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Canada’s main stock index opened lower Friday with materials shares weighing and investors taking stock of a disappointing reading on the country’s employment picture. On Wall Street, markets also started in the red with tech shares struggling as trade tensions between U.S. and China escalate and world markets grapple with political uncertainty in Italy.

At 9:49 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 10.16 points, or 0.06 per cent, at 16,394.37. Gains in energy shares on the back of higher oil prices were offset by weaker materials stocks. The energy sector was the index’s top gainer, advancing 0.8 per cent. Materials stocks were down 0.8 per cent as gold futures slipped.

South of the border, the Dow Jones Industrial Average fell 41.10 points, or 0.16 per cent, at the open to 26,337.09.

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The S&P 500 opened lower by 7.58 points, or 0.26 per cent, at 2,930.51. The Nasdaq Composite dropped 41.97 points, or 0.52 per cent, to 7,997.19 at the opening bell.

On Thursday, the leader of Italy’s ruling League party, Deputy Prime Minister Matteo Salvini, declared the governing coalition to be unworkable and said the solution was to hold fresh elections. The move slammed Italian bank stocks, which fell by 1.6 per cent early Friday, taking broader European markets lower.

“Political instability is nothing new in Italy but the risk of the coalition government collapsing appeared to have eased in recent weeks, giving the impression that we could be in for a relatively peaceful summer," OANDA analyst Craig Erlam said.

Market movers: Stocks seeing action on Friday - and why

Friday’s trading was further complicated by a Bloomberg report suggesting that Washington is delaying giving permission to U.S. companies to use Huawei products. That again put trade concerns back on the front burner coming after the United States labelled China a currency manipulator, triggering Wall Street’s worst trading day of the year on Monday.

On this side of the border, markets got a below-forecast reading on Canada’s employment market in July. Statistics Canada said the economy lost 24,200 jobs last month. Economists had been expecting an increase of 15,000 positions, although the monthly figure is notoriously hard to predict. The jobless rate rose to 5.7 per cent.

“The drop showed up in private paid employment, with an even split between full-time and part-time job losses,” CIBC economist Royce Mendes said. “A couple of the industries that had shown some surprising strength earlier in the year, wholesale and retail trade and transportation and warehousing, were the sectors that showed the greatest weakness.”

He also noted that hourly wages rose 4.5 per cent for permanent workers compared to the same month last year, offering some good news in the report. However, he also said those numbers should be read with a note of caution since the Bank of Canada’s indicator was closer to 2 per cent and the Statscan numbers are coming off a low base in 2018.

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The report was of particular interest this time out as investors try to gauge the Bank of Canada’s appetite for an interest rate cut. Already, the Federal Reserve has moved into easing mode. Central banks have joined in, notably in New Zealand which saw a surprise half percentage point reduction earlier this week. In Canada, economists have been moving up their forecasts for a reduction in rates. Capital Economics, for example, now expects the first cut to land in October. CIBC has moved up its projection to the first quarter of next year.

On the corporate front, oil sands transport company Inter Pipeline Ltd. reported second-quarter profit of $260-million or 63 cents a share, up from $136-million or 35 cents. Revenue rose to $642-million from $631-million. Shares started up more than 2 per cent in Toronto.

On Thursday, shares of Inter Pipeline jumped on a report in The Globe and Mail that the company had been approached about a potential takeover offer. Later in the day, Inter Pipeline said in a statement it is considering the sale of its bulk liquid storage businesses in Europe with operations in Britain, Denmark, Sweden, Germany, Netherlands and Ireland and 37 million barrels of storage capacity to reduce debt and help finance its Heartland Petrochemical Complex near Edmonton.

Cannabis producer CannTrust Holdings Inc. said on Friday its auditor KPMG LLP has withdrawn its report on the company’s financial statements for full-year 2018 and its interim report dated May 13. KPMG’s decision was prompted after CannTrust cautioned against relying on its financial statements and as new information from an investigation by a special committee was shared with the auditor. The stock was down about 4 per cent in early trading in Toronto.

On Wall Street, Uber Technologies Inc. shares were down more that 8 per cent in early trading after the ride-sharing giant reported a record US$5.2-billion loss and revenue that missed analysts’ forecasts. The results were released after the close on Thursday.

Uber reported that revenue growth slowed to 14 per cent to US$3.2-billion and fell short of the average analyst estimate of US$3.36-billion, according to IBES data from Refinitiv. The company’s core business, ride-hailing, grew revenue only 2 per cent to US$2.3 billion. Food delivery Uber Eats grew 72 per cent to US$595 million.

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Overseas, Asian markets finished the week mixed. The Shanghai Composite Index fell 0.71 per cent. Hong Kong’s Hang Seng slid 0.69 per cent. Japan’s Nikkei advanced 0.44 per cent after new figures showed that country’s second-quarter GDP grew at an annual rate of 1.8 per cent, far better than markets had been expecting.

In Europe, markets were lower, sideswiped by declines in Italian bank stocks. The pan-European STOXX 600 was down in afternoon trading. Britain’s FTSE 100 was slipped 0.02 per cent after new figures showed that the U.K. economy shrank in the second quarter. That was the first contraction for that economy since 2012. Germany’s DAX lost 0.90 per cent and France’s CAC 40 fell 0.59 per cent.

Commodities

Crude prices held modest gains early Friday with expectations of more OPEC production cuts helping offset a report from the International Energy Agency suggesting demand growth is at its lowest since the 2008 financial crisis.

