Equities
Canada’s main stock index opened down Thursday with commodities-linked stocks under pressure. On Wall Street, key indexes were mixed in early trading amid optimism over a possible deal to raise the U.S. debt ceiling.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 65.96 points, or 0.32 per cent, at 20,230.47.
The Dow Jones Industrial Average fell 46.21 points, or 0.14 per cent, at the open to 33,374.56.
The S&P 500 opened lower by 1.09 points, or 0.03 per cent, at 4,157.68, while the Nasdaq Composite gained 13.30 points, or 0.11 per cent, to 12,513.87 at the opening bell.
Sentiment got a lift after both U.S. President Joe Biden and House Speaker Kevin McCarthy expressed confidence that a historic default could be avoided.
“History, of course, tells us that a deal is more likely than not to be reached on the 11th hour, suggesting there is still room for a few bad headlines,” Rodrigo Catril, senior FX strategist at National Australia Bank, said in a note. “Treasury has almost run through all of its authorized extraordinary measures to keep paying the bills.”
In Canada, the Bank of Canada releases its latest financial system review at 10 a.m. The review summarizes the bank’s view on the main vulnerabilities and risks to the stability of the financial system. The report will be followed by a news conference with BoC Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers.
On the corporate side, earnings from big U.S. retailers continue with results from Walmart.
Walmart Inc raised its annual sales and profit targets. The retailer now expects full-year earnings per share in the range of US$6.10 to US$6.20 compared to the prior outlook of US$5.90 to US$6.05. Analysts on average were estimating a profit of US$6.16 per share, according to Refinitiv data. Walmart also forecast net sales to rise about 3.5 per cent, higher than its prior outlook. The outlook stands in contrast to that from rival Target a day earlier, which forecast a weaker second quarter as consumers cut back. Walmart shares were up about 2 per cent shortly after the opening bell in New York.
In Canada, luxury coat maker Canada Goose forecast annual sales above Wall Street estimates. Canada Goose said it expects fiscal 2024 revenue between $1.40-billion and $1.50-billion, compared with analysts average estimate of $1.33-billion, according to Refinitiv data.
Overseas, the pan-European STOXX 600 rose 0.59 per cent at midday. Britain’s FTSE 100 gained 0.51 per cent. Germany’s DAX and France’s CAC 40 advanced 1.52 per cent and 0.85 per cent, respectively.
In Asia, Japan’s Nikkei jumped 1.6 per cent. Hong Kong’s Hang Seng gained 0.85 per cent.
Commodities
Crude prices pulled back after surging the previous session with the supply-and-demand picture offsetting optimism in the broader markets.
The day range on Brent was US$76.48 to US$76.93 in the predawn period. The range on West Texas Intermediate was US$72.44 to US$72.88. Both benchmarks gained roughly US$2 a barrel on Tuesday.
“The fact that Investors continue to cheer that the two most extensive markets overhangs are easing ( Debt Limit and Bank Deposit runs) and oil is not bouncing higher in tandem with broader risk sentiment today continues to suggest supply, not demand, is hurting the bullish thesis with the ubiquitous dark fleets moving Russian and Iraqi oil to destinations around the world and keep inventories topped,” Stephen Innes, managing partner with SPI Asset Management, said.
Sentiment was underpinned by weekly gasoline inventory figures released Wednesday by the U.S. Energy Information Administration. The EIA said gasoline stocks fell by 1.4 million barrels last week, more than the 1.1 million drop expected by analysts, suggesting solid demand.
In other commodities, gold prices slid as the U.S. dollar steadied and broader market optimism reduced the metal’s safe-have appeal.
Spot gold fell 0.2 per cent to US$1,977.79 per ounce early Thursday morning. U.S. gold futures edged 0.1-per-cent lower to US$1,982.10.
Currencies
The Canadian dollar was down in early trading while its U.S. counterpart held near its best level in seven weeks on hopes an agreement is in the cards on raising the U.S. debt ceiling.
The day range on the loonie was 74.17 US cents to 74.35 US cents in the early premarket period.
Canadian investors get the Bank of Canada’s financial system review shortly after the start of trading today.
On world markets, the dollar index rose 0.2 per cent to 103.08, near Wednesday’s seven-week high of 103.12.
The euro languished near the previous session’s over six-week low of US$1.08105 and last bought US$1.0817, while Britain’s pound fell 0.3 per cent to US$1.2450, according to figures from Reuters.
The Australian dollar slid after new figures showed an unexpected decline in April employment. The Australian dollar slipped about 0.4 per cent after the release and was last 0.35 per cent lower at US$0.6637, Reuters reported.
In bonds, the yield on the U.S. 10-year note was little changed at 3.591 early Thursday morning.
More company news
Cisco Systems Inc said on Wednesday a large backlog of products due to supply chain constraints has hit demand for new orders from customers. Cisco’s product orders fell 23% in the third quarter, even as the maker of routers, security services and software products reported a quarterly profit that beat estimates, helped by its aggressive steps to resolve supply chain bottlenecks. But the backlog, combined with “macroeconomic conditions,” hit demand for new products, company executives said on a post-earnings conference call. -Reuters
Lightspeed Commerce Inc. reported a loss of US$74.5-million in its fourth quarter compared with a loss of $114.5-million in the same quarter a year earlier as its revenue rose 26 per cent. The e-commerce company, which keeps its books in U.S. dollars, says the loss amounted to 49 cents per diluted share for the quarter ended March 31 compared with a loss of 77 cents per diluted share a year earlier. Revenue in the final quarter of the company’s 2023 financial year totalled US$184.2 million, up from US$146.6 million last year. -The Canadian Press
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of May 13.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for May.
(10 a.m. ET) U.S. existing home sales for April.
(10 a.m. ET) U.S. leading indicator for April.
(11 a.m. ET) Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers hold a press conference on the Financial Systems Review.
With Reuters and The Canadian Press
Terry Weber