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Equity Markets

U.S. stock futures were higher ahead of one earnings season's busiest days. Amazon, Intel, Twitter, Mastercard and Starbucks are all among big names set to report. On Bay Street, futures were a touch lower as investors faced a similar flood of results with the emphasis in this country on energy and resource companies.

On tap are results from Cenovus and Crescent Point before the start of trading. Potash Corp. results are also due. After the close on Wednesday, Suncor Energy Inc. said it would take longer than expected to restore production at its Syncrude operation after a fire earlier this year. The company also cut its outlook for U.S. oil prices this year to $47 (U.S.) a barrel from $52 and posted earnings for the most recent quarter of $435-million (Canadian) or 26 cents a share, compared with a year-ago loss of $735-million or 46 cents.

Ahead of the start of trading Thursday, Potash Corp. posted earnings of 24 cents a share, beating analysts' estimates of 18 cents. Potash's revenue rose 6.4 per cent to $1.11-billion, also topping forecasts. The company's U.S.-listed shares were 3 per cent higher in premarket trading. Cenovus, meanwhile, reported a profit of $2.64-billion, or $2.37 per share in the second quarter ended June 30, compared with a loss of $267-million or 5 cents per share, a year earlier.

On Wall Street, Facebook shares could be back in the limelight after touching a record high in after-hours trading. The gains came after the social-media giant, which now has 2 billion regular users, said mobile advertising grew by 50 per cent in the latest quarter. Facebook shares were up more 3 per cent in premarket trading Thursday.

Twitter shares were down 5 per cent in premarket on news that the social media company failed to add users on a monthly basis in the latest quarter, compared with the prior three-month period. The company's loss also widened as it too a $55-million impairment charge. Quarterly revenue fell 4.7 per cent.

CMC chief market analyst Michael Hewson said U.S. markets appear to be content to emphasize earnings instead of ongoing political uncertainty in Washington. Both the Dow and the S&P 500 managed fresh highs on Wednesday.

"While the U.S. administration continues to be dysfunctional with no imminent prospect of any type of reform or stimulus package, markets appear to be taking comfort in the fact that the U.S. dollar has declined over 8 per cent thus far year to date, and in the process helped boost the earnings potential of those companies who conduct huge amounts of their business overseas," Mr. Hewson noted.

Outside earnings, traders may continue to weigh the Federal Reserves largely unchanged policy statement, released Wednesday afternoon. The Fed held largely to script but also said balance sheet normalization would come "relatively soon." That led traders to forecast a tapering announcement in September with action to follow. The markets trimmed expectations for a rate hike by year's end to roughly 42 per cent.

Overseas, markets were buoyed by a lower U.S. dollar and the suggestion that U.S. interest rates would remain lower for the immediate future. MSCI's 47-country All World share index followed Wall Street's lead to a record high overnight, while Asian stocks moved to their best levels in more than a decade, Reuters reports.

In Europe, disappointing results from Deutsche Bank and news of a failed lung cancer drug test by AstraZeneca weighed on sentiment. In early trading, Britain's FTSE 100 was up a modest 0.04 per cent. Germany's DAX fell 0.50 per cent and France's CAC 40 gained 0.14 percent.

In Asia, Japan's Nikkei finished up 29.48 points at 20,079.64. Hong Kong's Hang Seng rose 0.71 per cent and the Shanghai composite index was up 0.05 per cent.

Commodities

Oil prices continued to hold near two-month highs early Thursday after new figures showed a bigger-than-expected drop in U.S. crude stocks. In early trading, Brent crude and West Texas Intermediate were both modestly lower, although Brent remained above $50 (U.S.) a barrel and WTI stayed comfortably in the mid-$48 range.

On Wednesday, the U.S. Energy Information Administration reported that U.S. crude inventories fell by 7.2 million barrels last week, far more than the 2.6-million barrel decline that markets had been expecting. Despite the drop, worries over the persistent market overhang lingered, with crude prices failing to get a significant pop on the latest figures, analysts said.

"WTI crude oil almost ignored the 7.7 million barrel contraction in the U.S. oil inventories last week," LCG senior market analyst Ipek Ozardeskaya said in a note. "The global supply/demand imbalance still plays in favour of the short-side. Top sellers are touted at $49.45/49.60...before the $50 level."

Earlier this week, Saudi Arabia, OPEC's biggest producer, vowed at a meeting of OPEC and non-OPEC states in Russia to cap exports next month. Kuwait and United Arab Emirates have also said they would cut exports. Reuters notes that U.S. shale producers including Hess Corp., Anadarko Petroleum and Whiting Petroleum this week announced plans to cut spending this year as a result of low oil prices.

On Thursday, Norway's Statoil said it expects output to rise by about 5 per cent as crude prices firm.

In other commodities, gold rose for a second straight day to hit a six-week high after the U.S. dollar fell on a dovish U.S. Fed statement. The Federal Reserve said only that it expects to start trimming its massive bond holdings "relatively soon."

Spot gold prices advanced in the wake of Wednesday's announcement. U.S. gold futures for August delivery were up more than 1 per cent in early going.

