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Equity Markets

Canada's stock market slipped 2.06  points, or 0.01 per cent, at 15,408.67 in early trading Friday, led lower by a 3 per cent decline in energy stocks.

Five of the index's 10 sectors were lower.

Wall Street opened little changed on Friday, coming off six straight days of gains, as investors took to the sidelines ahead of a three-day Memorial Day holiday weekend.

The Dow Jones Industrial Average dipped 8.56 points, or 0.04 per cent, to 21,074.39. The S&P 500 edged lower by 1.38 points, or 0.05 per cent, to 2,413.69. The Nasdaq Composite eked out a gain of 1.64 points, or 0.03 per cent, to 6,206.90.

Turbulent oil prices continued to cast a shadow over the markets Friday. In early trading, battered oil prices regained some lost ground after a sharp sell-off on OPEC's decision to extend production cuts but not deepen them. Crude prices wavered early Friday - dipping below break even after posting early gains - following a drop of roughly 5 per cent in the previous session. West Texas Intermediate was still below the $50 (U.S) mark. On Thursday, Canadian stocks fell as oil's decline hit the energy sector but U.S. stocks shrugged off the drop, with the S&P 500 and Nasdaq closing at record highs. In economic news, U.S. first-quarter GDP growth was revised higher to 1.2 per cent year-over-year, compared with an initial reading of 0.7 per cent growth. U.S. durable goods orders fell 0.7 per cent, the first decline in five months. That decline, however, was better than the 1.4-per-cent drop economists had been expecting.

"The broader market tone this morning is somewhat risk averse, with European equities weaker, developed market bonds slightly firmer (U.S. Treasury bonds are mildly under-performing) and the (Japanese yen) out-performing (despite lower than expected core CPI data for Apr)," Scotiabank's  Shaun Osborne and Eric Theoret said in a morning note.

Overseas, European markets were mixed to lower Friday morning, with the FTSE 100 up 0.39 per cent but German's DAX down 0.34 per cent and France's CAC 40 off 0.25 per cent. Traders cited oil's rough ride and narrowing polling numbers ahead of the British election as reasons for the subdued trading atmosphere.

Asian markets also closed mostly lower on the OPEC news. Tokyo's Nikkei lost 126.29 points to finish at 19,686.84. Hong Kong's Hang Seng index was essentially flat, finishing up 0.03 per cent. The Shanghai composite index followed a similar patter, closing up 0.08 per cent.

U.S. markets will be closed Monday for Memorial Day.


Oil prices seesawed early on after Thursday's drop as investors dipped a toe back in the market. At Thursday's meeting in Vienna, the OPEC and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day until the end of the first quarter of 2018. The initial pact was set to expire next month. Some traders had hoped to see the cartel deepen cuts as well as extend them. The decision not to introduce steeper production cuts sent oil prices tumbling 5 per cent immediately after Thursday's meeting. Early Friday, both Brent and West Texas Intermediate moved back and forth across the break-even point through the early part of the morning. Oil prices appeared set to post a decline of about 3 per cent for the week.

"The reason for the sell-off was simple. There had been so much reported on the agreement in the weeks leading up to the meeting that it had been fully priced in," OANDA senior market analyst Craig Erlam said.

"Once speculation became reality, there was no more gains to be had, not in the near-term anyway. Should we see full compliance and evidence that inventories are falling back towards their five year average, as intended, the prices may well creep higher once again."

Elsewhere, gold rose to a four-week high as investors moved away from riskier assets on a mix of political uncertainty and a weaker U.S. dollar. Spot gold prices hit their highest level since May 1 early on. U.S. gold futures were also higher.

"We have had the political noise coming from Trump and the U.S. administration and there is a certain element of uncertainty in the markets in general, which is supporting gold. Equities are also down," analyst Carsten Menke at Julius Baer in Zurich told Reuters.

G7 leaders meet Friday in Sicily, a day after U.S. President Donald Trump slammed NATO allies for not spending more on defence and accused Germany of poor trade policies.

Silver was higher Friday and looked set for advance about 2.7 per cent for the week. That would mark the metal's biggest weekly gain since mid-April. Platinum was up 1.2 per cent for the week. Copper prices edged lower in London.

Currencies and bonds

The Canadian dollar was up modestly Friday morning. Traders said the currency, which finished Thursday higher despite oil's dramatic decline, has found some support in recent days from the Bank of Canada's surprisingly positive assessment of the country's economy. The day range for the loonie is 74.09 cents (U.S.) to 74.44 cents. However, oil's current volatility is again likely to move to the forefront as the glow from the central bank's comments fade, analysts said.

