At midday: TSX flat despite rise in marijuana, material stocks

Canada’s main stock index sat flat on Thursday, despite gains in marijuana producers and material shares on the back of rising gold and metal prices.

At 12:02 p.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was down 14.51 points, or 0.1 per cent, at 15,118.61.

The materials sector, which includes precious and base metals miners, added 0.4 per cent, as gold prices held steady after safe haven demand flowed in during times of political and economic uncertainty.

Zinc rallied, supported by sliding stockpiles and signs China may be taking steps to de-escalate its trade dispute with the United States.

First Quantum Minerals Ltd. jumped 4.3 per cent in morning trading, while Teck Resources Ltd. was up 2.9 per cent.

Health care stocks rose 2.5 per cent, led by a 6.1-per-cent jump by Aurora Cannabis Inc. Canopy Growth Corp. was up 5.3 per cent, while Aphria Inc. rose 5 per cent.

The energy sector fell 0.1 per cent as oil prices stabilized after losing nearly 7 per cent over the previous three days.

Canadian Natural Resources Ltd. was down 2.1 per cent and Tourmaline Oil Corp. slipped 1.6 per cent.

Sentiment was also lifted after Prime Minister Justin Trudeau said Canada and China will continue to work together towards an “eventual” free trade deal despite the country’s allegiance to the North American Free Trade Agreement (NAFTA), renamed the U.S.-Mexico-Canada Agreement (USMCA).

U.S. stocks struggled on Thursday as an attempt by technology companies to rebound from this week’s sharp losses was outweighed by a batch of weak results and Brexit-related concerns.

Department store operator J.C. Penney Co Inc lowered its sales outlook ahead of the holiday shopping season. However the shares reversed course to trade up 4.9 percent after new Chief Executive Officer Jill Soltau gave the first indications of her plans to turn a profit.

Dillard’s Inc fell 13.7 per cent after reporting third-quarter results.

Shares in the world’s largest retailer Walmart Inc, which was up earlier after beating quarterly comparable sales estimates and raising full-year outlook, gave up gains to trade down 1.5 per cent.

The results pulled down the broader group, sending the S&P 500 retailing index 1.5 per cent lower, despite economic data that showed U.S. retail sales rebounded sharply in October.

Political events in Europe also scared investors after a series of resignations in British Prime Minister Theresa May’s government threw into doubt her long-awaited Brexit deal and reports of anti-euro comments from an Italian official.

“Market’s choosing not to pick and spare (retail) numbers and most of the retailers are looking forward to the holiday season,” said Rick Meckler, a partner at Cherry Lane Investments, New Vernon, New Jersey.

“But right now the focus is on rising interest rates and the potential for long-term trade disruptions with China.”

Markets earlier got some relief following news that China had delivered a written response to U.S. trade demands ahead of an expected meeting between President Donald Trump and Chinese President Xi Jinping at the end of the month.

“Most people thought it would be resolved but it has dragged on and the optimism has turned to pessimism,” said Meckler.

U.S. stocks got off to a shaky start this month after a sharp selloff in October as investors weigh the prospects of rising interest rates, slowing global economy and trade tensions.

The Dow Jones Industrial Average was down 74.90 points, or 0.30 per cent, at 25,005.60, the S&P 500 was up 0.35 points, or 0.01 per cent, at 2,701.93 and the Nasdaq Composite was up 30.66 points, or 0.43 per cent, at 7,167.05.

Cisco Systems Inc rose 3.7 per cent after the network gear maker reported better-than-expected quarterly results, benefiting from demand for its routers and switches.

Apple Inc jumped 1.9 per cent after five days of losses, helping the S&P technology index gain 1.2 percent.

Facebook Inc dropped 1.7 per cent after the New York Times reported on how its executives ignored and then sought to conceal signs that the social media giant could be exploited to disrupt elections and broadcast viral propaganda.

Amazon fell 1.3 per cent, pulling the S&P consumer discretionary index down 1.4 per cent.

KB Home slumped 16.6 per cent after the company cut fourth-quarter revenue forecast. Shares of other homebuilders including PulteGroup Inc, Toll Brothers Inc and Lennar Corp also fell.

Shares in utility PG&E Corp continued its decline for a sixth day, hitting a 15-year low at $19.75, after warning that it could face “significant liability” in excess of its insurance coverage if its equipment caused the northern California blaze.

Oil futures rose more than 1 percent on Thursday, steadying after this week’s steep losses as fuel stockpile declines in the United States helped offset concerns about a potentially oversupplied market next year.

Prices have also been supported by the Organization of the Petroleum Exporting Countries signaling possible output cuts in 2019.

Brent crude futures gained $1.17, or 1.8 per cent, to $67.29 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 89 cents to $57.14 a barrel, a 1.6 percent gain.

Prices pared gains briefly after data from the U.S. Energy Information Administration showed crude inventories jumped 10.3 million barrels in last week, the biggest weekly build since February 2017. Analysts in a Reuters poll had expected an increase of 3.2 million barrels.

Gasoline stocks fell 1.4 million barrels, while distillate stockpiles drew down by 3.6 million barrels, the EIA data showed.

“Product draws are helping to offset some of the bearish brunt of a double-digit build – both gasoline and distillate show a jump in implied demand,” said Matt Smith, director of commodity research at ClipperData.

OPEC, led by Saudi Arabia, is considering a cut of up to 1.4 million barrels per day (bpd) next year to avoid the kind of build in global inventories that prompted the oil price to crash between 2014 and 2016.

“Oil prices shrug the (EIA) data off so far,” Commerzbank commodities analyst Carsten Fritsch said. “One explanation could be that a substantial production cut by OPEC becomes more likely.”

Earlier in the day, two-high ranking Russian sources told Reuters that Russia wants to stay out of any oil-production cuts being touted by some of its partners in the OPEC-led supply pact.

Reuters