Equity Markets
Wall Street opened little changed on Friday as earnings rolled in, while investors braced for the first round of the closely contested French presidential election.
Suggestions from U.S. Treasury Secretary Steven Mnuchin that a new tax plan could arrive "very soon" and solid corporate profits continue to soothe investors nerves. But, concerns the first round of voting in the French presidential election on Sunday and further violence in the streets of Paris on Thursday kept market optimism in check.
The Dow Jones Industrial Average rose 17.32 points, or 0.08 per cent, to 20,595.27, the S&P 500 lost 0.48 points, or 0.02 per cent, to 2,355.92 and the Nasdaq Composite slid 2.89 points, or 0.05 per cent, to 5,913.87.
Canada's main stock index also slipped in early trade on Friday, with heavyweight energy and banking stocks slightly lower as oil prices dipped and domestic inflation data came in lower than expected. The Toronto Stock Exchange's S&P/TSX composite index was down 16.59 points, or 0.11 percent, at 15,608.97 shortly after the open. It is on track for a 0.5 percent gain on the week.
Global markets were largely calm Friday. A fatal attack on police officers in Paris overnight caused investors some immediate concerns, with the gap between French and German 10-year borrowing costs - a key indicator of election nerves in recent months - rising sharply in the first few minutes of trading. That move, however, reversed as trading went on. France's CAC-40 slipped 0.36 per cent. London's FTSE-100 fell initially but then rose 0.04 per cent. Germany's DAX was up 0.17 per cent.
In Asia, Japan's Nikkei 225 closed up 1.03 per cent after Bank of Japan Haruhiko Kuroda said accommodative monetary policy will remain in place. Hong Kong's Hang Seng lost 0.06 per cent, and the Shanghai composite inched higher.
Commodities
Oil prices moved lower on Friday, heading to the biggest weekly decline in a month over skepticism that OPEC-led production cuts will restore balance to the market. Brent crude futures were lower and heading to a weekly decline of more than 5 per cent. That would be the biggest weekly drop since early March. U.S. crude futures were also in the red early on, heading to a weekly decline of 4.8 per cent. While some OPEC members have said they favour extending production cuts beyond the middle of the year, Russia's Energy Minister Alexander Nova said the market situation is "gradually improving" and wouldn't say if that country would join in an extension ahead of a joint meeting later this month.
Gold prices were relatively steady early Friday, with safe-haven assets still in favour as investors weigh a tight first round in the French presidential election. Spot gold prices were down slightly early on and faced the prospect of the first weekly decline in six.
Currencies and bonds
The Canadian dollar weakened Friday after new figures showed Canada's annual rate of inflation fell to 1.6 per cent in March from 2 per cent a month earlier. Economists said the latest figures show few inflationary pressures in the Canadian economy and offer little reason for the Bank of Canada to move anytime soon. The U.S. dollar, meanwhile, declined against the yen early Friday. The euro was also lower against the greenback.
French bond yields hit a three-month low with Thursday's Paris attack causing some immediate jitters with the gap between French and German 10-year borrowing costs - a key indicator of election nerves recently - rising sharply early on. Traders said the attack, which left one police officer dead and two others injured, could tip the French presidential vote in favour of far-right anti-immigrant candidate Marine Le Pen. The move, however, changed course as the session continued with the yield on 10-year French government debt hitting its weakest since January and the gap between French and German bonds narrowing. Reuters notes that, although falling yields usually indicate investors seeking safety, in the case of the election uncertainty lower French yields imply a more steady-as-she-goes approach to the future. Investors seem relatively confident that while Ms. Le Pen might well win enough votes on Sunday to make the second round on May 7, she will then likely lose to centrist candidate Emmanuel Macron.
U.S. Treasury prices gained slightly on Friday ahead of Sunday's presidential election in France, with no major U.S. economic releases due to set market direction. Benchmark 10-year note yields have held in a tight range since falling to five-month lows on Tuesday.
Stocks set to see action
General Electric Co. said Friday that first-quarter cash flow from its industrial operations turned negative and was less than the company expected, though its earnings and revenue exceeded analyst estimates. GE reported a negative $1.6-billion in cash flow from industrial operating activities compared with a negative $600-million it expected for the quarter due to higher working capital and the timing of bills to customers. Revenue fell 1 per cent to $27.66-billion but still beat analysts' estimates. Earnings per share from continuing operations rose to 10 cents from 3 cents. Adjusted earnings of 21 cents a share were unchanged from a year ago and beat analyst estimates of 17 cents, according to Thomson Reuters I/B/E/S.
Home Capital Group Inc. shares continue to be the focus of investor concerns. The company lost $300-million in market value on Thursday after regulators accused the company of making "materially misleading statements" to investors. On Friday, the company issued preliminary first-quarter earnings per share along with a statement from chairman Kevin Smith. In the statement, Mr. Smith acknowledged recent "challenges" and told investors the "best way for us to move forward is to view these challenges as opportunities to improve the way we do business and to regain your confidence and our strong reputation."
SNC-Lavalin Group Inc. announced Thursday that it is buying British-based WS Atkins PLC in a deal worth $3.6-billion, the biggest ever takeover for the Canadian company it pushes into the top tier of engineering firms worldwide.
Visa Inc. also reported its results after markets closed on Thursday. The credit card and payments giant posted a profit of about 86 cents a share, easily surpassing expectations for a profit of 79 cents a share, according to Bloomberg.
strong>Honeywell shares rose 2.4 per cent in premarket trading after it beat profit estimates and raised its earnings forecast.
Toy-maker Mattel Inc. reported an adjusted loss of 32 cents a share, far worse than the 17.5-cent loss that analysts had been expecting. Management blamed the setback on a "retail inventory overhang" over the holiday period that it said had now cleared.
U.S. regional banks could get some attention Friday after reporting that beat market expectations. Associated Banc-Corp, which is based in Wisconsin, reported a profit of 35 cents (U.S.) a share, beating a consensus expectation of less than 32 cents a share. FCB Financial Holdings Inc., which operates community banks in Florida, did even better: It reported a profit of 86 cents a share, which was considerably better than an expectation of 62.8 cents a share. National Bank Holdings, which has branches in Colorado, Missouri, Kansas and Texas, reported a profit of 30 cents a share, better than the 23 cents expected by analysts. The regional bank reports will continue into Friday as well, when SunTrust Banks Inc., which has subsidiaries in Florida, Georgia, Maryland and several other states, reports its results.
More reading: Friday's small-cap stocks to watch
More reading: Friday's analyst upgrades and downgrades
Economic News
Canada's annual inflation rate cooled more than expected in March, as food prices fell for the sixth month in a row, Statistics Canada said Friday. The annual rate fell to 1.6 per cent from the previous month's 2.0 per cent, exceeding economists' forecasts for a decline to 1.8 per cent. The three measures of core inflation put in place by the Bank of Canada last year remained tame, with CPI common the lowest at 1.3 per cent.
Consensus was for an increase of 0.4 per cent from February and 1.8 per cent year over year.
"Inflation isn't yet a concern for the Bank of Canada, and a soft CPI reading in March gives them room to continue citing slack in the economy...All told, a soft reading on CPI should give reason to bid up fixed income and weaken the (Canadian dollar) slightly," CIBC's Nick Exarhos said in a note.
U.S. home resales rose more than expected in March to the highest level in more than a decade as more homes came on the market and were quickly snapped up by consumers. The National Association of Realtors said on Friday that existing home sales increased 4.4 per cent to a seasonally adjusted annual rate of 5.71 million units last month. Economists expect to see a rebound of about 1.3 per cent in March.
With files from Reuters, Bloomberg and The Associated Press