Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Canada’s main stock index opened higher on Friday, led by gains in material and financial sectors, with risk appetite revived by signs of progress in U.S.-China trade talks.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 50.93 points, or 0.32 per cent, at 16,138.48.
Materials stocks were the biggest gainers, up 0.8 per cent as gold prices rose. Pan American Silver rose 1.5 per cent, Wheaton Precious Metals rose 1.5 per cent and Lundin Mining was up 1.1 per cent.
Financial stocks rose 0.6 per cent as Manulife gained 1.2 per cent, Sun Life Financial was up 0.9 per cent and Royal Bank rose 0.7 per cent.
Industrial stocks were up 0.6 per cent with Transcontinental up 1.9 per cent and WSP Global up 1.6 per cent.
Statistics Canada says manufacturing sales climbed 1.0 per cent to $57.1-billion in January, boosted by higher sales in the food as well as the electrical equipment, appliance and component industries. Economists on average had expected an increase of 0.4 per cent for January, according to Thomson Reuters Eikon.
In stocks, Canada’s biggest carrier Air Canada on Friday suspended its previous forecast for the first quarter and full year after Canada grounded Boeing Co’s 737 MAX jets following a deadly crash in Ethiopia on Sunday. The company said its forecast for 2020 and 2021 for annual profit margin remained in place. WestJet and Air Canada operate a number of MAX 8 aircraft and have been scrambling to reschedule flights as many Canadians are travelling on their March Break. Shares in Air Canada were of 2.2 per cent and WestJet dropped 0.6 per cent.
Imperial Oil Ltd. said it will delay its $2.6-billion Aspen oil sands project in Alberta by about a year after the provincial government imposed output cuts to tackle pipeline bottlenecks. It stock was up 0.03 per cent.
Shares of Boeing were down 1 per cent, continuing their losses since the crash last weekend.
Shares of automotive companies with electric vehicles could see some lift Friday amid reports Canada’s Federal Budget next week will include subsidies for electric vehicles. GM was up 0.5 per cent but Tesla was off 4 per cent after it announced a new SUV.
U.S. stocks rose slightly at open on Friday following a report of progress in trade talks between the United States and China and after UK lawmakers voted to delay a potentially chaotic exit from the European Union.
The Dow Jones Industrial Average rose 11.02 points, or 0.04 per cent, at the open to 25,720.96.
The S&P 500 opened higher by 2.31 points, or 0.08 per cent, at 2,810.79. The Nasdaq Composite gained 27.50 points, or 0.36 per cent, to 7,658.41 at the opening bell.
Chinese Vice Premier Liu He spoke by telephone with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, with the two sides making further substantive progress on trade talks, Xinhua news agency reported.
However, the prospect of trade talks taking longer than expected pressured markets in the previous session and resulted in the S&P and Nasdaq ending slightly lower.
Chipmakers, which get a large portion of their revenue from China, rose in premarket trading – Advanced Micro Devices Inc. rose 3.4 per cent , Lam Research Corp. gained 5.5 per cent and Nvidia Corp rose 3.5 per cent, while Broadcom Inc jumped 10 per cent. Broadcom also reported a quarterly profit that beat analysts’ estimates.
“Markets could hit new record highs if the trade issue with China is resolved, so anytime you get a positive story on that front it’s going to put a positive spin on the market,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“Brexit is another issue for markets and looks like there might be an extension and that could be a part of the optimism as well.”
British lawmakers voted to seek a delay in Britain’s exit from the European Union on Thursday, setting the stage for Prime Minister Theresa May to renew efforts to get her divorce deal approved by parliament next week.
The S&P 500 has risen 2.4 per cent so far this week, its biggest weekly gain in one month, largely helped by a host of economic reports that supported the Federal Reserve’s patient stance on future interest rate hikes.
A dovish Fed and hopes of a U.S.-China trade deal getting underway has helped put the benchmark S&P just 4.4 per cent away from its record closing highs.
Volatility may rise during Friday’s session on account of “quadruple witching,” as investors unwind interests in futures and options contracts prior to expiration.
Among stocks, Amazon.com Inc rose 1.1 per cent after brokerage KeyBanc upgraded the online retail giant’s shares to “overweight.”
Business software maker Oracle Corp fell 2.3 per cent, while photoshop maker Adobe Inc was down 5 per cent. Both companies forecast current-quarter revenue that fell below estimates.
Facebook Inc dropped 3.2 per cent after its Chief Product Officer Chris Cox exited the social media giant.
