Canadian markets react to U.S. midterm results and Bombardier cash flow update
Wall Street futures were mixed after a strong rally in North American markets, while Bombardier raised its free-cash-flow forecast and oil prices rose on Middle-East tensions.
Global equity markets posted gains on Thursday, though technology shares lagged as investors assessed the impact of a Democratic sweep in the U.S. midterm elections. Wall Street futures were mixed, with the Nasdaq pointing lower after major North American indexes rose the previous day, while TSX futures traded in positive territory.
In Canada, earnings reports from BCE Inc., Bombardier Inc., Canadian Natural Resources Ltd., TC Energy Corp., Wheaton Precious Metals Corp., Gildan Activewear Inc., AtkinsRéalis Group Inc., Pembina Pipeline Corp., Quebecor Inc. and Saputo Inc. were highlighted. Bombardier announced a second increase this year to its annual free-cash-flow forecast, prompting analysts to focus on how the company will deploy the surplus capital.
Deutsche Bank strategist Jim Reid said, ">When it comes to the headline result, it’s not too different from investor expectations beforehand, even if the scale of the Democratic victory was bigger than expected."
"In many respects, the overall rally fits into the classic midterm pattern we’ve previously highlighted. After all, in 20 out of 20 midterm elections since World War Two, the S&P 500 has been higher one year later," he added.
European markets rose, with the STOXX 600 up 0.58%, the FTSE 100 gaining 0.75%, Germany’s DAX climbing 0.77% and France’s CAC 40 advancing 0.74%. In Asia, Japan’s Nikkei fell 1.79% while Hong Kong’s Hang Seng jumped 3.67%.
Oil prices increased as traders weighed the outlook of the U.S.–Israeli conflict with Iran following the Republican losses in the U.S. midterms. Brent futures rose 1.79% to $96.31 a barrel and WTI crude gained 1.01% to $89.01. UBS commodity analyst Giovanni Staunovo noted, ">The situation in the Middle East is still unresolved and that’s why there is some modest recovery in prices at the moment."
Spot gold climbed 1.9% to $4,134.82 an ounce, and December U.S. gold futures rose 1.8% to $4,145.10.
The Canadian dollar strengthened, trading at $1.3965 per U.S. dollar, up about 1.87% over the past month. The U.S. dollar index edged higher to 101.61, while the euro and British pound slipped modestly. U.S. 10-year Treasury yields fell to 4.888%.
The Bank of England raised its policy rate to 4% from 3.75%, its first hike in more than three years, and signaled a possible further increase if the Middle-East conflict persists. Upcoming U.S. data include initial jobless claims, Q3 productivity, and a global supply-chain pressure index, while the Bank of Canada’s governor and senior deputy are set to appear before a Senate committee, and Canada’s federal budget is slated for release.