Equity Markets
Canada's main stock index fell on Friday as slumping oil prices pressured energy shares, while the country's heavyweight financial services group also lost ground after bond yields fell on slower U.S. jobs growth.
The Toronto Stock Exchange's S&P/TSX composite index was down 32.06 points, or 0.21 per cent, at 15,437.85, shortly after the open. Four of the index's 10 main groups were lower.
Statistics Canada said the country's trade deficit narrowed to $370-million in April from a revised deficit of $936-million in March. Exports rose 1.8 per cent. Imports were 0.6 per cent higher. Economists had been split on where trade is going. Some expected a trade surplus of $100-million for April after March's deficit of $135-million. Others, however, were less optimistic and expected a wider shortfall against a backdrop of heightened trade tensions with the United States. Lower oil prices were likely to weigh on trading.
The Dow Jones Industrial Average and the S&P 500 were little changed at the open after data showed job growth slowed in May, suggesting that a rebound in the labour market was losing steam.
The Dow rose 7.1 points, or 0.03 per cent, to 21,151.28. The S&P 500 fell 0.09 points, or 0.00 per cent, to 2,429.97.
The Nasdaq Composite, however, added 14.99 points, or 0.24 per cent, to 6,261.82.
Nonfarm payrolls in May rose by 138,000, the U.S. Labor Department said. Economists had been expecting an increase of about 185,000 positions, although a strong reading on private-sector hiring earlier in the week had raised hopes for an even stronger showing. Immediately after the release of the report, futures began losing altitude. Ahead of the report, analysts had said a June rate-hike by the Federal Reserve was now essentially a foregone conclusion. Despite the weaker-than-forecast figure, U.S. interest rate futures were little changed Friday. Traders now see an 87-per-chance of a rate increase on June 14. However, futures also suggest the odds of another hike by year's end are slightly less than even.
"Employment creation in the last six months have averaged a healthy 160K,000 a month, a tally higher than what the Fed would deem as necessary to bring down the jobless rate," National Bank Financial's Krishen Rangasamy said in a note.
"And recall that the jobless rate is now the lowest in 16 years...A giveback was always in the cards there. All told, the data, while disappointing, may not change the FOMC's view that monetary policy needs to be tightened again soon."
In Canada, Yoga-wear retailer Lululemon Athletica Inc. stock roses 14.6 per cent after its latest results beat company's early expectations on strong sales of new products and fabrics. Lululemon also said it would close nearly all of its money-losing Ivivva stores and boost investment in its online business.
Globally, world stocks hit record highs early Friday and were up about 11 per cent for the year so far. On Thursday, all major U.S. indexes managed record highs in the wake of strong readings on private employment and manufacturing, offering an early lift to global counterparts. In early going Friday, MSCI All-Country World index 0.3 per cent to a record high.
In Europe, Britain's FTSE 100 was trading up 0.17 per cent near record-high levels. Germany's DAX rose 1.3 per cent and France's CAC 40 rose 0.5 per cent.
In Asia, Tokyo's Nikkei 225 jumped 1.6 per cent to close at 20,177.28, the highest level since August, 2015. South Korea's Kospi soared 1.2 per cent to finish at 2,371.72, its record high. Hong Kong's Hang Seng index gained 0.4 per cent to 25,924.05. The Shanghai Composite Index dipped 0.1 per cent to 3,105.98.
Commodities
Oil prices sank on worries that U.S. President Donald Trump's decision to withdraw from the landmark Paris climate agreement could trigger increased drilling in the United States and worsen the global supply glut. In early trading, benchmark Brent crude fell below $50 (U.S.) a barrel. Both Brent and West Texas Intermediate were off roughly 3 per cent. Both are on track now for weekly losses of as much as 5 per cent.
The U.S. decision to pull out of the pact has drawn widespread criticism from other countries. The United States will join Syria and Nicaragua as the only nations that haven't signed onto the agreement.
"This could lead to a drilling free-for-all in the U.S. and also see other signatories waver in their commitments," Jeffrey Halley, senior market analyst at futures brokerage OANDA, told Reuters.
Last week, OPEC agreed to extend current production limits through to next year in a bid to trim the world's stubborn crude overhang. The move will see the current agreement to 1.8 million barrels per day from production extended through to next March. Crude prices fell in the wake of that already anticipated move because markets had also been hoping to see deeper supply cuts from the cartel. At the same time, concern continues over rising production from non-OPEC countries, including the United States. U.S. crude production last week was almost 500,000 barrels a day higher than levels seen last year.
