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Canada’s main stock index opened higher on Thursday, boosted by the financial sector that rose after strong earnings from two of the country’s biggest insurance companies.

The Toronto Stock Exchange’s S&P/TSX Composite index was up 33.39 points, or 0.2 per cent, at 16,348.47.

Manulife Financial Corp. rose 1.5 per cent after beating estimates with its second-quarter results, however Sun Life Financial Inc. slipped 3.0 per cent after reporting its earnings.

Canadian Tire Corp. fell 6.5 per cent after reporting a fall in quarterly profit.

U.S. stocks opened flat on Thursday as gains in the high-growth technology sector were offset by a drag in shares of big U.S. lenders.

The Dow Jones Industrial Average rose 6.04 points, or 0.02 per cent, at the open to 25,589.79.

The S&P 500 opened lower by 0.51 points, or 0.02 per cent, at 2,857.19. The Nasdaq Composite dropped 1.81 points, or 0.02 per cent, to 7,886.52 at the opening bell.

Alarm bells were ringing on Thursday as new U.S. sanctions drove down Russia’s rouble and worries that Turkey was sliding towards a full-blown economic crisis battered the lira.

A rally in Chinese stocks had helped offset the latest escalation in the Sino-U.S. trade war overnight after Beijing matched the latest U.S. sanctions, but too much was going on nearby for Europe to remain unscathed.

London’s FTSE , Frankfurt’s DAX and Paris’ CAC40 were down 0.7 per cent, 0.3 per cent and 0.4 per cent respectively, while German government bonds rose in a broad grab for safety.

The main fireworks were in the currency markets.

The Russian rouble sank after Washington said it would impose fresh sanctions because it had determined that Moscow had used a nerve agent against a former Russian agent and his daughter in Britain, something the Kremlin denies.

There were also reports of a new U.S. Senate bill that, if passed, would impose even more widespread punishments for meddling in U.S. elections.

The rouble slid to its lowest since late 2016, hitting 66.1 roubles to the dollar and leaving it almost 4 percent lighter than it had been 24 hours previously..

“I’m surprised that the market, in retrospect, was quite complacent about this risk,” said North Asset Management portfolio manager Peter Kisler, though he was relieved the new sanctions hadn’t flagged a ban on Russian sovereign debt or banks for the time being.

Turkey’s lira, bond and stocks markets were taking even more of a pounding after meetings between officials in Washington looked to have made little progress in mending a row over Ankara’s jailing of an American pastor.

The lira touched a record low of 5.44 against the dollar, weakening some 2.5 per cent from Wednesday’s close. There was widespread selling in the country’s bond markets and Istanbul stocks dropped 1 percent too.

“We think Turkey may need to approach the IMF or seek other external support. Otherwise, capital-control measures seem to be a distinct possibility,” said fund manager Lombard Odier’s chief investment strategist, Salman Ahmed.

CHINA RALLY

Asia had been much brighter. Shanghai blue chips closed up 2.5 per cent after talk of possible government support for home-grown technology companies, the latest in a series of growth-boosting measures rolled out by Beijing as the trade dispute worsens.

Hopes for more Chinese infrastructure spending underpinned industrial resources, including iron ore and copper.

The gains in Chinese stocks helped MSCI’s broadest index of Asia-Pacific shares reverse early losses to gain 0.5 per cent, though Japan’s Nikkei slipped 0.2 per cent, in part because core machinery orders fell.

Shares in Mazda Motor Corp, Suzuki Motor Corp and Yamaha Motor Co also fell on news they conducted improper fuel economy and emissions tests on their vehicles.

Japan will try to avert steep tariffs on its car exports and fend off U.S. demands for a free-trade agreement at talks in Washington later.

Early on Thursday, China’s state broadcaster said the country must counteract U.S. tariffs and that Beijing had the confidence to protect its own interests as well as the means to do so.

China had announced additional tariffs of 25 per cent on $16 billion worth of U.S. imports from fuel to autos. The tariffs will apply to billions of dollars in U.S. gasoline, diesel and other oil products, though not crude.

Back in the FX markets, it wasn’t only emerging-market currencies that were struggling.

The pound wallowed at its lowest against the dollar and euro in almost a year as fears remained that Britain might leave the European Union without a deal on trade.

Traders reported a significant increase in investors hedging against a no-deal Brexit, an event that could send sterling into free fall and hurt the economy by raising trade barriers with Britain’s biggest export market.

Sterling was last trading at $1.2893, having dropped 0.4 per cent overnight.

The Japanese yen seemed to be catching a bid as a safe haven, with the dollar easing to 111.11 yen after stretching as high as 111.44 on Wednesday.

The euro was subdued at $1.1590, while the dollar index was up at 95.282.

The New Zealand dollar dropped 1.4 per cent to a two-year low at $0.6641 after the country’s central bank pledged to keep rates at record lows well into 2020 .

“The risk of rate moves over the next 12 months is weighted more towards cuts than hikes, and financial markets will price the risk accordingly,” said Kiwibank’s chief economist, Jarrod Kerr.

“The good news here is interest rates and exchange rates will remain lower for much longer, assisting growth.”

Oil rose on Thursday, recouping some of the previous day’s steep price slide, after the first round of U.S. sanctions against Iran came into effect, although confidence in crude demand has been hit by the escalating China-U.S. trade dispute.

Brent crude futures were up 19 cents at $72.47 barrel, after having lost more than 3 per cent on Wednesday. U.S. crude futures rose 6 cents to $67.00 a barrel, having closed down 3.2 per cent the day before.

The United States on Tuesday reimposed sanctions on Iran, the third-biggest producer in the Organization of the Petroleum Exporting Countries.

The renewed sanctions will not directly target Iranian oil until November, although U.S. President Donald Trump has said he wants as many countries as possible to cut their imports of Iranian crude to zero.

“The impact of it is the greatest known unknown of the year. If worst comes to worst and 1.5-2 million bpd of Iranian disappears from the market ... calculations will go out of the window and oil bears will have to brace themselves for a very rough ride,” PVM Oil Associates analyst Tamas Varga said.

As part of its most recent retaliation against Washington in the mounting trade dispute, China will impose tariffs of 25 percent on a further $16 billion in U.S. imports, which will affect trade in goods from fuel and steel products to autos and medical equipment. Crude oil will be exempt.

The ongoing trade war is rattling global markets and investors fear any slowdown in the world’s two largest economies would slash demand for commodities.

Reuters

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
MFC-T
Manulife Fin
+1.2%33.83
SLF-T
Sun Life Financial Inc
+0.15%73.91

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