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Equities
Canada’s main stock index gained in early trading Thursday, helped by strength in materials shares and gains in Aphria Inc. stock on the back of positive earnings. In the U.S. indexes rose as investors await detail on President-elect Joe Biden’s stimulus plan.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 35.51 points, or 0.2 per cent, at 17,970.25.
On Wall Street, the Dow Jones Industrial Average rose 25.2 points, or 0.08 per cent, at the open to 31,085.67. The S&P 500 rose 5.1 points, or 0.13 per cent, at the open to 3,814.98, while the Nasdaq Composite rose 45.8 points, or 0.35 per cent, to 13,174.75 at the opening bell.
Reports suggest Mr. Biden is set to layout a new US$2-trillion stimulus plan aimed at bolster the U.S. economy as it contends with the continued impact of the COVID-19 pandemic. The plan is expected to be released later Thursday.
“One of the things Biden and other Democrats will want to avoid is making the mistake the Obama administration made in the wake of the financial crisis, and going too small when it comes to supporting the economy, the effects of which, it could be argued are still being felt,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“He will therefore need to navigate the gap between the $3.4-trillion stimulus plan passed last summer which couldn’t get through the Senate, with the current amount of $1.3-trillion to $2-trillion that is being bandied about, which is still more than the $900-billion bill which has just been passed.”
He also noted the recent swing in Georgia, which gives Democrats a narrow majority in the Senate with the vice-president having the deciding vote, doesn’t necessarily mean that Democrats have a freehand to “turn on the fiscal firehose.”
“There are Democrat hawks as well who will need to be convinced when it comes to deficit spending,” Mr. Hewson said.
Meanwhile, investors are also readying for earnings season to kick into gear with results from some of the biggest U.S. banks at week’s end. Citigroup, JPMorgan Chase and Wells Fargo all release results on Friday morning.
U.S. investors also got a reading on the health of the American job market. The U.S. Labor Department said weekly jobless claims came in at 969,000, much higher than the 789,000 economists had been forecasting.
On the corporate side, France’s labour minister joined political opposition to a takeover of French grocer Carrefour by Canada’s Alimentation Couche-Tard. On Wednesday, Laval, Que.-based Couche-Tard said it sent a non-binding offer letter to Carrefour for a friendly combination at a price of €20 per Carrefour share. That price values Carrefour at about US$20-billion.
“I am in favor of not questioning Carrefour’s current shareholding structure and allowing (the company) to pursue its strategy, so (I am) opposed to a takeover,” Labour Minister Elisabeth Borne told Europe 1 radio.
Finance Minister Bruno Le Maire on Wednesday had said he was not in favor of the deal at first glance.
In Canadian earnings, cable company Cogeco Inc. reports results after the close of trading.
Before the open, Aphria Inc on posted quarterly adjusted profit compared to year-ago loss, as demand for cannabis and related products surged during the coronavirus-induced lockdowns. The Ontario-based pot company posted adjusted net income of $3.2-million in the second-quarter ended Nov.30, compared with a loss of $48.8-million.
Aphria’s shares were up 14 per cent in Toronto on the results.
Overseas, major European markets were higher in early afternoon trading with the pan-European STOXX 600 rising 0.39 per cent. Sentiment got a boost from new figures showing China’s imports rose 6.5 per cent in December, better than the 5-per-cent increase economists had been forecasting.
Britain’s FTSE 100 rose 0.56 per cent. Germany’s DAX and France’s CAC 40 gained 0.19 per cent and 0.12 per cent, respectively.
In Asia, Japan’s Nikkei closed up 0.85 per cent. Hong Kong’s Hang Seng gained 0.93 per cent.
Commodities
Crude prices were slightly lower in early going with concern about rising coronavirus cases offsetting the impact of declining U.S. inventories and better-than-expected import figures out of China.
The day range on Brent is US$55.55 to US$56.43. The range on West Texas Intermediate is US$52.50 to US$53.29. Crude prices have been hovering around their best levels in 11 months in recent days.
