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Equities

Canada’s main stock index started higher Thursday with energy stocks getting a lift from higher crude prices. On Wall Street key indexes were also up despite a hotter-than-expected reading on U.S. inflation.

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At 9:30 a.m., the Toronto Stock Exchange’s S&P/TSX composite index was up 69.43 points, or 0.35 per cent, at 20,071.7.

Energy shares gained more than 1 per cent as crude prices firmed.

In the U.S., the Dow Jones Industrial Average rose 55.37 points, or 0.16 per cent, at the open to 34,502.51.

The S&P 500 opened higher by 9.01 points, or 0.21 per cent, at 4,228.56, and the Nasdaq Composite gained 22.13 points, or 0.16 per cent, to 13,933.88 at the opening bell.

Ahead of the North American open, markets got a hotter-than-expected reading on U.S. inflation in May. New figures showed consumer prices rose 5 per cent year-over-year, the highest reading since 2008. Analysts had been forecasting a number closer to 4.7 per cent. On a monthly basis, prices rose 0.6 per cent in May.

Investors have been keeping a close eye on inflation indicators, fearing that the Federal Reserve, which makes a policy announcement next week, could be forced to tighten policy. A stronger-than-expected reading during the previous month spooked investors, who remain concerned that rising inflation could force the Federal Reserve to tighten policy.

“The question is: how long will these elevated price increases go on? Over time supply is expected to adjust, but with pandemic-related supply shortages and constraints still in place the process could take some time,” TD senior economist Leslie Preston said.

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“Even as some of these swings are transitory, measures that aren’t as affected by the pandemic are also seeing sturdy price gains. Eventually the Federal Reserve may have to take notice, but the other side of the dual mandate – full employment – has been a bit disappointing lately, suggesting it will be some time still before they raise rates.”

In this country, the energy sector is in focus after TC Energy Corp. said it is terminating the Keystone XL pipeline, months after U.S. President Joe Biden pulled its permit. The cancellation comes after more than a decade of wrangling over the project.

Elsewhere, travel company Transat AT reported second-quarter revenue of $7.6-million, down from $571.3-million in the same quarter last year. On an adjusted basis, Transat says it lost $103.3-million or $2.74 per share for the quarter, compared with an adjusted loss of $38.8-million or $1.03 per share a year ago.

Overseas, the pan-European STOXX 600 was down 0.23 per cent. Britain’s FTSE 100 gained 0.18 per cent. Germany’s DAX and France’s CAC 40 slid 0.13 per cent and 0.32 per cent, respectively. Early Thursday, the European Central bank kept its policy rate and guidance unchanged.

In Asia, Japan’s Nikkei ended up 0.34 per cent. Hong Kong’s Hang Seng lost 0.01 per cent.

Commodities

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Crude prices steadied after earlier declines in the wake of new U.S. inventory figures showing a jump in weekly gasoline stocks ahead of the summer driving season.

The day range on Brent is US$71.51 to US$72.32. The range on West Texas Intermediate is US$69.29 to US$70.

The U.S. Energy Information Administration said crude inventories that exclude the Strategic Petroleum Reserve fell by 5.2 million barrels in the week to June 4 to 474 million barrels. But fuel stocks were up sharply, with product supplied falling to 17.7 million barrels per day (bpd) versus 19.1 million the week before, according to Reuters.

“Oil beat a modest retreat overnight after U.S. crude inventories fell, but U.S. gasoline inventories rose sharply,” OANDA senior analyst Jeffrey Halley said in a note.

“The pullbacks are modest in scale and look more look position adjustments into the U.S. CPI data tonight than a structural turn in sentiment in the greater scheme of things.”

He said only a retreat below US$70 a barrel for Brent and US$68 a barrel for WTI would suggest an end to the current rally.

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In other commodities, gold prices slipped as the U.S. dollar edged higher.

Spot gold was down 0.2 per cent at US$1,884.18 per ounce.

U.S. gold futures fell 0.5 per cent to US$1,886.20 per ounce.

Currencies

The Canadian dollar was lower after the Bank of Canada held rates steady while its U.S. counterpart remained near a five-month low against a group of world currencies.

The day range on the loonie is 82.48 US cents to 82.59 US cents.

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On Wednesday the Bank of Canada held rates steady, as expected, and said it expects the economy to rebound strongly as COVID-19 vaccinations advance.

Later Thursday, Bank of Canada deputy governor Timothy Lane is scheduled to speak on the country’s economy. The speech is scheduled for 1 p.m. ET and will be followed by a press conference.

“Yesterday’s BoC decision was as uneventful as expected with little in the statement to indicate any notable change to the Bank’s policy outlook,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“We think the Bank of Canada will again reduce its QE pace in July with the support from June employment data released five days before the decision,” he said in an early note.

On world markets, the U.S. dollar index has fluctuated narrowly around the psychologically important 90 level, and was last at 90.206 - not too far from last month’s low of 89.533, a level not seen since early January, according to Reuters.

The euro rose to a one-week high at US$1.2218 on Wednesday only to finish little changed, and was mostly flat at US$1.2169 in European trade.

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The yen traded at 109.46 per U.S. dollar, also little changed from Wednesday.

More company news

The Globe’s James Bradshaw reports that an Ontario judge has dismissed a US$4.5-billion lawsuit against Toronto-Dominion Bank over its role in providing bank accounts used in one of the world’s largest Ponzi schemes. The decision deals a blow to liquidators seeking to recover funds for investors in a US$7.2-billion fraud masterminded by ex-billionaire Allen Stanford. Lawyers for the liquidators argued that TD helped move billions of dollars for an offshore company controlled by Mr. Stanford, and was liable for investors’ losses for failing to detect the fraud or heed warning signs about questionable activity.

Brookfield Infrastructure Partners LP has filed an application with the Alberta securities regulator seeking elimination of takeover target Inter Pipeline Ltd’s $350-million termination fee to Pembina Pipeline Corp. Brookfield last week raised its hostile majority cash offer to buy Inter to $8.48-billion, topping Pembina’s $8.3-billion all-stock proposal for the Canadian oil and gas transportation company.

United Airlines is in talks to buy around 200 single-aisle jets in a multibillion-dollar revamp set to benefit both Boeing and Airbus, industry sources told Reuters. If confirmed, the deal could include over 100 of Boeing’s 737 MAX 8 and several dozen larger Airbus A321neo jets, they said, asking not to be identified. The carrier is looking to upgrade its fleet at a time when travel is surging in the United States, according to Bloomberg News, which first reported the Boeing negotiations. That portion of the order could include 150 MAX aircraft, it said.

Economic news

ECB monetary policy meeting

(8:30 a.m. ET) U.S. initial jobless claims for week of June 5. Estimate is 372,000, down 13,000 from previous week.

(8:30 a.m. ET) U.S. CPI for May. Consensus is a rise of 0.8 per cent from April and 4.7 per cent year-over-year.

With Reuters and The Canadian Press

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