Brent crude was moving in a day range of US$57.11 to US$57.94. West Texas Intermediate has a range of US$52.37 to US$52.95. Crude prices are down about 20 per cent since their peak in April.

On Friday, the IEA cut its demand growth forecasts for this year and next. It said global oil demand in the first half of 2019 grew at its slowest pace since 2008 hurt by mounting signs of an economic slowdown and a ramping up of the U.S.-China trade war.

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That report, however, was tempered by market expectations that OPEC and its allies would again move to curb production to shore up prices. Reuters, citing a Saudi Arabia oil official, reported that county plans to maintain its crude oil exports below 7 million barrels per day in August and September to bring the market back to balance and help absorb global oil inventories.

“The remarks from the Saudi’s provided a lift, but the group aren’t always the best at acting in a coordinated fashion," David Madden, market analyst with CMC Markets U.K., said in a morning note.

In other commodities, gold futures fell 0.1 percent to $1,496.1 an ounce.

Currencies

The Canadian dollar seesawed early Friday, losing altitude in the wake of a disappointing reading on Canadian hiring in July but then later finding its footing as crude prices rose.

The day range on the dollar was 75.34 US cents to 75.60 US cents. By midmorning, the loonie had moved back toward the upper end of that spread after dipping on the weak jobs numbers. (Statscan says the economy lost 24,200 jobs last month, with the jobless rate rising to 5.7 per cent. Economists had predicted a gain of about 15,000 jobs.)

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It’s worth noting, however, that the impact of the jobs numbers tends to happen in the immediate wake of the release. Mark McCormick, TD’s global head of FX strategy, said in a note issued ahead of the release noted that most of the moves tend to be seen in the first five minutes after the report.

“The impact doesn’t shift throughout the day, meaning that the first five minutes offers the bulk of the effects on the release,” he said.

“In the very short run, CAD will likely track the outlook of equities, oil, and the broader USD. The result is that it could extend the recent rally a bit further if the equity squeeze persists for a bit longer," he said.

On broader markets, Japan’s yen gained on renewed trade jitters. The yen rose 0.2 per cent to 105.9 yen per dollar. It was on course for its second weekly gain versus the greenback

The U.S. dollar index, which measures it against a basket of six major currencies, slipped slightly to 97.545 and remained on course for its biggest weekly decline since June 21. The euro rose 0.2 per cent to US$1.1197, showing little reaction to news that the Italian government was on the brink of collapse.

In bonds, the yield on the U.S. 10-year note was holding around 1.7 per cent as government debt prices rose on increased tension around U.S.-China trade. The yield on the 30-year note was at 2.225 per cent just after 6 a.m. ET.

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More company news:

Hydro One Ltd. reported earnings per share in the latest quarter of 26 cents, down 24 per cent from 34 cents a year earlier. The power company cited less favorable weather and higher financing and operational costs among the reasons for the decline. Hydro One stock was up slightly at the open.

Beyond Meat Inc has shelved plans to enter Japan, according to a Japan-based investor, focusing more on the U.S. market where it recently bolstered funding to fuel an expansion and beat out emerging faux-meat rivals. Japanese trading house Mitsui & Co Ltd, which bought a small stake in Beyond Meat in 2016, said it previously planned to partner with the U.S. company to sell plant-based meat alternatives in Japan, but there was no longer such a project.

Shareholders of Anadarko Petroleum Corp voted overwhelmingly to sell the company for $38 billion to rival Occidental Petroleum Corp, ending a short-lived contest that pitted two of the most storied names in the oil industry against one another.

Huawei Technologies unveiled on Friday its proprietary operating system for smartphones and other devices, as U.S. trade restrictions imposed in May threaten to cut the Chinese firm’s access to U.S. technologies such as Android. But Huawei said that for now it would stick to using Google’s Android for smartphones, and the new software will be gradually rolled out to support devices such as smartwatches, speakers and virtual reality gadgets. The new OS is part of Huawei’s attempt to develop its own technologies from chips to software to reduce its reliance on U.S. firms amid an intensifying U.S.-China trade war.

Bayer shares soared as much as 11 per cent on a Bloomberg report that the German company has proposed to pay US$8-billion to settle more than 18,000 U.S. lawsuits on its glyphosate-based weedkiller Roundup case. The stock was on track for its best single-day gain in a decade as traders said the settlement could remove an “overhang” on Bayer shares. Bayer shares have lost more than a third, or roughly 30 billion euros, in market value since August last year, when a California jury in the first such lawsuit found that Monsanto should have warned of the alleged cancer risks.

Economic calendar

Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts fell 9.6 per cent to 222,013 in July, from 245,455 a month earlier. Urban starts fell 10.4 per cent.

The Canadian economy lost 24,200 jobs in July. Economists had been forecasting an increase of about 15,000. The jobless rate rose to 5.7 per cent.

The value of Canadian building permits declined by 3.7 per cent in June to $8.01-billion as multi-family and institutional permit values dropped, Statscan said. Analysts in a Reuters poll had predicted a gain of 1.5 per cent in June.

The U.S. Labor Department said its producer price index for final demand rose 0.2 per cent last month after nudging up 0.1 per cent in June. In the 12 months through July the PPI increased 1.7 per cent after advancing by the same margin in June.

With Reuters and The Canadian Press

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