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Equities
Canada’s main stock index pulled back from recent highs at Thursday’s open while major U.S. indexes posted early losses after a weaker-than-expected reading weekly jobless claims and stalled talks for U.S. government stimulus.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 83.77 points, or 0.48 per cent, at 17,476.09.
In the U.S., the Dow Jones Industrial Average fell 114.73 points, or 0.38 per cent, to 39,954.08 at the opening bell.
The S&P 500 fell 19.11 points, or 0.52 per cent, to 3,653.71, while the Nasdaq Composite dropped 98.80 points, or 0.80 per cent, to 12,240.15.
Markets continue to focus on talks for new U.S. stimulus relief but a deal has yet to emerge. On Wednesday, Senate Majority Leader Mitch McConnel told Politico that the two sides are still looking for " a way forward.” They did, however, approve a stop-gap government funding bill. Recent weaker than expected economic readings have put increased pressure on Washington to find a path to a new deal.
“Stocks have not fallen too far out of bed as the market knows that stimulus in some form is coming,” Axi chief market strategist Stephen Innes said. “However, investors are not sure of the composition and timing, where the balance of angst sits.”
Ahead of the North American open, investors got a weaker-than-expected reading on weekly U.S. jobless claims. The U.S. Labor Department said the number of initial claims for state unemployment benefits rose to 853,000. Economists had been looking for a reading closer to 725,000.
In this country, Sobey’s parent Empire Co. Ltd. reported sales of nearly $7-billion in the 13 weeks ended Oct. 31, up 8.4 per cent compared to the same period last year. Same-store sales rose 8.7 per cent in the second quarter, not including fuel sales at its gas stations. Empire also said it will move up construction of a third order-fulfillment centre in Calgary for its online grocery service Voilà.
Retailer Lululemon reports after the close.
Thursday afternoon, markets will hear from deputy governor Paul Beaudry, who is speaking before the Greater Moncton Chamber of Commerce, the Fredericton Chamber of Commerce, and the Saint John Region Chamber of Commerce. The remarks are set for release at 1:30 p.m. ET and come one day after the central bank left its key policy rate unchanged and held its quantitative easing program steady.
“Beaudry will likely flesh out some details around their views, with the January Monetary Policy Report a more suitable time for potential forecast revisions,” RBC chief currency strategist Adam Cole said.
On Wall Street, shares of Airbnb Inc. are scheduled to start trading on the Nasdaq exchange Thursday. Airbnb said late Wednesday it sold shares in its initial public offering (IPO) at US$68 a piece, above its targeted price range, to raise around US$3.5-billion.
Overseas, major European markets were little changed by afternoon. The pan-European STOXX 600 off 0.22 per cent after a meeting between British Prime Minister Boris Johnston and EU Commission President Ursula von der Leyen failed to yield a breakthrough. The two sides committed to continue talks through the weekend.
Early Thursday, the European Central bank also boosted bond purchases and extended aid to banks as it moved to bolster the bloc’s economy amid the second wave of the pandemic. The ECB increased the overall size of its Pandemic Emergency Purchase Programme by 500 billion euros to 1.85 trillion euros and extended the scheme by 9 months to March 2022, with the aim of keeping government and corporate borrowing costs at record lows. It also extended the period during which banks will get a rebate rate on their Targeted Longer-Term Refinancing Operations (TLTRO) by one year to June 2022.
Britain’s FTSE 100 was up 0.49 per cent. Germany’s DAX slid 0.17 per cent. France’s CAC 40 rose 0.11 per cent.
In Asia, Japan’s Nikkei finished down 0.23 per cent. Hong Kong’s Hang Seng lost 0.35 per cent.
Commodities
Crude prices were higher, with Brent breaching US$49 a barrel, as optimism over the release of COVID-19 vaccines offset a sharp rise in U.S. inventories.
The day range on Brent so far is US$48.86 to US$49.40. The range on West Texas Intermediate is US$45.52 to US$46. Both benchmarks were up about 1 per cent in the predawn period.
