Equities
Canada’s main stock index was trading higher early Thursday with energy and materials stocks offering a lift. On Wall Street, key indexes were also positive despite a hotter-than-expected reading on wholesale inflation.
At 9:40 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 190.23 points, or 0.94%, at 20,469.17.
In the U.S., the Dow Jones Industrial Average rose 111.97 points, or 0.32 per cent, at the open to 34,687.50.
The S&P 500 opened higher by 20.34 points, or 0.46 per cent, at 4,487.78, while the Nasdaq Composite gained 76.17 points, or 0.55 per cent, to 13,889.76 at the opening bell.
Inflation and rate concerns continue to dominate the markets.
On Thursday, Wall Street got another look at price pressures in the U.S. economy with the release of the August producer price index, which offers a measure of wholesale inflation. The report said producer prices rose 0.7 per cent in August on a monthly basis. Year-over-year prices rose 1.6 per cent in August, compared with July’s annual rate of 0.8 per cent.
A day earlier, figures showed the annual rate of U.S. inflation rose to 3.7 per cent from in August from 3.2 per cent in July, fuelled by higher gasoline prices. Core inflation, which excludes food and energy, came in at 4.3 per cent in August, down from July’s 4.7 per cent. The numbers come less than a week before the Federal Reserve is set to deliver its next policy decision.
“Given the disconcerting uptick in headline inflation and the ongoing ascent of oil prices, the Federal Reserve is likely to maintain the option of another rate hike should the trend of inflation moderation witnessed over the summer fail to persist,” Stephen Innes, managing partner with SPI Asset Management, said.
“Even if a hike does not materialize, a move to lower the current target range of 5.25 per cent-5.50 per cent is unlikely to begin until about June 2024, given the expected sluggish path of inflation back to the target.”
In Canada, investors got results from Sobeys-parent Empire Co. Ltd. and travel company Transat A.T.
Empire said it earned $261-million or $1.03 a share in its latest quarter, up from $187.5-million or 71 cents in the same quarter last year, helped by the sale of its 56 gas stations in Western Canada to Shell Canada. First-quarter sales rose to $8.08-billion, up from $7.94-billion in the same quarter last year.
Meanwhile, Laurentian Bank said early Thursday it has completed its review of strategic options, with the lender now focusing on simplifying its organizational structure. “The Board, with the support of the Executive Management Team, has unanimously concluded that the best path forward is... accelerated evolution of its current strategic plan with an increased focus on efficiency and simplification,” Laurentian said. Laurentian had launched the review in July seeking to maximize shareholder value. When it reported its third-quarter results last month, Laurentian has said at that time that it was continuing its search for a buyer it continued to work through its three-year turnaround plan.
Laurentian shares were down more than 11 per cent shortly after the opening bell in Toronto.
Overseas, the pan-European STOXX 600 was up 0.79 per cent by midday. Early Thursday, the ECB raised interest rates by a quarter percentage point but also indicated that the tightening cycle was likely near an end.
Britain’s FTSE 100 rose 1.10 per cent. Germany’s DAX and France’s CAC 40 gained 0.36 per cent and 0.58 per cent, respectively.
In Asia, Japan’s Nikkei rose 1.41 per cent. Hong Kong’s Hang Seng advanced 0.21 per cent.
Commodities
Crude prices gained in early trading, reversing declines seen during the previous session, as traders again focus on tight supply in the wake of voluntary production cuts by Saudi Arabia and Russia for the rest of the year.
The day range on Brent was US$97.02 to US$92.74 in the early premarket period. The range on West Texas Intermediate was US$88.68 to US$89.41. On Wednesday, both benchmarks touched their best level in 10 months, before pulling back after weekly U.S. inventory numbers showed a surprise build in crude stocks.
That decline, however, has been offset by a forecast from the International Energy Agency which predicted a supply deficit through the fourth quarter on the back of OPEC+ output curbs. Last week, OPEC+ members Saudi Arabia and Russia both said they would extend voluntary cuts through the end of the year.
“OPEC+ is currently demonstrating a remarkable display of pricing power, skillfully increasing prices without causing a significant dent in demand,” SPI Asset Management’s Stephen Innes said.
“This formidable pricing prowess can be attributed to OPEC+’s substantial market share, bolstered by its alliance with Russia, and the relatively inelastic nature of non-OPEC supply, primarily influenced by the financial discipline observed in the U.S. shale industry.”
In other commodities, spot gold was flat at US$1,905.49 per ounce by early Thursday morning, hovering around its lowest level since Aug. 25 hit on Wednesday at US$1,905.10. U.S. gold futures fell 0.3 per cent to $1,926.70.
Currencies
The Canadian dollar was higher while its U.S. counterpart pulled back somewhat against a group of world currencies.
The day range on the loonie was 73.77 US cents to 73.94 US cents in the early premarket period. The Canadian dollar has gained more than 1 per cent against the greenback over the past five days.
On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, slid 0.07 per cent to 104.70 early Thursday morning. The index was down 0.35 per cent over the past five days but up more than 1 per cent for the year-to-date.
Ahead of the ECB rate decision, the euro added as much as 0.21 per cent to US$1.0752, continuing to move higher from last week’s low of US$1.0686, its weakest since mid June, Reuters reported.
Britain’s pound was little changed at US$1.2486.
In bonds, the yield on the U.S. 10-year note was up at 4.256 per cent in the predawn period.
More company news
Transat AT Inc. reported a third-quarter profit of $57.3-million compared with a loss of $106.5-million in the same quarter last year. The travel company says the profit amounted to $1.49 per diluted share for the quarter ended July 31, up from a loss of $2.82 per diluted share a year earlier. Revenue for the quarter totalled $746.3-million, up from $508.3-million in the same quarter last year. On an adjusted basis, Transat says it earned $1.10 per share in its most recent quarter, up from an adjusted loss of $3.20 per share a year earlier. -The Canadian Press
Chip designer Arm Holdings Plc secured a US$54.5-billion valuation in its U.S. initial public offering (IPO) on Wednesday, seven years after its owner SoftBank Group Corp took the company private for US$32-billion. The IPO represents a climb-down from the US$64-billion valuation at which SoftBank last month acquired the 25-per-cent stake it did not already own in the company from the US$100-billion Vision Fund it manages. -Reuters
Pot producer Canopy Growth said on Thursday it would seek bankruptcy protection for its sports nutrition products’ segment BioSteel. Canopy Growth had been exploring options for a while for BioSteel, which accounted for about 60% of the company’s fiscal first-quarter adjusted core loss. -Reuters
Economic news
ECB monetary policy announcement
(8:30 a.m. ET) Canadian wholesale trade for July.
(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 9.
(8:30 a.m. ET) U.S. retail sales for August.
(8:30 a.m. ET) U.S. PPI final demand for August.
(10 a.m. ET) U.S. business inventories for July.
With Reuters and The Canadian Press
Terry Weber