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Canada’s main stock index tracked global markets higher early Friday with higher crude prices helping underpin gains. South of the border, U.S. indexes also advanced during the final session of a volatile week as the bond market steadied and investors increasingly looked to world central banks to inject more stimulus into economy.

At 9:46 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 73.16 points, or 0.46 per cent, at 16,085.69. Ten of the index’s 11 main sectors were higher, led by technology shares. Energy and financial stocks were both up 0.7 per cent. Industrials were up 0.3 per cent.

On Wall Street, the Dow Jones Industrial Average rose 98.78 points, or 0.39%, at the open to 25,678.17.

The S&P 500 opened higher by 17.14 points, or 0.60 per cent, at 2,864.74. The Nasdaq Composite gained 61.74 points, or 0.79 per cent, to 7,828.35 at the opening bell.

Wall Street’s three main indexes are down about 1.5 per cent since last Friday and look headed for their third straight week of losses.

MSCI’s all-country index, which tracks stocks in 47 countries, rose 0.2 per cent Friday but still looked set for a 2.2-per-cent weekly decline. It would be the third straight weekly decline for that index. European markets opened in the black, although the London Stock Exchange got off to a late start because of a technical delay.

“While I’d like to think there’ll be no more drama in the final hours of trading, I’m just not that optimistic,” OANDA analyst Craig Erlam said. “The calendar may be a little thin but the yield curve inversion has spooked a lot of people this week and that may become very apparent again heading into the close.”

Friday’s analyst upgrades and downgrades

Right now futures are suggesting one-in-three odds that the Federal Reserve will cut rates by half a percentage point when it meets next month offering investors a respite after inverting bond yields this week flashed a recession warning. Similarly the European Central Bank has indicated that more easing could be on the horizon. In Canada, the Bank of Canada could be pushed to act after yield curves in this country inverted by the most in two decades earlier this week.

Also helping ease market concerns over trade tensions between the United States and China were comments late Thursday from U.S. President Donald Trump that he has a call scheduled with Chinese leader Xi Jinping “very soon.” He offered no further details.

In corporate news, shares of Nvidia Corp. jumped 8 per cent in morning trading after that semiconductor maker’s profit and revenue both beat market forecasts. Applied Materials Inc. fell nearly 3 per cent in early trading after the company topped Wall Street forecasts for quarterly revenue in the most recent quarter but also warned that a recovery in the memory chip market isn’t likely before next year. The company’s net sales fell 14 per cent to US$3.56-billion in the third quarter, but still beat the average analyst estimate of US$3.52-billion. The company, often seen as a bellwether for the sector, forecast fourth-quarter adjusted profit and revenue largely above analysts’ estimates.

Revlon’s biggest shareholder said Friday that the firm and the cosmetics giant would explore options for the business. MacAndrews and Forbes, the holding company through which billionaire Ronald Perelman owns about 87-per-cent stake in Revlon, disclosed in an SEC filing that an external financial adviser has been retained to help in the efforts, according to Reuters. Revlon shares were higher in premarket trading.

Market movers: Stocks seeing action on Friday - and why

On Bay Street, Catalyst Group Inc.'s bid for about 10.7 per cent of Hudson’s Bay Co. expires Friday. A special committee of the board at the retailer said Thursday that Catalyst has turned down a request to extend the deadline. Catalyst is offering buy up to nearly 19.8 million shares at a price of $10.11 per share. The move comes as HBC chair Richard Baker is leading a separate bid to take HBC private.

Overseas, major Asian markets finished mostly higher. The Shanghai Composite Index rose 0.57 per cent. Hong Kong’s Hang Seng gained 0.94 per cent. In Japan, the Nikkei clawed back early declines to close just above break even. The broader Topix ended up 0.1 per cent.

In Europe, major markets rallied as investors dipped a toe back into stocks following a volatile week. The pan-European STOXX 600 was up 0.85 per cent with all main sectors trading higher in afternoon trading. Britain’s FTSE 100, after a delayed start, was up 0.37 per cent. Germany’s trade-sensitive DAX gained 0.63 per cent. France’s CAC 40 rose 0.55 per cent.


Crude prices recouped some of the weeks losses, trading higher alongside stabilizing equity markets.

Brent crude was positive and traded in a day range of US$58.37 to US$59.50. West Texas Intermediate was also in the black, trading in a range of US$54.69 to US$55.67. Both benchmarks have seen sharp losses this week with Brent falling a combined 5 per cent on Wednesday and Thursday. Similarly, WTI lost 3.3 per cent on Wednesday and 1.4 per cent on Thursday.

Crude prices were helped by a report showing strong-than-expected U.S. retail sales in July, helping ease market concerns that a recession is on the horizon. Sales for the month rose 0.7 per cent, more than double market estimates.

