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Canada’s main stock index rose at the open for the fifth straight session on Friday as energy stocks gained and a rebound in U.S. jobs growth in March eased worries about a slowdown in the world’s largest economy.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite Index was up 33.1 points, or 0.2 per cent, at 16,344.71.
Health care stocks led the way, up 1 per cent, with Aurora Cannabis up 2.2 per cent, Canntrust up 1.7 per cent and Hexo up 1.4 per cent.
Energy stocks rose 1.1 per cent with Whitecap Resources up 2.7 per cent, Cenovus up 1.8 per cent and Baytex Energy up 2.3 per cent.
Tech and consumer discretionary stocks also rose 0.7 and 0.6 per cent, respectively.
SNC-Lavalin announced Friday it had reached an agreement to sell a 10.01 per cent stake in Toronto’s Highway 407 toll road to OMERS, the Ontario Municipal Employees Retirement System pension fund, for up to $3.25-billion. Its shares fell 0.4 per cent.
Media company Corus Entertainment Inc. beat analysts’ estimates for quarterly revenue on Friday, driven by a jump in television advertising. Its shares jumped 5.8 per cent.
U.S. stocks opened modestly higher on Friday as employment growth in March accelerated from a 17-month low, easing concerns of a domestic slowdown, while hopes of a U.S.-China trade deal added to the sentiment.
The Dow Jones Industrial Average rose 42.93 points, or 0.16 per cent, at the open to 26,427.56. The S&P 500 opened higher by 4.77 points, or 0.17 per cent, at 2,884.16. The Nasdaq Composite gained 22.73 points, or 0.29 per cent, to 7,914.51 at the opening bell.
Hiring rebounded in March as U.S. employers added a solid 196,000 jobs, up sharply from February’s scant gain and evidence that many businesses still want to hire despite signs the economy is slowing.
The Labor Department report showed nonfarm payrolls rose by 196,000 jobs last month, above economists’ estimate of 180,000. Data for February was revised modestly up to show payrolls rose by 33,000 instead of the previously reported 20,000.
Average hourly earnings rose 0.1 per cent in March, after jumping 0.4 per cent in the previous month, while unemployment rate held steady at 3.8 per cent.
The report adds to fairly upbeat construction spending and factory numbers that led Wall Street banks to boost their growth estimates for the first quarter.
“A mixed but overall very solid jobs report. The healthy bounce back in hiring last month should help to quell recession fears,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
“Still, weaker wage growth suggests the Fed’s December rate hike may have been its last in the current cycle.”
The Federal Reserve last month suspended its three-year campaign to tighten monetary policy, increasing market expectations of an interest rate cut.
However, the latest job numbers gave traders little reason to reprice expectations for a rate cut in 2020.
The situation wasn’t as positive in Canada. Statistics Canada says the economy lost 7,200 jobs in March, while the unemployment rate remained stable at 5.8 per cent. The loss followed the gain of 55,900 jobs in February and 66,800 in January.
Economists on average had expected a gain of 1,000 jobs in March and an unemployment rate of 5.8 per cent, according to Thomson Reuters Eikon.
Also adding to the upbeat mood was President Donald Trump’s comments that the U.S. and China were close to a trade deal that could be announced within four weeks, potentially easing concerns about a months-long tariff war that has clouded global growth.
Trade hopes and a dovish Fed have helped push the S&P 500 to its highest since Oct. 9, putting the index less than 2 per cent away from an all-time high of 2,940.91 points.
Bank of America Merrill Lynch said the index would scale new highs above 3,000 in the second quarter, fuelled by gains in bank and oil stocks, before peaking out.
Among stocks, Intel Corp slipped 1.6 per cent after Wells Fargo downgraded the chipmaker’s stock to “market perform” from “outperform.”
Viacom Inc rose 1.4 per cent after RBC Capital Markets upgraded the company to “outperform.”
Bed Bath & Beyond Inc climbed 1.2 per cent after Morgan Stanley upgraded the company’s shares to “equal-weight” from “underweight,” saying that the emergence of activist investors will create upside for the stock in the near term.
Overseas, better-than expected data out of Germany and receding fears of a disorderly departure from the European Union by the U.K. helped perk up sentiment.
British Prime Minister Theresa May asked the European Union for another Brexit extension until June 30.
The pan-European STOXX 600 index nudged higher, heading for its best performance in three weeks, with markets in Paris up 0.07 per cent and London adding 0.37 per cent. German stocks were treading water, though the index was on track for its best week since December 2016.
German industrial output rose by 0.7 per cent in February as mild weather helped a surge in construction activity.
MSCI’s All-Country World Index, which tracks shares in 47 countries, edged up and was on track for a second straight week of gains.
Markets in China and Hong Kong were closed for a holiday but Japan’s Nikkei rose 0.4 per cent.
