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Equities

Canada’s main stock index slid at Thursday’s open with weakness in gold prices weighing on the mining sector. South of the border, tech shares led Wall Street lower in early trading after the Federal Reserve struck a hawkish tone in its latest policy announcement.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 28.73 points, or 0.14 per cent, at 20,202.23.

In the U.S., the Dow Jones Industrial Average fell 19.3 points, or 0.06 per cent, at the open to 34014.38. The S&P 500 fell 3.3 points, or 0.08 per cent, at the open to 4220.37, while the Nasdaq Composite dropped 40.6 points, or 0.29 per cent, to 13999.126 at the opening bell.

“The fact that the Federal Reserve are slowly preparing the ground now may well be unsettling for markets but it is also necessary, and in the here and now, monetary policy still hasn’t changed that much,” Michael Hewson, chief market analyst with CMC Markets U.K,, said.

“The bond buying program still stands at $120-billion a month, and while they have started to talk about a timeline for reducing it, they still some way short of acting in that regard.”

On Wednesday, new projections from 11 of 18 central bank officials now forecast two quarter percentage point rate increases in 2023, although the central bank also vowed to keep policy supportive for the time being to bolster the recovery.

The Fed cited an improved economic outlook, with overall economic growth expected to hit 7 per cent this year.

Ahead of the start of trading on Wall Street, the U.S. Labor Department said weekly claims for initial unemployment benefits rose to 412,000. Markets had been expecting a number closer to 360,00.

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In this country, two major proxy advisory companies say BlackBerry Ltd .’s shareholders should reject the company’s pay practices.

The Globe’s David Milstead reports that Institutional Shareholder Services Inc. and Glass Lewis & Co. recommend “no” votes on BlackBerry’s non-binding vote on executive compensation, known informally as “say on pay.” Glass Lewis gave BlackBerry an “F” grade in its pay-for-performance system. It also recommends shareholders withhold votes from Prem Watsa, the Fairfax Financial chief executive officer who also serves as BlackBerry’s lead independent director and chairs the board’s compensation committee.

Overseas, Europe’s major markets were down in morning trading with the pan-European STOXX 600 off 0.45 per cent. Britain’s FTSE 100 fell 0.57 per cent. Germany’s DAX and France’s CAC 40 lost 0.29 per cent and 0.23 per cent.

In Asia, Japan’s Nikkei closed down 0.93 per cent. Hong Kong’s Hang Seng edged up 0.43 per cent.

Commodities

Crude prices pulled back from multi-year highs in early going as a higher U.S. dollar offset a drop in U.S. inventories.

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The day range on Brent is US$73.55 to US$74.25. The range on West Texas Intermediate is US$71.33 to US$72.06. On Wednesday, Brent touched its best level since 2019, while WTI managed its highest since 2018.

“Crude prices gave up earlier gains after a surprisingly hawkish FOMC dot plot sent both Treasury yields and the [U.S.] dollar higher,” OANDA senior analyst Ed Moya said.

“The short-term rebound in the dollar will likely be a speed bump in WTI crude’s path higher,” he said in a note.

Prices were underpinned by new figures from the U.S. Energy Information Administration showing that crude inventories fell by 7.4 million barrels last week as refining utilization increased 92.6 per cent, the highest since before the start of the pandemic.

The weekly decline in inventories was more than analysts had been forecasting.

“Americans are traveling as jet fuel demand improved to the highest level since the end of May and as gasoline demand rose by 900,000 barrels per day,” Mr. Moya said.

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Elsewhere, gold prices pared early gains, holding near their lowest levels in more than a month.

Spot gold was steady at US$1,813.80 per ounce, having climbed up to 0.7 per cent earlier in the session on bargain-hunting.

U.S. gold futures were down 2.6 per cent at US$1,812.20 per ounce.

“Gold was crushed overnight by a more hawkish Fed. It has staged a modest recovery in Asia, but the rally looks more like speculative dip buying and fast money short-covering, than a vote of confidence in the yellow metal,” Jeffrey Halley, a senior market analyst at OANDA, said.

Currencies

The Canadian dollar was weaker, trading below 82 US cents, as the greenback continued to advance on world markets after the Fed struck a surprisingly hawkish stance.

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The day range on the loonie is 81.17 US cents to 81.55 US cents. The Canadian dollar hit a six week low against its U.S. counterpart as the U.S. dollar advanced on suggestions the Fed could hike rates twice in 2023.

There were no major Canadian economic releases on Thursday’s calendar.

On global markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, was up 0.2 per cent on the day at 91.613, its highest in two months, according to figures from Reuters.

The euro dropped versus the U.S. dollar, with euro-dollar changing hands at a two-month low of US$1.1951.

“An FOMC surprise is always a great way to inject some movement into markets, and the past twelve hours or so have been a case in point,” IG chief market analyst Chris Beauchamp said.

“The dust has settled to a degree, but it has left the [U.S.] dollar in a stronger position,” he said.

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In cryptocurrencies, bitcoin was trading around US$39,300, slightly up on the day.

More company news

The beleaguered Terra Nova oilfield off the coast of Newfoundland and Labrador could live to pump another day after its owners reached a restructuring agreement in the eleventh hour Wednesday. The oilfield’s seven owners will shuffle their shares and provide short-term funding for the project, rather than abandon the field entirely, a news release from Suncor Energy Inc. said. The announcement comes a day after the company was expected to deliver a decision about whether the field would be shut down for good.

Canada’s financial regulator will raise the amount of capital the country’s biggest lenders must hold to guard against risks to 2.5% of risk-weighted assets from Oct. 31, from 1% currently, it said on Thursday. While key vulnerabilities, including household and corporate debt levels, remain elevated, the economic and market disruptions stemming from the pandemic have abated and banks’ capital levels have been resilient, the Office of the Superintendent of Financial Institutions said in a statement.

Pembina Pipeline Corp. and TC Energy Corp. have announced a plan to develop a carbon transportation and sequestration system in Alberta. The companies say the project will form the backbone of Alberta’s carbon capture utilization and storage industry. It will be capable of transporting more than 20 million tonnes of carbon dioxide annually.

Economic news

(8:30 a.m. ET) Canada’s international securities transactions for April.

(8:30 a.m. ET) U.S. initial jobless claims for week of June 12.

(8:30 a.m. ET) U.S. Philadelphia Fed Index for June.

(10 a.m. ET) U.S. leading indicator for May.

With Reuters and The Canadian Press

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