Oil prices edged up on Friday, with U.S. crude climbing to its highest so far this year as production cuts led by OPEC and U.S. sanctions against Venezuela and Iran likely created a slight deficit in global supply in the first quarter.
Yet prices have been prevented from rising further by concerns that an economic slowdown will soon start denting growth in fuel demand.
U.S. West Texas Intermediate (WTI) crude oil futures were up 15 cents at US$58.76 per barrel, their strongest so far in 2019.
Brent crude oil futures were at US$67.43 per barrel, up 20 cents, or 0.3 per cent, from their last settlement, and within a dollar of their US$68.14 2019-high reached the previous day.
Oil has rallied around a quarter since the start of the year.
“Oil continues to grind higher ... in response to ongoing production cuts from the OPEC+ group of producers as well as another (output) slump from a blacked-out Venezuela,” said Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank.
Gold rose on Friday, recovering from the previous session’s sharp fall, as the dollar dipped and mounting concerns about a slowdown in global economic growth buoyed demand for the safe-haven metal.
Spot gold had gained by 0.6 per cent to US$1,303.30 per ounce, after shedding about 1 per cent the day before. It was on track for a small weekly gain for a second consecutive week. U.S. gold futures rose 0.6 per cent to US$1,302.90 an ounce.
“The dollar has weakened and gold as a safe-haven asset has seen support from Brexit uncertainty. As long as gold can hold the US$1,290 level, it can reach the first level of US$1,302 and then US$1,310,” said Ajay Kedia, director at Kedia Commodities in Mumbai.
“The support we are now seeing at US$1,290 shows that as long as there is lack of clarity on the (Brexit) deal, gold should be holding well.”
Currencies and bonds
The Canadian dollar rose Friday as gold prices rose and was above the 75 cent US level.
The Canadian dollar could react to manufacturing sales data expected later Friday, which are expected to fall slightly on lower petroleum prices, said Adam Cole, chief currency strategist with RBC Europe Ltd. in a note. "Short-term support is located at US1.3290 (75.24 cents US) in USD/CAD, with resistance at $1.3343 (74.94 cents US).
The dollar slipped against its rivals on Friday and was set for its biggest weekly drop in more than three months before a U.S. central bank meeting next week where policymakers will shed more light on the outlook for interest rates.
While no change in policy rates is expected next week after the Fed paused a multi-year rate hiking cycle in January, officials might strike a more cautious view on the outlook for the global economy after a volatile week in currency markets.
“We are coming to the end of a very exhausting week in currency markets with the Brexit news and investors are waiting to get more insights from the Fed,” said Esther Maria Reichelt, an FX strategist at Commerzbank.
Against its rivals, the dollar fell 0.2 percent to 96.61 in early London trading. For the week, it is set to weaken 0.7 percent, its biggest drop since early December..
Stocks to watch
Amazon.com Inc rose 1.4 per cent after brokerage KeyBanc upgraded the rating of the online retail giant’s shares to “overweight.”
Oracle Corp. fell 3.5 per cent after the business software maker forecast current-quarter revenue below analysts’ estimates.
Facebook Inc dropped 1.7 per cent after its Chief Product Officer Chris Cox exited the social media giant.
Tesla Inc unveiled its Model Y electric sports utility vehicle on Thursday evening in California, promising a much-awaited crossover that will face competition from European car makers rolling out their own electric rivals. Tesla’s shares were down 2.8 per cent in premarket trading.
Earnings include: Hydrogenics Corp.; IPL Plastics Inc.; Osisko Mining Corp.; Stella-Jones Inc.
(8:30 a.m. ET) Canadian manufacturing sales for January. Consensus is an increase of 0.5 per cent from December.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for March. Consensus is a reading of 10.0, up from 8.8 in February.
(9 a.m. ET) Canada's existing home sales and average prices for February. Estimates are year-over-year declines of 4.0 per cent and 5 per cent, respectively.
(9 a.m. ET) Canada's MLS Home Price Index for February. Estimate is a year-over-year rise of 0.3 per cent.
(9:15 a.m. ET) U.S. industrial production for February. Consensus is an increase of 0.4 per cent from January.
(9:15 a.m. ET) U.S. capacity utilization for February. The Street expects 78.5 per cent, up from 78.2 per cent in January.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for March. Consensus is 95.6, up from 93.8 in February.
(10 a.m. ET) U.S. Job Openings and Labor Turnover Survey (JOLTS) for January.
(4 p.m. ET) U.S. net TIC flows for January.
With files from Reuters