“The oil markets remain supported as the U.S. recessionary fear recede while the calmer dialogue between US-China as adding to the ‘Feel-Good Friday’ story line,” Stephen Innes, managing partner with VM Markets, said.

OPEC’s monthly report, however, put a lid on some of the gains. The group cut its forecast for global oil demand growth in 2019 by 40,000 barrels a day and said the market will be in a slight surplus next year.

Elsewhere, gold prices were down in early going but still looked set for a third straight week of gains. Spot gold was down 0.9 per cent at $1,509.43 per ounce, but is up 0.8 per cent so far this week. U.S. gold futures fell 0.8 per cent to $1,519.40.

“It looks like a temporary retracement,” SP Angel analyst John Meyer told Reuters.

“There are many investors who fear the next global crisis so there is this a sense of ongoing investment into gold, particularly by central banks.”


The Canadian dollar pared early gains Friday. At last check, the loonie was around the midpoint of the day range of 75.05 US cents to 75.27 US cents.

RBC chief currency strategist Adam Cole said in an early note that exchange markets have retained a “risk-positive tone” overnight although moves in FX and asset markets have been small.

The lone item on the Canadian economic calendar will be Statistics Canada’s report on June international securities transactions, although Mr. Cole noted those figures “generally attract little immediate attention.”

The report showed that foreign investors cut their holdings of Canadian securities by $4-billion in June. That marked the third divestment in four months, according to Statscan. Meanwhile, Canadian investment in foreign securities rose by $6.6-billion, the biggest investment since last October.

On world exchange markets, the U.S. dollar index, which measures the greenback against a group of world currencies, was higher in the early London trading at 98.210. The has recovered by about 1 per cent from its three-week low on Aug. 9, according to figures from Reuters. The U.S. dollar drew some support from Thursday’s better-than-forecast increase in July retail sales.

The euro was down by 0.2 per cent at US$1.108875, the lowest it has been since Aug. 2. Britain’s pound was up 0.3 per cent at US$1.2118, close to a one-week high of $1.2150 and on course for its first weekly gain since mid-July. A solid reading on British retail sales and consumer prices helped bolster the pound.

In bonds, U.S. Treasury yields rose from recent record lows as investors shifted back into riskier holdings.

“Bond yields are modestly higher, with the 10-year Treasury yield up 3 basis points to 1.56 per cent after dipping below 1.5 per cent for a very brief moment yesterday and closing in on the 2012 and 2016 lows just under 1.4 per cent,” BMO senior economist Robert Kavcic said. “Note that the 10s/2s curve is positive again by about 4 bps. Canadian yields have steadied for now too, but the curve north of the border is more deeply inverted, with the 10s/2s sitting at minus 23 basis points—we’ll see if this captures the attention of the Bank of Canada.”

Other company news

Deere & Co.’s third-quarter earnings on Friday missed Wall Street estimates, hurt by the U.S.-China trade war that has dented the demand for its farm machines, forcing the company to revise down its full-year profit and sales growth forecasts. The Moline, Illinois-based company now expects full-year net income of US$3.2-billion on annual sales growth of 4 per cent, lower than the US$3.3-billion of income on sales up about 5 per cent projected earlier. This is the second cut to the full-year earnings outlook in the past three months.

Cathay Pacific Airways said CEO Rupert Hogg has resigned in a surprise announcement, amid mounting Chinese regulatory scrutiny of the Hong Kong flag carrier over the involvement of its employees in the city’s protests. Augustus Tang, the head of Hong Kong Aircraft Engineering Company - which like Cathay is managed by Swire Pacific Ltd , will take over as the carrier’s new chief. The airline also said Paul Loo had resigned as chief customer and commercial officer, to be replaced by the head of its low-cost arm Hong Kong Express, Ronald Lam.

Canadian cannabis grower CannTrust Holdings Inc. on Thursday said that the sale of more than half of its stock of marijuana and around a quarter of its plants had been suspended following the discovery of unlicensed cultivation at its facilities. Regulator Health Canada last month found unlicensed cultivation in five rooms at a CannTrust facility. Health Canada placed a hold on about 5,200 kilograms of dried cannabis harvested in the rooms, while CannTrust also put a voluntary hold on a further 7,500 kg of cannabis equivalents. CannTrust stock gained about 1 per cent in morning trading in Toronto.

Economic news

Statistics Canada said foreign investors cut their holdings of Canadian securities by $4-billion in June. It was the third divestment in four months, the agency said. Canadian investment in foreign securities, meanwhile, rose to $6.6-billion, the biggest investment since last October.

U.S. housing starts dropped 4.0 per cent to a seasonally adjusted annual rate of 1.191 million units in July, the U.S. Commerce Department said. Home building was likely disrupted by Tropical Storm Barry, which drenched Louisiana in the middle of July.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index.

With Reuters and The Canadian Press

With files from Reuters

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