Reuters reported Thursday that China, the world’s second biggest oil consumer, saw its biggest daily increase in new COVID-19 cases in 10 months. The increase comes as countries in Europe announced tighter restrictions and longer lockdowns, again raising concerns about rebounding crude demand.
“Oil is still pricing in a great deal of optimism linked to the roll-out of COVID-19 vaccines, and any negative developments would prompt a sharp negative reaction,” Axi chief market strategist Stephen Innes said in a note.
“Still, demand will gradually improve as more folks get vaccinated, and the supply side is under control thanks to OPEC+ and Saudi Arabia’s continued efforts. Risks remain, but there appears to be a clearer path to oil upside with downside risks diminished.”
Prices were underpinned by figures release Wednesday by the U.S. Energy Information administration, which showed that U.S. oil inventories fell by 3.24 million barrels, more than the 2.55 million that analysts had been expecting. However, gasoline stockpiles rose by 4.39 million barrels. CMC Market analyst David Madden says that was more than the markets had been forecasting.
Prices also found some support in new figures out of China which showed that country’s total crude imports rose 7.3 per cent in 2020, despite the pandemic’s impact.
In other commodities, gold prices slid.
Spot gold fell 0.2 per cent to US$1,840.55 per ounce, while U.S. gold futures slipped 0.8 per cent to US$1,840.10.
“Any strength in the U.S. dollar and yields will serve as a headwind,” Mr. Innes said.
“Should yields continue to rise, bullion may experience further dips and may need to seek out support at US$1,800 and the November low of US$1,765.”
Currencies
The Canadian dollar was slightly higher as its U.S. counterpart held steady against global counterparts on expectations of more U.S. COVID-19 relief.
The day range on the loonie is 78.70 US cents to 78.95 to US cents.
“The CAD is modestly higher on the session but is holding within recent ranges and lagging its G10 commodity peers again,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
“Energy prices remain buoyant (note that the Western Canada Select spread versus West Texas Intermediate has narrowed since the start of the year) and the broader commodity complex’s gains in the past few months remains clearly supportive of the CAD’s gains as domestic terms of trade have improved.”
There were no major Canadian economic releases on Thursday’s calendar.
On global markets, the U.S. dollar held above three-year lows against a basket of world currencies.
The U.S. dollar index was little changed, up 0.04 per cent at 90.320, as investors waited for U.S. President-elect Joe Biden to give details later today of a plan for further pandemic relief. The index has gained in four of the past five sessions, according to figures from Retuers.
The euro slid 0.05 per cent to US$1.214 after falling 0.4 per cent during the previous session.
The U.S. dollar edged up 0.13 per cent to 104.02 yen.
Bitcoin held on to 10-per-cent gains made on Wednesday after sliding almost US$12,000 from last week’s record high of $US42,000. It rose 3 per cent to US$38,860 on Thursday.
More company news
Barrick Gold Corp said fourth-quarter production fell 16.19%, hurt by lower output from Nevada Gold mines as well as Pueblo Viejo mine in Dominican Republic. Total preliminary gold production fell to 1.21 million ounces in the quarter ended Dec. 31 from 1.44 million ounces, a year earlier.
Vancouver-based retailer Aritzia said net income totalled $30.5-million or 28 cents per share in its third quarter, compared with $34.8-million or 32 cents per share during the same period the year before. Aritzia’s adjusted net income was $32.2-million or 29 cents per share for the period ended Nov. 29, versus $35.7-million or 32 cents per diluted share last year. Analysts had expected Aritzia to report earnings per share of 23 cents per share, according to financial data firm Refinitiv. The results were released after Wednesday’s close.
BlackRock Inc, the world’s largest asset manager, on Thursday reported a stronger quarterly profit, as increased volatility in financial markets resulted in higher capital inflows. The company’s net income rose to $1.57 billion, or $10.18 per share, in the quarter ended Dec. 31, from $1.31 billion, or $8.34 per share, last year.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Jan. 9.
(8:30 a.m. ET) U.S. import prices for December.
(12:30 p.m. ET) U.S. Fed Chair Jerome Powell speaks at Princeton University (webinar)
With Reuters and The Canadian Press