Equities
U.S. stock futures were higher on continued trade optimism while a spate of strong earnings from big players like Airbus and AstraZeneca helped push European indexes higher in morning trading. U.S. futures, however, lost some altitude following a report showing a 1.2-per-cent decline in December retail sales. On Bay Street, TSX futures advanced as crude prices gained for a third day. Earnings from Bombardier, Canadian Tire and Telus among others will help set the tone.
On world markets, trade between the United States and China continues to be a key driver. On Wednesday, U.S. President Donald Trump said talks with China were “going along very well.” A Bloomberg report suggested that the U.S. could push a March 1 trade deadline to raise tariffs on Chinese imports by 60 days.
David Madden, markets analyst with CMC Markets U.K., said stronger-than-expected import and export figures out of China also helped bolster sentiment heading toward the North American open. Exports jumped 9.1 per cent in January. Economists had been expecting a decline of 3.2 per cent. Imports fell 1.5 per cent, better than the 10-per-cent drop markets had been expecting. The January figure also improved on December’s 7.6-per-cent decline.
“Over all, the figures confirm the global economy is in better shape than originally thought, and that has lifted investor confidence,” Mr. Madden said. “That fact that China’s economy is showing some signs of improvement might mean Beijing will be less susceptible to pressure from the US regarding the trade dispute.”
On Bay Street, insurers Manulife Financial Corp. and Sun Life Financial Inc. could get some attention after both posted higher fourth-quarter earnings after the close of trading on Wednesday. Manulife reported earnings per share, excluding one-off items, of 65 cents, compared with 59 cents a year ago. Sun Life Financial reported earnings per share, excluding one-off items, of $1.19, compared with $1.05 in last year's quarter.
Meanwhile, early Thursday, Bombardier Inc. said earnings before interest and taxation rose to $342-million, from $73-million last year. The latest results topped analysts’ forecasts, which called for EBIT of $254.5-million. Bombardier’s net profit swung to $55-million, compared with a $188-million net loss a year earlier.
Retailer Canadian Tire Corp., meanwhile, posted a 5.8-per-cent decline in quarterly profit, hit by rising expenses. Net income fell to $278.2-million, or $3.99 per share, in the fourth quarter ended Dec. 31, from $ 295.4-million, or $4.10 per share, a year earlier.
Results are also due Thursday from Canada Goose and Telus. Canopy Growth reports after the close.
On Wall Street, shares were higher following reports it plans to roll out the first cryptocurrency by a U.S. bank. According to CNBC, the bank’s engineers have created a digital token called JPM Coin that will settle transactions between clients at its wholesale payments business. The report says only a small fraction of payments will be handled by cryptocurrency.
Overseas, strong earnings pushed the pan-European STOXX 600 up 0.45 per cent in morning trading. Airbus was among the winners after reporting better-than-expected earnings, helping offset news that the aerospace giant plans to abandon its A380 program. Airbus shares were up more than 5 per cent. Drug maker AstraZenec saw its stock jump 4 per cent after its latest results exceeded market forecasts. Food giant Nestle also surged on an upbeat outlook.
Britain’s FTSE 100 rose 0.34 per cent. France’s CAC 40 was up 0.78 per cent. Germany’s DAX gained 0.43 per cent.
In Asia, the Shanghai Composite Index slid 0.5 per cent. Hong Kong’s Hang Seng ended down 0.23 per cent. Japan’s Nikkei was little changed, slipping 0.02 per cent.
Commodities
A bullish news flow helped push Brent crude to its best levels this year while West Texas Intermediate was up more than 1 per cent in the predawn hours. The range on Brent for the day is US$63.64 to US$64.81. The range on WTI is US$53.90 to US$54.68.
A flurry of positive headlines - including optimism over U.S.-China trade and solid import-export figures from China - have helped crude prices move higher for three consecutive session.
“The (U.S.) dollar rally isn’t holding oil back either, with WTI and Brent now pushing previous resistance levels and threatening a very bullish breakout,” OANDA analyst Craig Erlam said. "There has been significant resistance around US$55 and US$65, respectively, for some time and these are both currently coming under pressure."
“The newsflow recently has certainly been more bullish, particularly reports of Saudi Arabia exceeding production cut targets by 500,000 barrels per day, and this has been the catalyst for the current bout of strength.”
Thursday’s price gains came even as figures on U.S. crude stocks showed inventories last week had risen to their highest levels since late 2017. The U.S. Energy Information Administration said crude inventories rose for the fourth week, climbing to 450.8 million barrels, up 3.6 million barrels. Analysts had been expecting an increase closer to 2.7 million barrels. Crude production, meanwhile, held at a record high of 11.9 million barrels a day.
