Canada’s main stock index was mostly treading water at Thursday’s opening bell while Wall Street saw modest early gains after an agreement on the U.S. debt deal cleared Congress.
At 9:34 a.m. ET the Toronto Stock Index fell 5.97 points, or 0.1 per cent, to 19,563.30.
In the U.S., the Dow Jones Industrial Average rose 21.58 points, or 0.07 per cent, at the open to 32,929.85.
The S&P 500 opened higher by 3.20 points, or 0.08 per cent, at 4,183.03, while the Nasdaq Composite gained 9.18 points, or 0.07 per cent, to 12,944.46 at the opening bell.
Markets saw some relief overnight after the U.S. House of Representatives passed the bill to suspend the U.S. debt ceiling and avert an historic default. With the House vote of 314-117, the bill now heads to the Senate with passage expected within days.
“There is this hope among traders now that the bill has passed the House and will get the green light from the Senate, which will support the risk-on rally among investors and traders,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said.
Traders are now shifting their attention back to the Fed and what it will do at this month’s policy meeting. On Wednesday, Fed Governor Philip Jefferson said that skipping a rate increase at the next meeting would allow central bankers time to assess the need for more policy firming, offering markets some optimism that a pause could be in store.
“There is still a lot of noise from the Fed members about their next policy action,” Mr. Aslam said. “Traders aren’t sure if the Fed is actually ready to pause the interest rate or if they will continue to hike interest rates as inflation is still highly sticky and stubborn in nature.”
In the wake of Mr. Jefferson’s comments, Fed futures reflected a less-than-even chance of a quarter-point rate hike when the Fed next meets on June 13-14, according to Reuters.
U.S. traders will get key May jobs numbers tomorrow. Ahead of that release, ADP said Thursday morning that U.S. private payrolls jumped by 278,000 in May, far more than economists had been forecasting.
Canada’s employment numbers for the month will follow late next week. A better-than-expected reading on GDP yesterday raised some speculation that the Bank of Canada, which moved to the sidelines earlier this year, could be moved to again raise interest rates.
In this country, earnings continue to roll in with results from Ski-Doo maker BRP and Montreal-based Laurentian Bank. Vancouver-based athletic-wear maker Lululemon reports after the close of trading.
BRP reported first-quarter profit of $154.5-million or $1.92 a diluted share, up from $121-million or $1.46 in the same quarter last year. Revenue totalled $2.43-billion, up from $1.81-billion in the same quarter last year.
Overseas, the pan-European STOXX 600 was up 0.41 per cent by afternoon. Britain’s FTSE 100 gained 0.21 per cent. Germany’s DAX and France’s CAC 40 were up 0.70 per cent and 0.12 per cent, respectively. New figures released early Thursday showed the euro zone inflation rate eased to 6.1 per cent in May from 7 per cent a month earlier.
In Asia, Japan’s Nikkei closed up 0.84 per cent. Hong Kong’s Hang Seng slid 0.10 per cent.
Crude prices were steady in early trading, buoyed by renewed speculation that the U.S. Federal Reserve could be poised to hit the pause button after a series of rate hikes.
The day range on Brent was US$72.15 to US$73.43 in the early premarket period. The range on West Texas Intermediate was US$67.51 to US$68.84. Both benchmarks saw losses on Wednesday and posted declines for the month.
“High inflation, recession concerns, higher interest rates, greater-than-expected supply, and governments releasing oil reserves to push back against inflation have all contributed to fragile oil markets,” Stephen Innes, managing partner with SPI Asset Management, said.
“And interday plays will continue to get dominated by fresh macroeconomic demand indicators, which remain the primary driver of speculative demand for oil.”
Crude drew some support from yesterday’s comments from comments from Fed officials that rates hikes could be put on hold at the central bank’s next meeting in two weeks. As well, oil benefitted from positive broader sentiment linked to the passage of the U.S. debt deal in Congress.
Those factors, however, continue to be offset somewhat by weaker-than-expected economic data out of China, one of the world’s top crude consumers, earlier this week.
Meanwhile, the first of two weekly U.S. inventory reports showed a rise in crude stocks. Data from the American Petroleum Institute, released yesterday, showed crude inventories rose 5.2 million barrels last week. More official U.S. government figures are due shortly after the start of trading on Thursday.
In other commodities, spot gold slid 0.2 per cent to US$1,958.61 per ounce by early Thursday morning. U.S. gold futures dipped 0.3 per cent to $1,958.00. Gold posted a monthly decline in May.
The Canadian dollar was slightly lower early Thursday while its U.S. counterpart advanced against a group of world currencies on the back of developments in Washington on the U.S. debt deal.
The day range on the loonie was 73.60 US cents to 73.75 US cents. The dollar was down about 0.3 per cent against the greenback over the past month.
There were no major Canadian economic releases due on Thursday.
On global markets, the U.S. dollar index, which measures the currency against a basket of six peers rose 0.22% to 104.38, and was off a two-month high of 104.7 touched on Wednesday as traders pared back their expectations of another Fed rate hike this month, according to Reuters.
The euro fell 0.12 per cent to US$1.0675, towards a two-month low of US$1.0635 seen on Wednesday amid signs of easing inflationary pressures in the euro zone.
Britain’s pound slipped 0.2 per cent to US$1.2421, the Japanese yen fell 0.38 per cent to 139.81 per U.S. dollar, Reuters reported.
In bonds, the yield on the U.S. 10-year note was higher at 3.677 per cent in the predawn period.
More company news
Laurentian Bank of Canada raised its quarterly dividend as it reported a second-quarter profit of $49.3 million, down from $59.5-million a year ago. The Montreal-based bank says it will now pay a quarterly dividend of 47 cents per share, up a penny from 46 cents. The increased payment to shareholders came as Laurentian says it earned $1.11 per diluted share for the quarter ended April 30, down from $1.34 per diluted share in the same quarter last year.
Nordstrom Inc posted a surprise quarterly profit and estimate-beating revenue on Wednesday as better inventory control and demand from wealthy shoppers helped the company defy an inflation-driven slump in retail spending. Shares of the upmarket department store chain jumped more than 6 per cent in premarket trading, as the company also maintained its forecasts for 2023 sales and adjusted profit, and signaled improving sales at its off-price Rack banner. -Reuters
Macy’s Inc on Thursday missed quarterly revenue expectations, as consumers limit non-essential spending due to persistently high inflation. The company’s first-quarter net sales fell to $4.98-billion from $5.35-billion a year earlier, beating expectations of $5.04-billion, according to IBES data from Refinitiv. -Reuters
(8:15 a.m. ET) U.S. ADP National Employment Report for May.
(8:30 a.m. ET) U.S. initial jobless claims for week of May 27.
(8:30 a.m. ET) U.S. productivity for Q1.
(9:30 a.m. ET) Canada’s S&P global manufacturing PMI for May.
(9:45 a.m. ET) U.S. S&P global manufacturing PMI for May.
(10 a.m. ET) U.S. ISM manufacturing PMI for May.
(10 a.m. ET) U.S. construction spending for April.
With Reuters and The Canadian Press