Global stock markets traded in narrow ranges on Thursday, a day after major U.S. indexes hit record highs in a pre-Independence Day rally amid ongoing hopes over an easing of trade tensions between the U.S. and China.
With Wall Street trading closed for the July 4 holiday, investors will be looking ahead to the U.S. government’s closely watched monthly jobs report on Friday. The markets expect a solid 165,000 increase in non-farm payrolls. The outcome will likely be a factor in the Federal Reserve’s meeting this month. The central bank has already said it is prepared to cut rates to shore up the U.S. economy if trade disputes crimp growth.
“The tranquility is unlikely to last, with tomorrow’s non-farm payroll almost bound to inject volatility back into the markets,” said Fiona Cincotta, senior market analyst at City Index.
Canada’s main stock finished flat on Thursday, failing to get a boost from a rally in global stock markets.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 12.65 points, or 0.08 per cent, at 16,588.85.
With U.S. markets closed for the U.S. Independence Day holiday, the news flow was thin. However, a slump in benchmark debt yields on hopes of accommodative policies from major central banks continued to support risk assets.
However, Canada’s main stock benchmark, trading near record levels, was weighed down by a 0.5-per-cent loss in the healthcare sector.
Energy stocks gained 0.7 per cent as oil prices fell after data showing a smaller-than-expected draw on U.S. crude stockpiles along with worries about the global economy.
The Canadian dollar was little changed against its U.S. counterpart on Thursday, holding near an earlier eight-month high which was notched after a number of recent data releases pointed to a pick up in the domestic economy.
The Canadian dollar was trading nearly unchanged at 1.3055 to the greenback, or 76.60 U.S. cents. The currency touched its strongest level since Oct. 25, last year at 1.3038, while its weakest was 1.3079.
The narrow range for the currency came as markets were closed in the United States for the Independence Day holiday.
“There is certainly decent momentum for the Canadian dollar given the string of strong and somewhat surprising data,” said Michael Goshko, a corporate risk manager at Western Union Business Solutions.
Data last Friday showed faster-than-expected growth in Canada’s economy in April, while a report on Wednesday showed a surprise swing in the May trade balance to surplus. Canada’s jobs report for June is due on Friday.
“Until the data begins to really soften in Canada, the BoC is going to be standing pat as far as the eye can see ... that’s certainly at odds with what is going on in the United States.”
Oil prices fell in thin trade on Thursday, weighed down by data showing a smaller-than-expected draw on U.S. crude stockpiles and worries about the global economy.
Front-month Brent crude futures, the international benchmark for oil prices, were down 25 cents or 0.39 per cent at $63.57 per barrel. Brent closed up 2.3 per cent on Wednesday.
U.S. West Texas Intermediate (WTI) crude futures were down 33 cents or 0.58 per cent at $57.01 per barrel. WTI closed up 1.9 per cent on Wednesday.
European shares closed at their highest in more than a year on Thursday as Italian stocks surged on relief that Rome had avoided European Union disciplinary action and rising expectations of looser monetary policy by major central banks.
The pan-European STOXX 600 index rose 0.1 per cent, extending gains to a sixth straight session on optimism that Christine Lagarde will stick to the ECB’s dovish stance as the central bank’s next chief.
Milan’s MIB rose 1 per cent to hit its highest level in almost a year, while its bank index soared 3.4 per cent after Italy persuaded the European Commission that new measures submitted this week would help bring its growing debt in line with EU fiscal rules.
While Italy has dodged a bullet for now, disciplinary action could be back on the agenda in the autumn when the 2020 budget is drafted, ING senior economist Paolo Pizzoli said.
“As things stand, crafting a fiscally sound 2020 budget will prove challenging.”
Earlier in Asia, Japan’s Nikkei 225 index added 0.3 per cent to 21,702.45 and South Korea’s Kospi rebounded, gaining 0.5 per cent to 2,108.73. The S&P ASX 200 in Australia rose 0.6 per cent to 6,718.00. The Shanghai Composite index gave up earlier gains, slipping 0.3 per cent to 3,005.25. In Hong Kong, the Hang Seng shed 0.2 per cent lower to 28,795.77. India’s Sensex added 0.2 per cent to 39,901.45.
Whatever materializes on the jobs front, the main driver for markets over the coming weeks will be what happens on the trade front. Last weekend’s agreement by U.S. President Donald Trump and China’s Xi Jinping to refrain from new tariffs pending a new round of negotiations has relieved some pressure on markets. But the trade war has not been resolved and still remains the biggest cloud hanging over the global economic outlook.
White House economic adviser Larry Kudlow told reporters in Washington that he expected to announce a new round of negotiations soon. “They’re on the phone,” he said. “There’s lots of communication.”
“We’re not done yet, but we’re hopeful,” he said.
Reuters and the Associated Press