Elsewhere, gold prices were little change with a stronger U.S. dollar and rising global markets putting a ceiling on prices. Spot gold was steady at US$1,305.78 per ounce. U.S. gold futures were down 0.4 per cent at US$1,309.30.
“[A rising U.S. dollar] is keeping the pressure on gold which tends to struggle against the backdrop of a stronger dollar,” Mr. Erlam said. “It’s showing some admirable resilience itself though and continues to trade above US$1,300 but this will only last so long. At some point, the relationship will likely resume and it’s just a case of who can hold their nerve longer, gold bulls or dollar bulls.”
Currencies and bonds
The Canadian dollar was a touch lower as its U.S. counterpart continued to advance against world currencies. At last check, the loonie was sitting closer to the lower end of the day range of 75.34 US cents to 75.59 US cents.
For the loonie, the morning’s key report will be Statistics Canada’s tally of factory sales in December. Sales fell 1.3 per cent in December. The markets had been expecting a gain of 0.5 per cent.
On world markets, the U.S. dollar, which has struggled on a shift in tone by the U.S. Federal Reserve, continues to find its footing. The greenback was holding near a three-month high against the euro in early trading in Asia. The U.S. dollar index, which weighs the currency against a basket of its peers, was up slight at 97.20, after rising 0.5 per cent a day earlier. Reuters reports that the index has gained 1.7 per cent so far this month following two straight months of declines.
In bonds, U.S. Treasury yields were lower as the markets looked ahead to weekly jobless claims. The yield on the 10-year note was lower at 2.695 per cent. The yield on the 30-year note was lower at 3.021 per cent.
Stocks set to see action
Telus Corp reported a 4 per cent rise in quarterly profit on Thursday, as the telecom services provider registered growth across its wireless and wireline segments. The Vancouver-based company reported net income of $368-million, or 60 cents per share, in the fourth-quarter ended Dec. 31, from $354-million, or 59 cents per share, a year earlier. Total operating revenue rose to $3.76-billion from $3.54-billion.
Luxury coat maker Canada Goose Holdings Inc’s quarterly profit surged 64 per cent, bolstered by growth at its direct-to-consumer operations that include online stores and company-owned retail outlets. The Toronto-based company said on Thursday net income rose to $103.4 million or 93 cents per share in the third quarter ended Dec. 31, from $63 million or 56 cents per share a year earlier. U.S.-listed shares were up more than 6 per cent.
Coca-Cola Co reported sales that topped Wall Street estimates for the tenth straight quarter, benefiting from higher prices and strong demand for its zero-sugar sodas. The company’s revenue fell 6 per cent to US$7.1-billion in the fourth quarter ended Dec. 31, hurt by the refranchising of its low-margin bottling operations. Analysts had estimated sales of US$7.03-billion, according to IBES data from Refinitiv. However, shares fell in premarket trading after the company’s full-year forecast fell short of Wall Street expectations.
Cisco Systems Inc shares were higher in the premarket after the company reported second-quarter revenue that beat Wall Street estimates. The company reported net income of US$2.8-billion, or 63 US cents per share, in its quarter ended Jan. 26, compared with a loss of US$8.78-billion, or US$1.78 per share, a year earlier, when it took a charge of US$11.1-billion related to the new U.S. tax laws. Cisco’s results were released after the close on Wednesday.
Precision Drilling Corp. reported a loss of $198.3-million in its fourth quarter as it was hit by $208-million in goodwill impairment charges. The oilfield services company says the loss amounted to 68 cents per diluted share for the quarter ended Dec. 31. That compared with a loss of $47-million or 16 cents per share in the same quarter a year earlier.
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Economic news
Canadian factory sales fell 1.3 per cent to $56.4-billion in December on lower sales of petroleum and coal products, Statistics Canada says. Excluding that industry, sales were down 0.3 per cent. Economists had expected an increase of 0.5 per cent for the month. The agency says sales were down in 12 of 21 industries.
Initial claims for U.S. unemployment benefits rose to 239,000 last week, exceeding economists’ forecasts.
U.S. retail sales fell 1.2 per cent in December from the month before following a 0.1-per-cent revised decline in November. Economists had been expecting a modest increase in monthly retail sales.
(10 a.m. ET) U.S. business inventories for November. Estimate is a rise of 0.2 per cent from October.
With Reuters and The Canadian Press
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Terry Weber