Meanwhile, Igor Sechin, chief of Russia's largest oil producer, Rosneft, said Friday U.S. oil producers could add up to 1.5 million bpd to world oil output next year.
In other commodities, gold prices turned higher after the release of below-forecast U.S. employment figures. Earlier both spot gold and gold futures were down on expectations that the May jobs figures would seal the deal for an interest rate hike by the Federal Reserve later this month. Despite Friday's weaker figures, interest rate futures suggested the market has priced in an 87-per-cent chance of a rate hike.
Silver prices were also higher after posting early declines. London copper and nickel edged lower on worries over softer demand and oversupply.
Currencies and bonds
The Canadian dollar was down but off earlier lows after Statistics Canada said the country's trade gap narrowed in April. After the release of the report, the dollar moved back above the 74-cent mark. So far Friday, the day's range is 73.82 cents to 74.10 cents. Looking ahead, economists expect the loonie to remain under pressure in the immediate future as GDP growth moderates from a blockbuster showing in the first quarter and a likely Fed rate hike this month. Some, however, have a more positive outlook for the currency further out.
"We remain positive about the currency over the medium term," National Bank Financial economists Krishen Rangasamy and Stéfane Marion said in a recent note. " True, the loonie remains vulnerable in light of persistent current account deficits which are being financed by unstable short term flows. But interest rate spreads with the U.S. are about to become more favourable to the Canadian currency. Indeed, the Bank of Canada's decision to ditch its dovish language signalled to markets an upcoming change in monetary policy stance."
In other currencies, the U.S. dollar weakened on the latest employment figures after having hit a one-week high against the yen earlier in the session. The euro was little changed but was on track for a weekly gain of about 0.4 per cent against the greenback.
In bonds, the benchmark 10-year Treasury yield was marginally higher at 2.22 per cent, but was still a long way from this year's high above 2.60 per cent seen in March, Reuters reported.
The yield spread between Germany's 10 and 30-year bonds hit its widest in 18 months on Friday as investors questioned how long policy makers will keep current stimulus levels in place.
Stocks set to see action
Athletic apparel maker Lululemon Athletica Inc. on Thursday said it would close most of its money-losing Ivivva girls stores and boost investment in its online business as it reported quarterly profit that beat analysts' forecasts. Excluding the impact of restructuring, Lululemon forecast full-year diluted earnings per share of $2.28 to $2.38. That range is 2 cents above the company's previous forecast. Its stock jumped 15.5 per cent in premarket trading.
Canadian apparel maker Canada Goose reported a smaller-than-expected quarterly loss in its first earnings report as a publicly listed company, buoyed by higher sales that helped offset a jump in expenses. However, the company's net loss widened to $23.4-million, or 23 cents per share, in the three months ended March 31 from $9.2-million, or 9 cents per share, a year earlier. On an adjusted basis, the company reported a loss of 15 cents per share. Canada Goose, known for its expensive jackets that have been made popular by celebrities such as Canadian rapper Drake, said quarterly revenue jumped 22 per cent to $51.10-million. Analysts had expected an adjusted loss of 19 cents per share and revenue of $31.25-million, according to Thomson Reuters I/B/E/S. Its New York-listed shares jumped 12.5 per cent in premarket trading.
The Trudeau government has suspended negotiations with Boeing Co. to purchase fighter planes as it continues to play hardball with the Chicago company over a U.S. trade complaint the firm lodged against Montreal aircraft maker Bombardier Inc.
RH slumped 21.7 per cent after the high-end furniture retailer slashed its full-year profit forecast.
Wayfair was up 2.3 per cent after a brokerage increased its rating on the online furniture retailer's stocks.
HR and financial management software company Workday Inc. posted adjusted profit of 29 cents a share, which beat estimates by 13 cents per share. It also beat on revenue and boosted its full-year revenue targets. However, its shares fell 2.8 per cent in premarket trading.
Broadcom rose 5.9 per cent in premarket trading after it posted adjusted profit of $3.69 per share, higher than the $3.50 expected by analysts. Its revenue also beat expectations and it gave an upbeat outlook. Its shares rose 5.8 per cent.
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Economic News
Statistics Canada said the country's trade deficit narrowed to $370-million in April from a revised deficit of $936-million in March. Exports rose 1.8 per cent. Imports were 0.6 per cent higher.
U.S. nonfarm payrolls increased by 138,000 positions in May. Economists had been expecting an increase of 185,000. May's unemployment rate was 4.3 per cent.
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(8:30 a.m. ET) U.S. goods and services trade deficit for April. Consensus is $44-billion, up $0.3-billion from March.
With files from Reuters