Optimism over the rollout of of a coronavirus vaccine continues to underpin sentiment. Britain began vaccinations this week. On Wednesday, Canada approved its first vaccine and expects the first doses to be delivered next week.
“There is enough positive vaccine feeling to keep the market in check,” Axi chief market strategist Stephen Innes said.
“The World Health Organization said jumps in weekly COVID-19 cases in the United States and Canada are particularly problematic as winter approaches. But the U.S. is [also] drawing closer to vaccine approval.”
Thursday’s gains were capped, however, by a rise in U.S. weekly inventories.
The U.S. Energy Information Administration said Wednesday that weekly oil inventories spiked by 15.2 million barrels last week. Analysts had been looking for a drop of about 1.4 million barrels.
“Considering how bearish the report was, the oil-price selloff was limited,” Mr. Innes said.
“Optimism over the vaccine prevails and continues to limit any serious downside action.”
In other commodities, gold prices edged lower, following a steep selloff in the previous session.
Spot gold slipped 0.2 per cent to US$1,835.40 per ounce, after falling as much as 2.5 per cent on Wednesday. U.S. gold futures were steady at US$1,839.20.
“Gold has struggled as markets are disappointed with the inability of U.S. lawmakers to agree on a fiscal deal they were anticipating,” said Lachlan Shaw, National Australia Bank’s head of commodity research.
Currencies
The Canadian dollar was higher on improved risk sentiment while the U.S. dollar held steady with a U.S. stimulus deal still just out of reach.
The day range on the loonie is 77.95 US cents to 78.23 US cents. The dollar was trading near the upper end of that range in early going.
“While the CAD remains in consolidation mode, the backdrop suggests more CAD gains are on the cards,” Scotiabank chief FX strategist Shaun Osborne said.
“The BoC meeting posed no risk to the CAD, noting gains rather matter-of-factly in its policy statement.”
Investors will be awaiting remarks from Bank of Canada deputy governor Paul Beaudry on Thursday afternoon. On Wednesday, the Bank of Canada delivered its final policy decision of the year, holding rates steady.
On global markets, the U.S. dollar index, which tends to fall when risk appetite is strong, held firm overall and was flat against a basket of major currencies as agreement on a U.S. stimulus remained elusive, according to figures from Reuters.
The euro, meanwhile, was just slightly higher against the U.S. dollar, rising 0.04 per cent to US$1.2086 ahead of the ECB’s policy decision.
Against the pound, the euro rose 0.7 per cent to 90.80 pence while sterling sustained similar losses against the dollar, retreating to US$1.3317.
More company news
U.S. regulators are accusing Facebook Inc. of being an illegal monopoly that should be broken up in a pair of landmark antitrust lawsuits filed on Wednesday. In two separate and wide-ranging cases filed in a Washington, D.C. court, the Federal Trade Commission, a consumer watchdog agency, and dozens of state governments accused Facebook of abusing its position as the world’s largest social-media company to crush rivals and stifle online competition. Facebook “engaged in a systematic strategy … to eliminate threats to its monopoly,” the FTC said in a statement. Shares were down more than 1.6 per cent in early trading.
The U.S. Securities and Exchange Commission said General Electric Co has agreed to pay a $200-million penalty to settle charges for misleading investors over how it was generating earnings in its power and insurance businesses, Reuters reports. In 2017, GE took a surprise accounting charge of $6.2 billion and said it would need to set aside $15 billion for long-term care insurance payouts. Securities regulators opened a probe into the company’s accounting practices following the insurance charge. The inquiry, which initially focused on long-term service agreements for maintenance of power plants, jet engines and other industrial equipment, was later expanded to include GE’s review of its insurance business.
Economic news
ECB monetary policy meeting
(8:30 a.m. ET) U.S. initial jobless claims for week of Dec. 5.
(8:30 a.m. ET) U.S. CPI for November.
(10 a.m. ET) U.S. quarterly services survey for Q3.
(1:30 p.m. ET) Bank of Canada Deputy Paul Governor Beaudry presents the Economic Progress Report (videoconference)
With Reuters and The Canadian Press