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Equities
Canada’s main stock index kicked off the month on a sour note, opening lower Thursday as weaker crude and gold prices weighing on sentiment. On Wall Street, key indexes also started in the red with economic concerns continuing to rattle investors’ nerves.
At 9:40 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 184.53 points, or 0.95 per cent, at 19,146.28.
In the U.S., the Dow Jones Industrial Average fell 55.85 points, or 0.18 per cent, at the open to 31,454.58.
The S&P 500 opened lower by 18.27 points, or 0.46 per cent, at 3,936.73, while the Nasdaq Composite dropped 108.76 points, or 0.92 per cent, to 11,707.44 at the opening bell.
“As we start a new month and meteorological autumn, the question now being asked is where we go next for equity markets, after [Fed chair Jerome] Powell’s comments at the end of last week, and subsequently hawkish comments from more Fed officials this week,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“When you have the likes of a typical Fed dove like Minneapolis Fed President Neel Kashkari talk about the unlikely prospect of rate cuts in 2023, it’s hard to envisage a scenario of anything other than a 75bps rate hike later this month, as the Fed continues to insist that their priority is to keep going on rates until the job is done.”
The Fed makes its next rate decision later this month. The Bank of Canada’s next policy decision comes next week. Both are expected to continue the course of aggressive rate hikes.
Traders will have a close eye on the new U.S. nonfarm payrolls figures when they’re released early tomorrow morning. A strong hiring number could support the case for another outsized move by the Federal Reserve on rates.
OANDA senior analyst Ed Moya says expectations are mostly optimistic for the latest U.S. jobs report. Economists are expected to see about 300,000 new jobs created in August with the unemployment rate holding steading at 3.5 per cent.
“A slower pace of hiring still gives the Fed the greenlight for more aggressive rate hikes over the next couple of FOMC meetings,” Mr. Moya said.
Canada’s August employment report is due next week.
Elsewhere, The Globe’s Temur Durrani reports Shopify Inc. is extending its wave of layoffs while boosting pay for many of its remaining employees amid a restructuring that saw the Ottawa-based e-commerce company shed a tenth of its work force in late July. About 70 employees have been let go in August, according to three people familiar with the situation.
On the corporate side, investors will get second-quarter results from Lululemon Athletica after the close of trading.
Overseas, the pan-European STOXX 600 was down 1.2 per cent by midday. Britain’s FTSE 100 slid 1.23 per cent. Germany’s DAX and France’s CAC 40 were down 1.04 per cent and 1.35 per cent, respectively.
In Asia, Japan’s Nikkei finished down 1.53 per cent. Hong Kong’s Hang Seng lost 1.79 per cent.
Commodities
Crude prices continued to slide with global recession weighing on prices.
The day range on Brent was US$93.10 to US$95.68 by early Thursday morning. The day range on West Texas Intermediate was US$87.12 to US$89.63. Both benchmarks were down nearly 4 per cent on Wednesday.
“Crude prices are falling as energy traders anticipate a brutal period for global growth,” OANDA’s Ed Moya said in a note.
“China factory activity remains depressed and another euro zone record high inflation reading has raised the prospects of much more aggressive ECB tightening that could trigger a severe recession.”
Early Thursday, Reuters reported that the OPEC+ Joint Technical Committee expects a 2023 oil market deficit of 300,000 barrels a day in 2023. The JTC, which met on Wednesday, expects demand to lag supply by 400,000 bpd this year, a downward revision of 500,000 bpd after new production assumptions were taken into account, the news agency reported.
Meanwhile, gold prices hit a six-week low, hit by concerns about future rate hikes and a strong U.S. dollar.
Spot gold was down 0.3 per cent at US$1,706.40 per ounce by early Thursday morning. Earlier in the day, bullion hit its lowest level since July 21 at US$1,701.10.
U.S. gold futures shed 0.5 per cent to US$1,717.40 per ounce.
Currencies
The Canadian dollar was lower, trading below the 76-US-cent mark, amid weaker global sentiment and flagging crude prices.
