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Equities

Canada’s main stock index edged higher early Thursday alongside global markets, although weakness in mining stocks capped the advance. On Wall Street, key indexes rose with investors setting aside concerns over the Federal Reserve’s plans withdraw stimulus.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 11.9 points, or 0.06 per cent, at 20,413.39.

In the U.S., the Dow Jones Industrial Average rose 37.98 points, or 0.11 per cent, at the open to 34,296.30.

The S&P 500 opened higher by 11.11 points, or 0.25 per cent, at 4,406.75. The Nasdaq Composite gained 63.16 points, or 0.42 per cent, to 14,960.00 at the opening bell.

“[Fed chair Jerome] Powell’s press conference came across as much more hawkish as he outlined the beginning of the process of a tapering of asset purchases this year,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“In its statement the Fed stated that ‘if progress continues broadly as expected, the Committee judges a moderation in the pace of asset purchases may soon be warranted’.”

He said the Fed will now be watching the September U.S. payrolls report, due on Oct.8.

“According to Powell, an even half decent report here could be the final piece of the jigsaw for tapering to start in November, with the potential to be all done by the middle of 2022,” Mr. Hewson said.

“This rather begs the question, why wait until then, if you’re only looking for a semi decent report, unless you are buying time to see how the situation in Washington regarding the debt ceiling plays out, as well as the Evergrande crisis in China.”

Elsewhere, markets continue to monitor the Evergrande situation in China. The company faces US$83.5-million in dollar-bond interest payments due on Thursday on a US$2 billion offshore bond. And more payments are coming due next week, with a US$47.5-million dollar-bond interest payment due. Earlier in the week, Evergrande said it had “resolved” a coupon payment on an onshore bond, calming market concerns after a sharp selloff stemming from the debit situation.

Bloomberg Law reported early Thursday that, in a recent meeting with Evergrande executives, Chinese regulators said the company should communicate proactively with bondholders to avoid a default but didn’t give more specific guidance. The Wall Street Journal, meanwhile, reported that Chinese authorities are asking local governments to prepare for a “possible storm”, signalling reluctance to bailout the company.

In this country, Statistics Canada says retail sales fell 0.6 per cent in July, less than economists had been expecting. Markets had been expecting a decline closer to 1.2 per cent. The agency says the July decline was driven by lower sales at food and beverage stores and building material and garden equipment dealers.

Statscan also said early estimates suggest that Canadian retail sales rose 2.1 per cent in August.

“With only a modest pullback in retail sales in July, a rebound in August, and surging spending on services, the economy will be driven by consumer spending growth in the third quarter,” CIBC senior economist Royce Mendes said.

On the corporate side, BlackBerry Ltd topped Wall Street forecasts for second-quarter revenue as hybrid working trends drove demand for its cybersecurity software products. Revenue was US$175-million for the quarter ended Aug. 31, compared with US$259-million a year earlier. Analysts on average expected US$163.5-million in revenue, according to IBES data from Refinitiv. BlackBerry shares were up more than 10 per cent in early trading in Toronto.

On Wall Street, Nike and Costco both report after the close of trading.

Overseas, the pan-European STOXX 600 gained 0.84 per cent. Britain’s FTSE 100 added was flat. Germany’s DAX and France’s CAC 40 were up 0.78 per cent and 0.75 per cent, respectively.

In Asia, Hong Kong’s Hang Seng rose 1.19 per cent. Markets in Japan were closed.

Commodities

Crude prices were steady, supported by rising demand and a bigger-than forecast decline in weekly U.S. inventories.

The day range on Brent is US$75.05 to US$75.71. The range on West Texas Intermediate is US$71.92 to US$72.54. Both benchmarks jumped more than 2 per cent during the previous session.

“With Gulf of Mexico production returning slowly, and natural gas prices remaining sky high, the structural outlook for oil remains promising as OPEC+ struggles to meet even its current production quotas,” OANDA senior analyst Jeffrey Halley said in a note.

Prices were underpinned by the latest figures from the U.S. Energy Information Administration which showed that weekly crude inventories fell by 3.5 million barrels, hitting the lowest level since October 2018.

The market also drew support from an easing U.S. dollar, which pulled back somewhat from one-month highs, and improved risk sentiment related to the situation with the potential debt default by China’s Evergrande.

As well, Reuters reports that several OPEC+ countries - including Nigeria, Angola and Kazakhstan - have struggled in recent months to raise output due to years of under-investment or maintenance work delayed by the pandemic.

In other commodities, gold prices fell in the wake of the Fed’s policy announcement.

Spot gold was down about 0.3 per cent at US$1,763.50 per ounce, while U.S. gold futures slipped 0.8 per cent to US$1,764.20.

“Everyone is going to be focused on how persistent these inflation pressures are and whether the Fed needs to be hastier in hiking the Fed funds rate in response... Once we start talking about rate hikes that’s going to be really bad for gold prices,” IG Market analyst Kyle Rodda said.

Currencies

The Canadian dollar gained, trading around 79 US cents, on improved risk sentiment in the broader market while its U.S. counterpart slid from one-month highs.

The day range on the loonie is 78.14 US cents to 79.06 US cents.

“The CAD is one of the top-performing currencies on the session, supported by the constructive risk mood and relatively firm crude oil prices,” Shaun Osborne, chief FX strategist with Scotiabank, said.

The Canadian dollar strengthened after Statistics Canada reported that retail sales fell less than expected in July and forecast an increase of 2.1 per cent in August.

On world markets, the U.S. dollar index was at 93.277, down a quarter percent on the day and having risen as high as 93.526, according to figures from Reuters.

“USD has partially reversed the gains that followed the FOMC announcement as risky assets continue to grind higher from Monday’s low,” RBC chief currency strategist Adam Cole said.

The euro was up at US$1.1716, a month high, while Britain’s pound also rose ahead of a Bank of England meeting.

More company news

Longtime Facebook executive Mike Schroepfer said on Wednesday that he was stepping down as the company’s chief technology officer. Mr. Schroepfer said in a Facebook post that veteran leader Andrew Bosworth, who heads up the social media company’s augmented reality and virtual reality efforts, including products like its Oculus Quest VR headset, will take over the role in 2022.

The European Union aims to have a common charging port for mobile phones, tablets and headphones under a European Commission proposal presented on Thursday in a world first, with the move impacting iPhone maker Apple more than its rivals. Under the Commission’s proposal, a USB-C connector will become the standard port for all smartphones, tablets, cameras, headphones, portable speakers and handheld videogame consoles. Chargers will also be sold separately from electronic devices.

Salesforce.com Inc on Thursday raised its fiscal full-year revenue forecast, as the pandemic-led shift to hybrid work fueled demand for its cloud-based software. The company now expects full-year sales in the range of $26.25-billion to $26.35-billion, compared to its previous forecast of $26.2-billion to $26.3-billion.

Economic news

Bank of England monetary policy announcement and minutes.

(830 am ET) Canada retail sales for July.

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

(945 am ET) U.S. Markit PMIs.

(10 am ET) U.S. leading indicator for August.

With Reuters and The Canadian Press

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