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Equities

Canada’s main stock index slipped at the start of trading, weighed down by materials shares. On Wall Street, key indexes were treading water after a weaker-than-expected reading on weekly U.S. jobless claims offset optimism over a spate of solid corporate earnings.

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At 09:31 a.m., the Toronto Stock Exchange’s S&P/TSX composite index was down 17.95 points, or 0.09 per cent, at 20,092.1.

In the U.S., the Dow Jones Industrial Average rose 1.7 points, or flat, at the open to 34799.68. The S&P 500 rose 2.6 points, or 0.06%, at the open to 4361.27, while the Nasdaq Composite rose 20.8 points, or 0.14%, to 14652.724 at the opening bell.

Wall Street earnings on Thursday morning include AT&T, American Airlines and Southwest Air. After the close, Intel, Twitter and Snap all release results. Markets have found some support so far from corporate reports, with more than 80 per cent of the S&P 500 companies posting results so far beating on earnings estimates, according to Refinitiv.

“Upbeat earnings reports are giving investors a sense of optimism and, while disruptions are likely as a result of the surge, the belief remains that the best is yet to come,” OANDA senior analyst Craig Erlam said.

“Whether that will be sustained if countries impose tighter restrictions is another thing but for now, optimism remains.”

In economics, U.S. investors got a disappointing reading on weekly jobless claims. The U.S. Labor Department said claims rose unexpectedly to 419,000 last week. Markets had been expecting a reading closer to 350,000.

In this country, investors got results from Precision Drilling. In the second quarter, the company said revenue rose about 6 per cent to $201-million. Precision Drilling’s quarterly loss totalled $76-million or $5.71 a share, compared with $49-million or $3.56 a year earlier.

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Overseas, the pan-European STOXX 600 was up 0.95 per cent by midday. The ECB held rates unchanged, as expected, and unveiled new policy guidance that suggests longer support for the bloc’s economy.

Britain’s FTSE 100 was up 0.02 per cent. Germany’s DAX rose 0.93 per cent. France’s CAC 40 gained 0.73 per cent.

In Asia, Hong Kong’s Hang Seng jumped 1.83 per cent. Markets in Japan were closed.

Commodities

Crude prices gained in early going despite a rise in weekly U.S. inventories, helped by a return of positive risk sentiment to the markets.

The day range on Brent is US$71.74 to US$72.89. The range on West Texas Intermediate is US$69.86 to US$70.94.

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Both benchmarks rose by more than 4 per cent on Wednesday.

The gains came despite an increase in weekly U.S. inventories of 2.1 million barrels to 439.7 million barrels, according to the U.S. Energy Information Administration. Markets had been looking for a decline.

“I can only surmise that with risk sentiment climbing...that some good old-fashioned FOMO [fear of missing out] fast-money drove the rally,” OANDA senior analyst Jeffrey Halley said in a note.

“Unless we get another massive wave of Delta-variant risk-off sentiment sweeping markets, the lows seen by oil this week are likely to be the lows seen for some time,” he said. “The world remains on a recovery track, albeit asymmetrically, supporting oil’s consumption fundamentals for the rest of 2022.”

Gold prices continued to decline with the return of positive risk sentiment.

Spot gold fell 0.5 per cent to US$1,794.58 per ounce. U.S. gold futures slipped 0.5 per cent to US$1,793.90.

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“Due to the return of the risk appetite to the market, concerns about the possible implications of the coronavirus have again abated,” Commerzbank analyst Eugen Weinberg said.

“As a result, gold as a safe haven in this situation has not seen a huge demand.”

Currencies

The Canadian dollar was steady as its U.S. counterpart slid against a group of global currencies with investors shifting out of safe-haven holdings.

The day range on the loonie is 79.44 US cents to 79.67 US cents.

“The CAD rallied sharply yesterday as stocks and oil prices rebounded but the damage to sentiment and positioning will take some time to heal and we continue to see the longer run outlook for the CAD diminished by recent losses,” Shaun Osborne, chief FX strategist with Scotiabank, said.

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There were no major Canadian economic releases due Thursday. The next key indicator comes Friday, with the release of Statistics Canada’s report on May retail sales.

On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies slipped to 92.75 after pulling back from a 3-1/2 month high of 93.194 touched on Wednesday, according to figures from Reuters.

The euro traded at US$1.1790, just off the early April lows of $1.1752 touched on Wednesday.

The Australian dollar traded at US$0.73675, from an eight-month low of US$0.72895 the previous day.

More company news

AT&T Inc on beat analysts’ estimates for monthly phone bill paying subscriber additions in the second quarter, fueled by more Americans converting to 5G phones. The company, which also raised its full-year revenue and adjusted earnings per share growth forecasts, added 789,000 net new postpaid phone subscribers during the quarter, above FactSet estimates of 278,000.

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Southwest Airlines Co reported a smaller quarterly loss and said it would remain profitable for the rest of the year, as leisure bookings rebound thanks to aggressive vaccination drives. Excluding items, Dallas-based Southwest’s net loss narrowed to $206-million, or 35 cents per share, in the second quarter, from $1.50-billion, or $2.67 per share, a year earlier.

Unilever Plc warned that surging commodity costs would squeeze its full-year operating margin, overshadowing strong second-quarter sales growth fuelled by the easing of pandemic-related curbs in many of its markets. Underlying sales for the maker of Dove soap maker rose 5% in the three months ended June 30, above 4.8% forecast by analysts. However, rising prices of everything from crude to palm and soybean oil made the company cut its operating margin outlook to “about flat” from slightly up earlier and flag greater uncertainty surrounding that forecast.

Texas Instruments Inc forecast current-quarter revenue slightly below Wall Street estimates, leaving investors concerned about the chipmaker’s ability to meet searing demand in the face of a global shortage. The company expects third-quarter revenue between $4.40-billion and $4.76-billion, with the midpoint below analysts’ expectations of $4.59 billion, according to IBES data from Refinitiv. However, the company beat Wall Street estimates for second-quarter results, helped by a more than 40% rise in revenue from both its analog chips and embedded processing businesses.

American Airlines Group Inc beat Wall Street estimates for second-quarter revenue on the back of a recovery in demand as leisure travel rebounds from pandemic lows. Excluding items, the company posted a second-quarter net loss of $1.1-billion, or $1.69 per share. The U.S airline posted a net income of $19-million, or 3 cents per share, in the quarter ended June 30, compared with a loss of $2.07-billion, or $4.82 per share, a year earlier. Total operating revenue jumped 361% to $7.48-billion. Analysts, on average, expected a revenue of $7.34-billion, according to Refinitiv data.

Economic news

830 a.m. (ET) U.S. initial jobless claims for previous week.

10 a.m. (ET) U.S. existing home sales for June.

With Reuters and The Canadian Press

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