Silver prices were also higher. London copper held near two-year highs, also supported by a weaker greenback.

Currencies and bonds

The Canadian dollar was trading higher after touching the mid-80 cent (U.S.) mark overnight as oil held near two-month highs and the U.S. dollar slid on a dovish Fed statement. So far, the day range on the loonie is 80.27 cents to 80.54 cents, with the upper end coming just after midnight. Since then, the loonie has trended lower but continues to trade above Wednesday's Bank of Canada closing price. At last check, the loonie was trading well above 80 cents.

The U.S. dollar fell immediately after the Federal Reserve held closely to previous statements but also suggested concern about weakness in U.S. inflation, hinting at a slower path to future rate hikes. Markets now forecast a 42.9-per-cent chance of a Fed hike by the end of the year, down from 45 per cent ahead of the latest Fed announcement.

"Expectations for this week's meeting were low and the Fed delivered on that with no rate change and a policy statement that was very similar to June's," RBC economist Josh Nye said in a note. "The sole development was a change in language on balance sheet normalization though that was not a surprise.  The Fed is now indicating that the planned change in their reinvestment policy, which was outlined in June, will begin "relatively soon."

He says the statement likely sets up the Fed to announce tapering of its bond holdings in September, with October implementation likely. "We think the Fed will want to see some evidence that tight economic and labour market conditions are actually feeding through to higher prices before going too far toward normalizing interest rates," he said.

Overnight, the U.S. dollar recovered against the euro overseas after dropping to its lowest level in more than two years. Against the euro, it has fallen 13 per cent from a peak hit in January, and 5 per cent in the past four weeks, according to Reuters. Against a broad basked of currencies, the U.S. dollar, however, shook off early losses to move higher about an hour before the start of trading in North America.

In bonds, Germany's short-dated government bond yields dipped to a six-week low following the Fed decision. U.S. Treasurys, meanwhile, were lower. The yield on the 10-year note was higher at 2.292 per cent. The yield on the 30-year note was up at 2.893 per cent.

Stocks set to see action

Barrick Gold Corp., the world's largest gold miner by production, reported better-than-expected second-quarter earnings on Wednesday and said it would begin discussions with the government of Tanzania next week about an export ban. Toronto-based Barrick said adjusted net earnings rose to $261-million, or 22 cents a share, from $158-million, or 14 cents a share, in the year-ago period on the back of lower mining costs and higher gold and copper sales volumes. Analysts, on average, had expected an adjusted profit of 18 cents per share, according to Thomson Reuters I/B/E/S.

AstraZeneca's combination of two injectable immunotherapy drugs failed to help patients as hoped in a closely watched advanced lung cancer trial, sending its shares plunging on Thursday. The so-called MYSTIC study was the most anticipated clinical experiment in the pharmaceutical industry this year and the news saw the shares tumble more than 16 percent, wiping $14 billion off the company's value in their biggest ever daily fall. The study was seen as key to proving the value of the group's new drug pipeline and its future as an independent company, after it spurned a $118 billion takeover attempt by Pfizer in 2014. Uncertainty about the MYSTIC outcome had been heightened recently by speculation that Chief Executive Pascal Soriot might be considering a highly paid new job as head of Israel-based Teva Pharmaceutical Industries.

Deutsche Bank forecast lower full-year revenues and only a modest improvement in earnings on Thursday, after second-quarter sales were hit by a drop in capital markets trading.  Germany's biggest lender beat forecasts with a jump in quarterly net profit to 466 million euros ($547 million) from just 20 million a year earlier, helped by cost cutting. Analysts had forecast a profit of 273 million. However, total revenues were down 10 percent in the quarter to 6.6 billion euros, and Deutsche said it expected revenues of its operating businesses to be lower in 2017 than last year - compared with its previous guidance for a broadly flat outcome.


Whole Foods Market Inc., which has agreed to be bought by Amazon.com Inc. for $13.7-billion, on Wednesday reported a quarterly profit decline after same-store sales fell for the eighth quarter in a row.

Mastercard Inc., the world's second-biggest payments network, reported a nearly 20-per-cent jump in quarterly profit as people spent more using credit and debit cards. The company's net income rose to $1.18-billion, or $1.10 per share in the second quarter ended June 30, from $983-million, or 89 cents per share, a year earlier.

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Economic News

British retail sales growth hit a three-month high in July, boosted by groceries and summer clothing, according to a survey on Thursday that bucked other signs of a consumer slowdown. The Confederation of British Industry's (CBI) monthly retail sales balance rose to +22 in July from +12 in June, its highest since April. Expectations for August were the strongest since December last year, but the CBI warned it might not last. "While retailers expect a similar pace of growth next month, the factors underpinning their sales growth are more shaky," said Anna Leach, head of the CBI's economic intelligence.

Statistics Canada said Thursday that average weekly earnings of non-farm payroll employees were $972 in May, unchanged from April but up 2 per cent from 12 months earlier.

U.S. jobless claims totalled 244,000 last week. Economists had forecast a figure closer to 240,000.

U.S. durable goods orders rose 6.5 per cent in June, the most in almost three years, on higher demand for civilian aircraft.

With files from Reuters