Equities
Canada’s main stock index started slightly lower Thursday while U.S. indexes posted slim gains at the opening bell as traders weigh the latest reading on inflationary pressures in the U.S. economy.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 4.51 points, or 0.02 per cent, at 20,984.91.
In the U.S., the Dow Jones Industrial Average rose 51.41 points, or 0.14 per cent at the open, to 37,747.14.
The S&P 500 opened higher by 8.68 points, or 0.18 per cent, at 4,792.13, while the Nasdaq Composite gained 51.531 points, or 0.34 per cent, to 15,020.96 at the opening bell.
Markets got key U.S. inflation figures for December ahead of Thursday’s opening bell, withtraders looking for hints about how soon the U.S. Federal Reserve could start cutting interest rates. The CME FedWatch tool suggested markets were pricing in about a roughly 69-per-cent chance of the first cut coming in March ahead of this morning’s inflation report.
Early Thursday, the U.S. Labor Department said the annual rate of inflation in the U.S. rose to 3.4 per cent in December, from 3.1 per cent in November. Economists had been expecting the rate to nudge higher, but most had expected a reading closer to 3.2 per cent. On a monthly basis, consumer prices rose 0.3 per cent in December, more than the 0.2-per-cent increase markets had been forecasting.
The annual rate of core inflation, meanwhile, fell to 3.9 per cent last month, from 4 per cent in November. Markets had been expecting the December annual rate to decline to 3.8 per cent.
“Even though we are not fully there yet in year-over-year terms, the substantial progress on core inflation momentum will make the Fed less willing to tolerate a material slowing of the economy,” CIBC economist Ali Jaffery said. “We expect the Fed to start easing policy in the second half of this year.”
In Canada, Vancouver-based retailer Aritzia reported net income of $43.1-million or 38 cents per diluted share in the latest quarter, down from $70.7-million or 61 cents in the same period a year earlier. Net revenue rose to $653.5-million, up from $624.6-million a year earlier. The Canadian Press reports that Aritzia plans to open 11 to 13 new boutiques next year, including a Chicago flagship, and expand four or five, including two Manhattan stores. Aritzia shares jumped more than 20 per cent in morning trading in Toronto on Thursday.
Overseas, the pan-European STOXX 600 reversed early gains and slid 0.02 per cent by afternoon.
Britain’s FTSE 100 dipped 0.17 per cent per cent. Germany’s DAX was flat while France’s CAC 40 edged up 0.10 per cent.
In Asia, Japan’s Nikkei rose 1.77 per cent to close above 35,000 for the first time since February 1990. Hong Kong’s Hang Seng finished up 1.27 per cent.
Commodities
Crude prices were up in early trading amid concerns about escalating geopolitical tensions in the Middle East.
The day range on Brent was US$76.66 to US$78.14 in the early premarket period. The range on West Texas Intermediate was US$71.17 to US$72.68. Prices ended lower on Wednesday, continuing the choppy pattern seen through the week.
Reuters reported the United Kingdom Maritime Trade Operations (UKMTO) authority received word on Thursday that a vessel about 50 nautical miles east of Oman’s coast was boarded by four to five armed individuals. The previous day Yemen-based Houthis mounted their largest attack yet on commercial shipping lanes in the Red Sea and Israeli strikes in southern and central Gaza also intensified, the news agency said.
“There remains plenty of unknowns in the oil market from OPEC+ unity to potential disruptions in the Red Sea and the growth prospects for the global economy,” OANDA senior analyst Craig Erlam said in a recent note.
Sentiment was tempered by a surprise build in weekly U.S. inventories. Figures released Wednesday by the U.S. Energy Information Administration showed U.S. crude inventories rose by 1.3 million barrels to 432.4 million barrels in the week ended Jan. 5. Analysts had been expecting a decline of about 700,000 barrels.
In other commodities, gold was up 0.4 per cent at US$2,031.83 per ounce by early Thursday morning. U.S. gold futures also rose 0.4 per cent to US$2,036.60.
Currencies
The Canadian dollar shed early modest gains while its U.S. counterpart advanced after the release of the latest U.S. inflation figures.
The day range on the loonie was 74.57 US cents to 74.91 US cents ahead of the North American opening bell.
“In the absence of any major domestic news or developments, external drivers — the broader USD tone, risk appetite — and technical factors will continue to drive the CAD,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index, which gauges the greenback against a basket of currencies, was up 0.06 per cent at 102.42 after the release of the latest U.S. inflation data.
The euro slid 0.19 per cent to US$1.0954. Britain’s pound dipped 0.10 per cent to US$1.2730.
In bonds, the yield on the benchmark U.S. 10-year note edged up to 4.024 per cent after the latest U.S. economic numbers.
Elsewhere, bitcoin neared US$47,000, trading close to a two-year high, early Thursday morning after U.S. approval of spot bitcoin exchange-traded funds.
More company news
Cogeco Inc. reported its first-quarter profit fell compared with a year earlier as its revenue also edged lower. The company reported a profit attributable to owners of the corporation of $34.5-million or $2.21 per diluted share for the quarter ended Nov. 30. The result was down from a profit of $42.1-million or $2.67 per diluted share in the same period a year earlier. -The Canadian Press
Google has laid off hundreds of employees working on its hardware, voice assistance and engineering teams as part of cost-cutting measures. The cuts come as Google looks towards “responsibly investing in our company’s biggest priorities and the significant opportunities ahead,” the company said in a statement. “Some teams are continuing to make these kinds of organizational changes, which include some role eliminations globally,” it said. -The Associated Press
Chesapeake Energy said on Thursday it would buy smaller rival Southwestern Energy in an all-stock transaction valued at US$7.4-billion, a deal that would enable the second-largest U.S. natural gas producer to take the top spot. The move extends a recent spate of multi-billion deals in the U.S. energy sector including Exxon Mobil’s US$60-billion Pioneer Natural Resources offer and Chevron’s $53-billion agreement for Hess, as firms seek lucrative acreage to rebuild depleting assets. Chesapeake has offered US$6.69 per Southwestern share held, representing a discount of about 3% to the stock’s last close, according to Reuters calculation. -Reuters
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Jan. 6.
(8:30 a.m. ET) U.S. CPI for December.
(2 p.m. ET) U.S. treasury budget for December.
With Reuters and The Canadian Press
Terry Weber