Global stocks flitted between positive and negative territory on Thursday while U.S. Treasuries were in demand after the European Central Bank chief said economic growth was likely to be weaker than previously expected and the United States was cautious on prospects for a trade deal with China.
Demand increased for safe-haven assets with U.S. Treasury 10-year yields hitting a one-week low, due to anxiety about slowing global growth and trade after U.S. Commerce Secretary Wilbur Ross told CNBC that Washington was “miles and miles” from resolving trade issues with China.
The euro touched its lowest point against the dollar in six weeks after ECB President Mario Draghi left the bloc’s interest rates unchanged on Thursday, saying near-term data is likely to be weaker than previously anticipated due to the fallout from factors ranging from China’s slowdown to Brexit.
“It’s not just an European issue. We are talking about a global slowdown,” said Stan Shipley, a strategist at Evercore ISI in New York.
On top of the U.S.-China trade war and its global impact investors were also worried about the economic impact of the longest U.S. government shutdown in history, now in its 34th day.
Thursday’s data showed the number of applications for U.S. unemployment benefits fell to more than a 49-year low last week though claims for several states including California were estimated.
But while the data was encouraging, Tony Roth, chief investment officer at Wilmington Trust in Delaware said it was only a matter of time before a continued shutdown would do “irreparable damage” to the economy. The shutdown and U.S.-China trade war are adding pressure to global economies, he said.
“Every day that goes by that we don’t have positive news on those fronts, the starting base line (for the market) is negative,” said Roth. “It’s a major tactical blunder that the (Trump) administration is trying to do both at the same time.”
Energy stocks led Canada’s main stock index higher on Thursday.
The Toronto Stock Exchange’s S&P/TSX composite index closed unofficially up 72.45 points, or 0.48 per cent, at 15,280.78.
Nine of the index’s 11 major sectors were higher, led by a 2.6-per-cent rise in the health care sector. Aurora Cannabis Inc. jumped 7 per cent, while Cronos Group Inc. was up 1.5 per cent.
The energy sector rose 1.6 per cent with Encana Corp. increasing 2.8 per cent and Canadian Natural Resources Ltd. finishing 2.1 per cent higher.
The materials sector, which includes precious and base metals miners and fertilizer companies, gained 0.9 per cent. West Fraser Timber Co Ltd. jumped 7.6 per cent, while Norbord Inc. was up 4.4 per cent.
The Canadian dollar weakened to its lowest level in more than two weeks against its U.S. counterpart on Thursday as the greenback broadly climbed and optimism faded for a near-term resolution to a trade dispute between the United States and China.
Canada exports many commodities, including oil, so its economy could be hurt if the trade dispute drags on.
“In a weaker global economy, the U.S. dollar always strengthens into that and Canada is on the opposite side of that trade,” said Rob Edel, chief investment officer at Nicola Wealth Management.
The U.S. dollar climbed against a basket of major currencies after European Central Bank President Mario Draghi said economic risks have moved to the downside, pressuring the euro.
The Canadian dollar was trading 0.1 per cent lower at 1.3352 to the greenback, or 74.90 U.S. cents. The currency touched its weakest level since Jan. 7 at 1.3375.
U.S. oil prices rose by 1 per cent on Thursday, boosted by the U.S. threat of sanctions on Venezuela, but gains were capped by record high gasoline inventories and an unexpected big build in crude stocks in the United States.
U.S. West Texas Intermediate (WTI) crude futures rose 51 cents to settle at $53.13 a barrel, a 0.97-per-cent gain. Brent crude futures fell 5 cents to settle at $61.09 a barrel.
On Wall Street, the S&P 500 edged higher but the Dow closed nominally lower on Thursday as lingering anxieties about slowing global growth and unresolved trade disputes undercut a spate of strong earnings, while chipmakers rallied to give the Nasdaq a solid gain.
The Dow Jones Industrial Average fell 22.31 points, or 0.09 per cent, to 24,553.31, the S&P 500 gained 3.63 points, or 0.14 per cent, to 2,642.33 and the Nasdaq Composite added 47.70 points, or 0.68 per cent, to 7,073.46.
Nasdaq was supported by strength in chipmaker and airline stocks after earnings reports.
The pan-European STOXX 600 index rose 0.22 per cent and MSCI’s gauge of stocks across the globe shed 0.04 per cent.
The euro was 0.78 per cent lower against the dollar at $1.1291, its lowest since Dec. 14, and on pace for the second-worst day this year.
More broadly, the dollar index, which tracks the greenback versus the euro, yen, sterling and three other currencies, was up 0.56 per cent at 96.658.
Benchmark 10-year notes last rose 12/32 in price to yield 2.7121 per cent, from 2.755 per cent late on Wednesday.
Reuters