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Equities
Canada’s main stock index slid early Thursday with wavering crude prices hitting energy shares. Wall Street’s key indexes started relatively flat despite a better-than-forecast reading on weekly jobless claims.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 36.07 points, or 0.17 per cent, at 20,705.72.
In the U.S., the Dow Jones Industrial Average fell 17.99 points, or 0.05 per cent, at the open to 35,013.08.
The S&P 500 opened lower by 1.05 points, or 0.02 per cent, at 4,513.02, while the Nasdaq Composite gained 9.43 points, or 0.06 per cent, to 15,296.06 at the opening bell.
OANDA senior analyst Jeffrey Halley says markets are feeling the pressure from a downbeat Fed Beige Book, released Wednesday afternoon, and tapering nerves after New York Fed President John Williams said paring of bond purchases could come sooner rather than later.
“We have a lot of uncertainty pulling markets in both directions with no clear theme developing and plenty of risks circling. It’s no surprise, therefore, that investors have pushed equities slightly lower,” Mr. Halley said.
Ahead of the opening bell, U.S. markets also got a better-than-expected reading on weekly jobless claims. The U.S. Labor Department said claims for initial state unemployment benefits fell to 310,000 last week. Economists had been expecting a more modest decline to 335,000. The latest reading was near an 18-month low. A day earlier, the U.S. Labor Department’s job openings and labour turnover survey showed job openings jumped as businesses struggled to fill open positions.
In this country, investors will be waiting for remarks from Bank of Canada Governor Tiff Macklem at midday. On Wednesday, the central bank left rates and bond purchases unchanged while acknowledging weak recent economic reports.
“While we’ll hear from Governor Macklem [on Thursday], don’t expect any big headlines,” Benjamin Reitzes, director of Canadian rates and macro strategist with Bank of Montreal, said in a note.
“We’ll have to wait until after the election to get a better read on how concerned the BoC is about the recent downdraft in the data.”
On the corporate side, U.S.-listed shares of Vancouver-based Lululemon Athletica Inc. spiked more than 13 per cent early trading after the retailer raised its full-year forecast and beat quarterly revenue forecasts on strong consumer demand. The company said it now expects annual net revenue to be in the range of US$6.19-billion to US$6.26-billion, compared with its prior range of US$5.83 billion to US$5.91 billion.
On Thursday, investors got results from Dollarama, Transat AT and Sobeys-parent Empire.
Empire Co. Ltd. reported profit of $188.5-million or 70 cents a share in its latest quarter compared with a $191.9-million or 71 cents per share a year ago. The year-earlier quarter included a benefit from a real estate transaction partly offset by a lump-sum payment related to collective bargaining in Alberta. Excluding those one-time items last year, Empire says its earnings per share in its latest quarter were up 4.5 per cent. Shares were down more than 4 per cent in morning trading in Toronto.
Overseas, the pan-European STOXX 600 was down 0.31 per cent after the ECB said it is dialing back some of its massive emergency pandemic support for the economy. Britain’s FTSE 100 fell 1.06 per cent. Germany’s DAX lost 0.13 per cent. France’s CAC 40 edged up 0.14 per cent.
In Asia, Japan’s Nikkei closed down 0.57 per cent. Hong Kong’s Hang Seng slumped 2.3 per cent with big-name tech shares coming under pressure amid renewed regulatory worries. The South China Morning Post that Beijing had temporarily slowed down approval for all new online video games in a bid to curb the gaming addiction among young people.
Commodities
Crude prices wavered with uncertainty over the restart in production in the Gulf of Mexico coming up against a mixed report on weekly U.S. inventories.
The day range on Brent is US$72.35 to US$72.94. The range on West Texas Intermediate is US$68.99 to US$69.55.
Prices saw a choppy overnight session with support from a slow production restart in the Gulf of Mexico being offset by the latest inventory figures from the American Petroleum Institute and broader market weakness.
“Oil markets are suffering from lots of noise but little substance right now,” OANDA’s Jeffrey Halley said.
