previous week but still expected the latest number to come in closer to 538,000.
In this country, Canadian Natural Resources reported a rise in first-quarter profit from the fourth quarter, helped by higher crude prices. On an adjusted basis, the company posted a profit of $1.22-billion, or $1.03 per share, in the quarter ended March 31, compared with $176-million, or 15 cents, from the prior three-month period.
Two of Canada’s biggest insurers reported earnings after Wednesday’s closing bell. Manulife reported core earnings of $1.6-billion, or 82 cents a share, in the three months ended March 31, from $1-billion, or 51 cents, a year earlier. Sun Life reported underlying profit of $850-million, or $1.45 a share, in the three months ended March 31, from $770-million, or $1.31, a year earlier.
Manulife shares were down more than 4 per cent in morning trading in Toronto. Sun Life shares slid more than 1 per cent.
Thursday morning, investors get results from Bombardier and Cineplex.
Overseas, Britain’s FTSE 100 rose 0.16 per cent by afternoon. Germany’s DAX fell 0.28 per cent. France’s CAC 40 was down 0.08 per cent. The Bank of England kept its key rate unchanged Thursday but The central bank said it would slow its bond-buying to 3.4 billion pounds a week, down from its current pace of 4.4 billion pounds a week.
In Asia, Japan’s Nikkei rose 1.8 per cent. Hong Kong’s Hang Seng added 0.77 per cent.
Crude prices wavered in early going, underpinned by a bigger-than-expected decline in weekly U.S. inventories.
The day range on Brent is US$68.34 to US$69.37. The range on West Texas Intermediate is US$64.98 to US$65.98.
The U.S. Energy Information Administration said crude inventories fell by 8 million barrels in the week to April 30 to 485.1 million barrels. Analysts polled by Reuters had expected a decline of 2.3 million barrels. U.S. gasoline stocks rose by 737,000 barrels in the week, the EIA said, against a forecast for a 652,000-barrel draw.
“It [the report] appears to have been priced in, and with gasoline stocks not falling by as much as expected, long positions were squeezed out,” OANDA senior analyst Jeffrey Halley said.
Optimism over rebounding demand has been increasing alongside easing COVID-19 restrictions in the U.S. and parts of Europe, although rising infections in countries like India and Japan continue to raise concerns.
Meanwhile, Reuters reports that militants using bombs attacked two oil wells at an oilfield close to the northern Iraqi city of Kirkuk on Wednesday, killing at least one policeman and setting off fires. Industry sources told the news agency the attack had not affected output.
In other commodities, gold prices rose, helped by a pullback in the U.S. dollar and Treasury yields.
Spot gold was up 0.4 per cent at US$1,794.30 per ounce. U.S. gold futures rose 0.6 per cent to US$1,794.20 per ounce.
“Gold will likely stage a breakout one way or the other post the U.S. non-farm payrolls,” Mr. Halley said.
“The topside is more likely to capitulate as predictions of a one million-plus jobs added has become a very crowded trade. An on-expectation release could see both U.S. yields and the U.S. dollar head lower, lifting gold through US$1,800 an ounce.”
The Canadian dollar was trading higher, bolstered by recent gains in crude prices, while its U.S. counterpart pulled back from two-week highs against a basket of currencies.
The day range on the loonie is 81.38 US cents to 81.69 US cents. The Canadian dollar has been trading around its best level in three years, supported by crude prices and a hawkish stance from the Bank of Canada.
There were no major Canadian economics releases on Thursday. Markets are now awaiting Friday’s labour force survey for April from Statistics Canada.
“The backdrop for the CAD remains constructive — focus on the economic rebound and policy prospects are supporting CAD-positive interest rate spreads against the USD while the commodity cycle remains bullish,” Shaun Osborne, chief FX strategist with RBC, said.
“We remain bullish on the CAD outlook but the positive trend does risk hitting a bump in the road tomorrow if Canada’s labour market data reflects the softness that should follow on from the renewed lockdown measures imposed last month.”
On world markets, the U.S. dollar index was a touch lower, down 0.1 per cent on the day at 91.152, according to figures from Reuters.
The Australian dollar was up 0.1 per cent versus the U.S. dollar at 0.77530, having hit as low as 0.7701 overnight . The New Zealand dollar also declined, but saw a similar recovery.
Britain’s pound was steady against the U.S. dollar at US$1.3909 and down 0.2 per cent against the euro at 86.425 pence per euro ahead of the Bank of England’s latest policy decision, due later in the morning.
More company news
The Globe’s Susan Krashinsky Robertson reports Cineplex Inc.’s first-quarter revenues fell by 85.4 per cent, as Canada’s largest movie theatre chain continues to feel the sting of mandated closures during the third wave of the COVID-19 pandemic. The Toronto-based company reported $41.4-million in revenues for the three months ended March 31, compared to $282.8-million in the same period in 2020.
Bombardier reported an increase in quarterly adjusted profit on Thursday, helped by a recovery in business aviation, as rising COVID-19 vaccinations encourage wealthy travelers to fly again. Bombardier’s first-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $123-million, in the first quarter ended March 31, from $86-million, a year earlier.
Magna International Inc reported a 136% rise in quarterly profit and raised its full-year revenue outlook, as strong demand for vehicles encouraged its customers to order more body structures, chassis and powertrains. Magna’s revenue for the year is now expected to be between US$40.2-billion and US$41.8-billion, up from a previous forecast of $40.0 billion to $41.6 billion. Net income attributable to Magna rose to US$615-million, or US$2.03 per share, in the first quarter ended March 31, from US$261-million, or 86 US cents per share, a year earlier.
The Globe’s Steven Chase and Emma Graney report that Michigan’s Governor Gretchen Whitmer’s office says a key petroleum pipeline for Central Canada that runs through the Great Lakes state is a “ticking time bomb” and that Calgary-based operator Enbridge Inc. would be breaking the law if it doesn’t shut it down next week as she has ordered. Bobby Leddy, press secretary to Ms. Whitmer, said the Governor’s position is that Enbridge must stop operating Line 5 by May 12. “As of that date, Enbridge’s continued operation of the Line 5 pipelines in the Straits of Mackinac would be unlawful,” Mr. Leddy said in a statement.
830 a.m. (ET) U.S. weekly jobless claims.
830 a.m. (ET) U.S. productivity and unit labour costs.
Bank of England monetary policy announcement and monetary policy report.
With Reuters and The Canadian Press