Equities
Indexes on both sides of the border opened down Friday morning with uncertainty over the course of interest rates hitting sentiment.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 110.8 points, or 0.56 per cent, at 19,701.43. Canada’s main index was down more than 2 per cent for the week heading into Friday’s session.
In the U.S., the Dow Jones Industrial Average fell 106.47 points, or 0.31 per cent, at the open to 34,368.36.
The S&P 500 opened lower by 25.48 points, or 0.58 per cent, at 4,344.88, while the Nasdaq Composite dropped 126.91 points, or 0.95 per cent, to 13,190.02 at the opening bell.
“Equity investors are grappling with uncertainty regarding the market’s next direction,” Stephen Innes, managing partner with SPI Asset Management, said.
“This uncertainty underscores the heightened responsiveness of equity markets to economic data. Markets seem to have adopted a ‘bad news is good news’ view, rallying on weak growth data and selling off on solid data — amid fears that too strong data will increase the risk of an additional rate [increase].”
On the corporate side, The Globe’s Niall McGee reports Teck Resources Ltd. intends to completely exit its coal business, but in the event of only a partial sale, would spin off the remainder to ensure a clean break, a source familiar with the situation said. The Vancouver-based mining company has been entertaining a variety of bids for its metallurgical coal business since late April after an earlier restructuring plan failed.
On Wall Street, shares of Applied Materials were up nearly 3 per cent in premarket trading after the company forecast fourth-quarter results above market estimates on strong demand from chipmakers setting up new plants. Santa Clara, California-based Applied Materials posted third-quarter revenue of US$6.43-billion, beating analysts’ average estimate of $6.16-billion, according to Refinitiv data, Reuters reported. On an adjusted basis, it earned US$1.90 per share in the quarter ended July 30, beating estimates of US$1.74. The results were released after Thursday’s close.
Early Friday, Deere & Co. raised its annual profit forecast on Friday as demand for large farm tractors remains robust. The equipment giant expects 2023 net income between US$9.75-billion and US$10.00-billion, compared with its previous outlook of US$9.25-billion to US$9.50-billion.
Overseas, the pan-European STOXX 600 was down 1.14 per cent by afternoon. Britain’s FTSE 100 lost 1.2 per cent. Germany’s DAX and France’s CAC 40 fell 1.16 per cent and 1.2 per cent, respectively.
In Asia, Japan’s Nikkei finished down 0.55 per cent. Hong Kong’s Hang Seng slumped 2.05 per cent. The Globe’s James Griffiths reports this morning that Chinese authorities announced a slew of measures Friday to address growing concern over the state of the world’s second largest economy. The China Securities Regulatory Commission said it would cut handling fees, extend trading hours and support share buybacks, among other measures. Separately, the country’s central bank intervened to stop the depreciation of the renminbi.
Commodities
Crude prices were steady but on track for weekly losses following a lengthy winning streak as rate concerns and worries about China’s economic growth temper sentiment.
The day range on Brent was US$83.67 to US$84.54 in the early premarket period. The range on West Texas Intermediate was US$79.91 to US$80.96. Both were little changed in the early premarket period. Both benchmarks have seen gains over the past seven weeks, but looked set for weekly losses ahead Friday’s North American open.
Traders remain wary of the path ahead for U.S. interest rates after positive readings this week on weekly jobless claims and U.S. retails sales suggested the Federal Reserve may have to keep borrowing costs higher for longer. As well, weak recent economic data out of China have raised concerns about demand in one of the world’s top consumers of crude.
In other commodities, spot gold gained 0.2 per cent to US$1,892.30 per ounce by early Friday morning, after touching its lowest since mid-March on Thursday. U.S. gold futures rose 0.4 per cent to US$1,922.90.
Currencies
The Canadian dollar was down modestly in early trading, hit by weaker global risk sentiment, while its U.S. counterpart also pulled back but looked set for a fifth consecutive week of gains against a group of world currencies.
The day range on the loonie was 73.76 US cents to 73.94 US cents in the early premarket period. The Canadian dollar was down about 0.84 per cent over the last five days against the greenback by early Friday morning and off more than 2 per cent for the past month.
“The weak risk mood and marginally lower energy prices are enough to keep the CAD tone defensive for the moment while relatively stable short-term spreads may act as something of an anchor for the CAD,” Shaun Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian economic releases on Friday’s calendar.
On world markets, the U.S. dollar index, which measures the currency against six peers, flattened at 103.40, after touching a two-month high at 103.59 on Thursday. For the week, it is set to gain 0.5 per cent, according to figures from Reuters.
Against the yen, the dollar slid 0.34 per cent to 145.36 on Friday, after reaching a nine-month peak of 146.56 on Thursday.
In bonds, the yield on the U.S. 10-year note was lower at 4.231 per cent in the predawn period.
More company news
Tilray Brands said on Friday it had acquired the remaining 57.5% stake it did not own in cannabis-infused drinks maker Truss Beverage from Molson Coors , as the pot firm seeks to broaden its customer base. The company’s chief executive officer, Irwin Simon, last month told Reuters Tilray was actively seeking strategic acquisitions in the spirits and beverages industry. Tilray said the acquisition would strengthen its market position and streamline sales and distribution. -Reuters
Embattled developer China Evergrande Group has filed for bankruptcy protection in a U.S. court as part of one of the world’s biggest debt restructuring exercises, as anxiety grows over China’s worsening property crisis and a weakening economy. Once China’s top-selling developer, Evergrande has become the poster child of the country’s unprecedented debt crisis in the property sector, which accounts for roughly a quarter of the economy, after facing a liquidity crunch in mid-2021. The developer has sought protection under Chapter 15 of the U.S. bankruptcy code, which shields non-U.S. companies that are undergoing restructurings from creditors that hope to sue them or tie up assets in the United States.
Economic news
(8:30 a.m. ET) Canadian industrial product and raw materials price indexes for July.
(10 a.m. ET) U.S. quarterly services survey for Q2.
With Reuters and The Canadian Press
Terry Weber