Equities
Canada’s main stock index edged higher early Thursday with energy and materials shares offering a lift. Key U.S. indexes saw a muted start after a new report showed headline inflation was slightly higher than forecast in September, although underlying price pressures matched expectations.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 17.61 points, or 0.09 per cent, at 19,681.45.
In the U.S., the Dow Jones Industrial Average rose 40.78 points, or 0.12 per cent, at the open to 33,845.65.
The S&P 500 opened higher by 3.99 points, or 0.09 per cent, at 4,380.94, while the Nasdaq Composite gained 12.79 points, or 0.09 per cent, to 13,672.47 at the opening bell.
Traders are closely watching the inflation report for clues about where the Federal Reserve goes from here on interest rates. On Wednesday, minutes from the most recent Fed meeting, when the central bank held borrowing costs steady, suggested caution on future increases. The U.S. central bank cited uncertainties around the economy, oil prices and financial markets as backing “the case for proceeding carefully in determining the extent of additional policy firming that may be appropriate.”
Ahead of the North American opening bell, new figures showed the U.S. consumer price index rose 0.4 per cent in September, slightly ahead of the 0.3-per-cent gain markets had been forecasting. The annual rate of inflation was unchanged at 3.7 per cent. Economists had been expecting to see a modest pullback to 3.6 per cent.
Core inflation, excluding volatile food and energy costs, came in at 0.3 per cent on a monthly basis and 4.1 per cent year-over-year. Both were in line with market forecasts.
“Today’s September [U.S.] CPI report came in broadly as expected, but headline figures masks a divergence between stronger services inflation, driven mainly by higher shelter costs, that was offset by further weakness in goods prices,” CIBC economist Ali Jaffrey said.
“Overall, this paints a complicated picture of strong demand-induced inflation being offset by resurgent supply, making November a complicated decision for the Fed,” he said.
Canada’s reading on September inflation is due next week.
On the corporate side, The Globe’s Nicolas Van Praet reports that Alimentation Couche-Tard Inc. is setting ambitious new profit targets for the next five years as the Canadian convenience store giant pushes to exploit its growing size and find new cost-saving opportunities to deliver returns in an increasingly shaky market for consumer retailing. The Laval, Que.-based retailer, Canada’s second biggest company by revenue, outlined a new five-year strategy Wednesday that aims to boost earnings before interest, taxes, depreciation and amortization (EBITDA) to US$10-billion by fiscal 2028, up from US$5.8-billion this year.
Overseas, the pan-European STOXX 600 was up 0.62 per cent in morning trading. Britain’s FTSE 100 gained 0.72 per cent. Germany’s DAX and France’s CAC 40 rose 0.57 per cent and 0.48 per cent, respectively.
In Asia, Japan’s Nikkei closed up 1.75 per cent. Hong Kong’s Hang Seng gained 1.93 per cent.
Commodities
Crude prices shook off early losses and shifted higher ahead of the North American opening bell as improved sentiment in the broader markets helped offset a rise in U.S. stockpiles.
The day range on Brent was US$85.18 to US$86.92 in the early premarket period. The range on West Texas Intermediate was US$82.78 to US$84.32. Both benchmarks lost about 2 per cent in the previous session.
“With the rising risks of potential sanctions on Iranian crude, the oil market will pay close attention to see how much non-OPEC and “fragile five” production increases,” OANDA senior analyst Ed Moya said in a note.
“The U.S. and Venezuela talks could lead to some oil sanction exemptions that could help some more supply come to the market.”
New inventory figures, meanwhile, put a lid on Thursday’s gains. The American Petroleum Institute said late Wednesday that U.S. crude inventories jumped by 12.9 million barrels. Markets had been forecasting a rise of about 500,000 barrels. More official U.S. government data is due later this morning.
Elsewhere, the International Energy Agency, in its monthly report, cut its 2024 oil demand growth forecast early Thursday, citing weaker global economic conditions and progress in energy efficiency.
The Paris-based agency lowered its 2024 demand growth forecast to 880,000 barrels per day from its previous forecast of 1 million bpd. However, it raised its 2023 demand forecast to 2.3 million bpd from a forecast of 2.2 million.
In other commodities, gold prices managed their best level in two weeks as the U.S. dollar pulled back ahead of Thursday’s U.S. inflation figures.
Spot gold rose 0.3 per cent to US$1,880.00 per ounce by early Thursday morning, its highest level since Sept. 27. U.S. gold futures were up 0.3 per cent to US$1,893.70.
Currencies
The Canadian dollar was slightly higher while its U.S. counterpart held near two-weeks low ahead of the latest U.S. inflation report.
The day range on the loonie was 73.50 US cents to 73.65 US cents in the premarket period. The Canadian dollar was up 0.82 per cent against the U.S. dollar over the past five days as of early Thursday morning.
“The CAD is steady against the USD, with the CAD finding some support from stable crude oil prices and the recent rebound in risk appetite/stocks,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Some offset is coming from wider US/Canada spreads along the curve, however, and that development may keep the CAD from making further progress towards fair value for now.”
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was little changed at 105.63. Earlier in the day, the index hit 105.52, its lowest level since Sept. 25.
The euro and yen were all steady against the dollar, at US$1.06245 for the European common currency and 149.13 per U.S. dollar for the yen, with major moves capped by the looming inflation figures, Reuters reported.
In bonds, the yield on the U.S. 10 year note was lower at 4.577 per cent ahead of the North American opening bell.
More company news
Canadian pipeline firm TC Energy on Thursday named industry veteran and former CEO Hal Kvisle as the chair of its Liquids Pipelines Company board. -Reuters
U.S. auto workers are expected to return to talks with Chrysler maker Stellantis on Thursday, a tense day after a surprise walkout at Ford’s biggest and most profitable plant sharply raised the stakes between the United Auto Workers and the Detroit Three. The Wednesday evening decision to shut Ford’s Kentucky truck plant employing 8,700 workers, the largest single walkout since targeted strikes began four weeks ago, came as the UAW and Stellantis prepared for another major round of bargaining, sources told Reuters. -Reuters
Delta Air Lines on Thursday reported stronger-than-expected quarterly earnings, but trimmed its full-year profit outlook due to higher fuel costs. The Atlanta-based carrier’s earnings report comes as signs of softening domestic travel demand have raised questions over whether consumers are cutting back on travel spending amid the depletion of household savings, the resumption of student loan repayments and high interest rates. Delta CEO Ed Bastian cautioned against interpreting that as a broader industry trend. In an interview, he said the demand for Delta’s products remain “high” as its customers are in “a very healthy condition.” -Reuters
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Oct. 7.
(8:30 a.m. ET) U.S. CPI for September.
With Reuters and The Canadian Press
Terry Weber