American Petroleum Institute data showed that crude drawdown for the week ended Sept. 3 was smaller than expected in a Reuters poll, but gasoline and distillate declines were bigger than forecast.
API data showed U.S. gasoline stocks fell by 6.4 million barrels for the week ended Sept. 3, while crude stocks dropped by 2.9 million barrels. U.S. distillate stocks fell by 3.7 million barrels over the same week.
Markets will get more official figures later Thursday morning from the U.S. Energy Information Administration.
Elsewhere, gold prices slid as weaker risk sentiment bolstered the U.S. dollar.
Spot gold fell 0.1 per cent to US$1,788.11 per ounce, hovering close to a two-week low hit in the previous session.
U.S. gold futures eased 0.2 per cent to US$1,789.70.
“Gold still looks highly vulnerable to further US dollar strength,” Mr. Halley said.
Currencies
The Canadian dollar was weaker as its U.S. counterpart slid modestly against a basket of currencies after three days of gains.
The day range on the loonie is 78.56 US cents to 78.83 US cents.
“We think the markets are a bit too negative on the CAD right now as fundamentals remain — relatively — positive,” Shaun Osborne, chief FX strategist with Scotiabank, said. “Crude remains firm but spreads have narrowed marginally and the volatile risk backdrop is making it hard for the CAD to strengthen.”
Investors will get remarks from Bank of Canada Governor Tiff Macklem, scheduled for around noon. On Friday, markets will get the August jobs report from Statistics Canada.
On world markets, the U.S. dollar index was marginally lower at 92.644, after three consecutive days of rises, according to figures from Reuters.
The euro rose 0.1 per cent to US$1.1825 following a three-day retreat from Friday’s two-month peak of US$1.1909. The ECB is expected to reduce the pace of its bond-buying program in its decision later Thursday morning.
The U.S. dollar dropped 0.3 per cent to 0.9195 Swiss francs.
The yen was also stronger, with the US dollar losing 0.2 per cent to 129.99 yen.
Britain’s pound steadied at US$1.3778 after declining earlier in the week.
More company news
Dollarama Inc. reported a second-quarter profit of $146.2-million, up from a profit of $142.5-million in the same quarter last year. The retailer says the profit amounted to 48 cents per diluted share for the quarter, up from 46 cents a year ago. Sales in 13-week period ended Aug. 1 totalled $1.03-billion, up from $1.01-billion last year. Dollarama says comparable store sales fell 5.1 per cent due to a ban on the sale of non-essential products in Ontario in place for the first 5.5 weeks of the quarter due to the pandemic.
Travel company Transat AT Inc. says it lost $138.1-million in its latest quarter compared with a loss of $45.1-million in the same quarter last year. The Montreal-based company says the loss amounted to $3.66 per diluted share for the quarter ended July 31 compared with a loss of $1.20 per diluted share a year earlier. Revenue in what was the company’s third quarter totalled $12.5 million, up from $9.5 million a year ago.
United Airlines Holdings Inc warned on Thursday its third-quarter revenue and capacity would take a hit from weaker travel demand due to a rise in COVID-19 cases fueled by the Delta variant. United expects revenue to fall 33% compared to the same period in 2019 and capacity to decline at least 28%, more than the 26% fall forecast earlier. The airline expects to post an adjusted pre-tax loss in the third quarter while it had previously forecast adjusted pre-tax income of $82-million.
GameStop Corp reported a 25% jump in quarterly sales but failed to lay out fresh details about how it plans to refashion itself into a gaming and entertainment retailer. Fresh from raising new capital and watching its share price march higher during the second quarter, GameStop executives reported that net sales, the company’s main performance metric, jumped to $1.18-billion in the three months ended July 31 from $942-million a year earlier as vaccinations encouraged people to return to its stores. Analysts had estimated sales of $1.12-billion, according to IBES data from Refinitiv.
Economic news
ECB holds monetary policy meeting
(830 am ET) U.S. initial jobless claims for last week.
(10 am ET) U.S. quarterly services survey for the second quarter.
(12 pm ET) Bank of Canada Governor Tiff Macklem presents to Economic Progress Report via videoconference.
With Reuters and The Canadian Press