The day range on the Canadian dollar is 75.78 US cents and 76.24 US cents.
There were no major Canadian economic releases due Thursday.
On world markets, the U.S. dollar index, which measures the greenback against a basket of currencies, was up 0.18 per cent at 108.93 in early going, not far off its two-decade high of 109.48 hit on Monday, according to figures from Reuters.
The greenback also managed a 24-year high against the Japanese yen. In Asia trade, the greenback hit a high of 139.69 yen, its highest since 1998, after gaining about 0.5 per cent on the previous day’s close, Reuters reports.
The euro fell 0.3 per cent to just hold above parity at US$1.00235. Britain’s pound was down 0.16 per cent at US$1.16015 after hitting a new two-and-a-half year low of US$1.1570 hit early in the session.
More company news
Canada’s Turquoise Hill Resources Ltd. has accepted a sweetened offer by Rio Tinto International Holdings Ltd. for the stake in the company that it does not already own valued at about $4.2-billion. Under the new proposal, Rio Tinto will pay $43 per share in cash for the 49 per cent stake it does not already hold in the company. The offer is up from $40 per share Rio Tinto offered last week and higher than the company’s earlier bid of $34 per share rejected by Turquoise Hill.
Fairfax Financial Holdings Ltd. has signed a definitive agreement to take Recipe Unlimited Corp., the company behind Swiss Chalet, Harvey’s, St-Hubert and the Keg, private. The deal for $20.73 per share in cash values Recipe Unlimited at about $1.2-billion. Fairfax, which first announced its offer in August, is already the controlling shareholder of the company.
Imperial Oil Ltd. says it and ExxonMobil Canada have closed the $1.9-billion sale of their oil and gas-producing assets in the Montney and Duvernay areas to Whitecap Resources Inc. The two companies each owned 50 per cent of XTO Energy Canada, which held the assets, while Imperial itself is majority owned by ExxonMobil. Imperial says the assets sold include almost 230,000 net hectares in the Montney shale and about 29,000 net hectares in the Duvernay shale, plus additional holdings in other areas of Alberta.
Britain’s competition regulator said Microsoft Corp’s acquisition of “Call of Duty” maker Activision Blizzard Inc may be expected to result in substantial lessening of competition. “Merger will be referred for an in-depth investigation unless the parties offer acceptable undertakings to address these competition concerns,” the watchdog said in a statement.
Farm equipment maker Deere & Co on Thursday named Joshua Jepsen as its chief financial officer, replacing Rajesh Kalathur, who was appointed to the role barely three months ago. Kalathur will continue as president of Deere’s financial unit, Deere said in a statement. Jepsen, who assumed the duties of deputy financial officer at Deere earlier this year, joined the company as an intern in 1999.
Boeing Co expects the 737 Max 7 will be certified by the end of the year and the larger Max 10 in the first half of 2023, a company executive said on Thursday. The plane maker faces a year-end deadline from U.S. lawmakers for both or will need to meet new cockpit alerting requirements unless waived. “The Max 7, that’d be the first one to come in. The Max 10 will be right behind that,” John Dyson, product marketing specialist at Boeing Commercial Airplanes, told reporters before providing more specific dates to Reuters after a briefing.
The Chinese government on Thursday called on Washington to repeal its technology export curbs after chip designer Nvidia Corp. said a new product might be delayed and some work might be moved out of China. Nvidia said it was told Friday it needs a U.S. government license to export any product with performance equal to its A100 graphics processing chips or better to China, Hong Kong or Russia. It said buyers of the A100 and development of the newer H100 might be affected.
Economic news
(830 am ET) Canada building permits for July.
(830 am ET) U.S. jobless claims for last week
(830 am ET) U.S. productivity and unit labour costs for the second quarter.
(930 am ET) Canada S&P global manufacturing PMI.
(945 am ET) U.S. S&P global manufacturing PMI, followed by the ISM manufacturing PMI
(10 am ET) U.S. construction spending.
With Reuters and The Canadian Press
Terry Weber