Commodities
Oil prices declined on Friday, with Brent slipping away from the US$70 mark reached the previous day, but both main contracts were set for weekly gains due to mounting geopolitical risks.
Brent crude futures dropped 16 cents to $69.24 a barrel, having touched US$70.03 in the previous session, the highest since Nov. 12.
U.S. West Texas Intermediate (WTI) crude fell 4 cents a barrel to US$62.06, having hit their highest since Nov. 7 on Wednesday at US$62.99.
Brent and WTI are on track for their second and fifth consecutive weeks of gain, respectively.
Weighing on prices are concerns that an economic slowdown could dent fuel consumption.
“At the heart of this late retreat in oil prices were lingering trade jitters,” said Stephen Brennock of oil brokerage PVM.
The United States and China, the world’s two biggest oil consumers, could be close to ending their trade dispute though some hurdles remain.
“The geopolitics around Libya and Venezuela, alongside the possible reflation of risk appetite on positive U.S.-China trade talks may well pull the market out of its morning doldrums,” Harry Tchilinguirian, global oil strategist at BNP Paribas, told the Reuters Global Oil Forum.
Eastern Libyan commander Khalifa Haftar ordered his troops on Thursday to march on the capital Tripoli, escalating a conflict with the internationally recognized government.
Any potential oil outages in Libya would “noticeably increase the pressure on Saudi Arabia to open up the oil tap again, as it did in the autumn,” Commerzbank said in a note.
Gold prices slipped on Friday as global stocks firmed and the dollar rose against the yen, but bullion held above a 10-week low touched in the previous session ahead of U.S. jobs data.
Spot gold slipped 0.2 per cent to US$1,289.40 per ounce, after touching its lowest since Jan. 25 at US$1,280.59 on Thursday. The metal was down about 0.2 per cent so far for the week. U.S. gold futures were unchanged at US$1,294 an ounce.
“The market is being a little bit cautious ahead of the non-farm payroll figures, after we had a disappointing figure in February. Bond markets are trading lower, which means yields are up, increasing opportunity cost for holding gold,” Quantitative Commodity Research analyst Peter Fertig said.
“It also seems a bit more out of the leaders and into the laggards; platinum is up, silver is up while gold and palladium are down. It is a little bit of buying underperformers and taking profits in those who did quite well over the last couple of weeks and months.”
Currencies and bonds
The Canadian dollar was down slightly and was trading in the 74.7 cent US range with oil and gold prices lower.
Traders were on hold in advance of the jobs data. “USD/CAD continues to trade just below resistance at $1.3376 (74.76 cents US). A break above it would target $1.3468 (74.25 cents US) next. Meanwhile, support stands at $1.3297 (75.20 cents US), followed by $1.3242 (75.51 cents US) and $1.3196 (75.78 cents US),” said Adam Cole, chief currency strategist with RBC Europe Ltd.
Canada’s employment report for March will come as blockbuster Canadian job gains this year have helped bolster investor sentiment for the loonie, offsetting weak gross domestic product data and a slowdown in the global economy that could hurt Canada’s exports.
“In order for exports to do better the Canadian dollar needs to weaken,” said Bipan Rai, North America head of FX strategy at CIBC Capital Markets, who favours selling the currency should it rally.
Optimism for a U.S.-China trade deal helped the U.S. dollar hit a three-week high against the yen on Friday, although moves in broader foreign exchange markets were limited as investors saw a lot of headlines but no conclusions out of the trade talks.
The dollar rose to a three-week high of 111.80 yen per dollar while holding firm against most other currencies. The offshore yuan rose 0.2 per cent to 6.7065 .
Against a basket of currencies, the dollar index slipped slightly to 97.254, however, staying below recent highs of 97.517. Most major currencies are trading in tight ranges.
The focus for the day is U.S. labour market data, which will help traders decide how the U.S. economy is holding up. Analysts said the market was struggling for direction before the jobs report.
Stocks to watch
Intel Corp slipped 1.1 per cent in premarket trading after Wells Fargo downgraded the chipmaker’s stock to “market perform” from “outperform”.
Bed Bath & Beyond Inc. climbed 2.3 per cent in premarket trading after Morgan Stanley upgraded the company’s shares to “equal-weight” from “underweight,” saying that the emergence of activist investors will create upside for the stock in the near term.
Earnings include: Corus Entertainment Inc.
Economic news
(8:30 a.m. ET) Canadian employment report for March. The Street expects a decline of 0.1 per cent (or 10,000 jobs) from February with the unemployment rate remaining 5.8 per cent.
(8:30 a.m. ET) U.S. employment report for March. Consensus is a rise of 175,000 from February with the unemployment rate remaining 3.8 per cent.
(3 p.m. ET) U.S. consumer credit for February. The Street expects an increase of US$17.5-billion from the previous month.
With files from Reuters, AP