"The Loonie has been a very good proxy for trading the declining oil story, given that the post-BoC rally in (Canadian dollar) opened the door for interesting top selling opportunities, and traders clearly jumped on the occasion," LCG's Ipek Ozkardeskaya said.

"Now, it is the same old story. The market was fundamentally disappointed with the OPEC's nine-month extension plan, and the sell-off that hit the oil markets posterior to the OPEC statement could extend, keeping the downside pressure high on the Loonie."

She said 73 cents (U.S.) now appears to be a "reasonable target" for the Canadian dollar in coming weeks.

On world currency markets, the pound fell to its lowest level in two weeks after a new poll showed a narrowing lead for British Prime Minister Theresa May ahead of the June 8 election. The poll showed the opposition Labour Party had trimmed the lead for May's Conservatives to five points.

The U.S. dollar rose to a one-week high on Friday after first-quarter U.S. GDP figures were revised higher. The U.S. dollar index, which tracks the greenback against six major rivals, was up 0.11 per cent to 97.357, after rising to a high of 97.512, its strongest since May 19.

In bonds, Germany's 10-year government bond yield, the benchmark for the region, fell 1 basis point to 0.36 per cent. Other euro zone yields also edged lower on the day.

U.S. Treasury yields briefly pared their early fall on Friday as a revision on U.S. gross domestic product in the first quarter and data on durable goods orders in April came in a tad stronger than economists' forecasts. At 8:51 a.m. (ET), benchmark U.S. 10-year government note yield was 2 basis points lower at 2.236 per cent, sending the 2-year and 10-year part of the U.S. yield curve to its flattest level in seven months, according to Reuters data.

Stocks set to see action

Newly installed chief executive officer Joe Natale says Rogers Communications Inc. has to take an "end-to-end" approach to make meaningful progress on customer service. Poor customer experience, which leads to high subscriber turnover and increased costs, has long plagued the Toronto-based cable and wireless company and, on his first day as CEO in April, Mr. Natale pledged to "obsess" over the issue. Now, five weeks in to the job, he says "there hasn't been enough of a concerted effort" to improve overall customer experience across the "complete value chain."

General Motors Co. was accused in a lawsuit on Thursday of rigging hundreds of thousands of diesel trucks with devices similar to those used by Volkswagen AG , to ensure they pass emissions tests. The proposed class-action lawsuit covers people who own or lease more than 705,000 Chevrolet Silverado and GMC Sierra pickups fitted with "Duramax" engines from the 2011 to 2016 model years. Its shares were down 0.6 per cent in premarket trading.

Costco shares rose 1.6 per cent in premarket trading after the warehouse club company reported earnings late Thursday that topped Wall Street expectations. Net income in its most recent quarter came to $700-million, or $1.59 per share, up from $545-million, or $1.24 per share, in the same period last year. Stripping out one-time items, earnings came to $1.40, which beat analyst estimates of $1.31 per share. Revenue rose 7.8 per cent to $28.86 billion, also beating estimates.

BlackBerry Ltd. says it will receive a total of $940-million (U.S.) from Qualcomm by May 31 to settle a dispute over royalty payments. That's up $125-million from the initial settlement. An arbitrator sided with BlackBerry in April, and announced an interim award of $814.9-million (U.S.) plus additional amounts for interest and legal fees. BlackBerry's shares rose 2.7 per cent in premarket trading,  while Qualcomm's shares slipped 0.1 per cent.

Lion's Gate Entertainment beat estimates by two cents with quarterly earnings of 28 cents per share, helped by La La Land and its acquisition of cable channel Starz. Its revenue also beat forecasts. its shares rose 1.5 per cent in premarket trading.

GameStop fell 8.2 per cent in premarket trading, as the videogames and gaming consoles retailer left its full-year earnings forecast unchanged after quarterly profit beat estimates.

Big Lots was up 8.6 per cent in premarket trading after the discount retailer raised its full-year profit forecast.

More reading: Friday's small-cap stocks to watch
More reading: TSX earnings scorecard: How first-quarter results have fared so far

Economic News

U.S. GDP grew at an annual rate of 1.2 per cent in the first quarter, compared with earlier estimates of 0.7 per cent growth, according to figures released Friday.

The U.S. Commerce Department said durable goods orders fell 0.7 per cent in April after rising 2.3 per cent in March. The downturn was the first since durable goods orders fell 4.6 per cent in November. Orders for transportation equipment fell 1.2 per cent, pulled down by a 9.2 per cent drop in orders for civilian aircraft.

U.S. University of Michigan consumer sentiment index for May came in at 97.1. Economists had expected a reading of 97.5.

With files from Reuters