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Equities

Canada’s main stock index started higher Friday with crude prices boosting energy shares and a stronger-than-forecast reading on U.S. employment helping ease worries about a global economic slowdown. On Wall Street, the S&P 500 and the Nasdaq indexes both traded at record levels on the latest jobs numbers.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was up 67.04 points, or 0.41 per cent, at 16,550.2.

South of the border, the S&P 500 opened higher by 13.16 points, or 0.43 per cent, at 3,050.72. The Nasdaq Composite gained 42.69 points, or 0.51 per cent, to 8,335.05 at the opening bell.

The Dow Jones Industrial Average rose 96.72 points, or 0.36 per cent, at the open to 27,142.95.

The U.S. Labor Department said the U.S. economy added 128,000 new positions last month. Economists had been expecting to see a gain of about 80,000 with many braced for a weaker showing as a result of the lengthy strike by GM workings south of the border. The unemployment rate ticked up to 3.6 per cent from 3.5 per cent.

U.S. short-term interest rate futures dropped in the wake of the report with traders increasingly expecting the Federal Reserve to keep borrowing costs steady after three cuts this year.

“The Fed is looking smart today,” OANDA senior analyst Edward Moya said. “The mid-cycle adjustment call seems to tentatively be justified with a robust labor market that continues to keep this record expansion going strong.”

Market sentiment had already been positive ahead of the report with world stocks getting a lift from a report showing that manufacturing activity in China grew at the fastest pace since February 2017. The figures helped push MSCI’s all-country index up 0.3 per cent. That index was now heading to its fourth week of gains.

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On the trade front, China’s foreign ministry said Friday that China and the U.S. have maintained close contact on bilateral trade issues. Markets had been optimistic that leaders of the two countries would sign a partial deal at the now-cancelled APEC summit in Chile later this month, although a Bloomberg report earlier in the week suggesting China had reservations about a deal caused some concern. U.S. President Donald Trump said Thursday that a new venue would be announced soon to sign “phase one” of a trade agreement.

In this country, earnings continue to be the name of the game.

Keystone operator TC Energy posted a 20-per-cent decline in third-quarter profit. The Calgary-based company’s net income attributable to shareholders fell to $739-million, or 79 cents a share, in the quarter, compared with $928-million, or $1.02 per share, a year earlier. Profit in the latest quarter was hit by after-tax losses linked to asset sales this summer. On an adjusted basis, earnings per share rose to $1.04, up from $1 a year earlier. Analysts had been looking for earnings per share by that measure of 98 cents in the most recent quarter. Shares were up in early trading in Toronto.

After Thursday’s close, Fairfax Financial Holdings Ltd. reported earnings per share of US$2.04, down from US$3.34 a year earlier. Fairfax said the latest numbers were hit by US$96.7-million in investment losses. Net premiums increased 12.1 per cent to US$3.3-billion. Underwriting profits rose to US$81.3-million from US$74.2-million last year. “We continue to be soundly financed, with over $1 billion cash and marketable securities at the holding company and no significant holding company debt maturities until 2022,” Fairfax chairman and CEO Prem Watsa said.

On Wall Street, fitness tracker Fitbit Inc. said Friday it will be acquired by Google for US$2.1-billion. The offer amounts to US$7.35 a share. Fitbit shares jumped nearly 17 per cent at the open in New York.

Overseas, European markets were higher in morning trading.

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The pan-European STOXX 600 was up 0.69 per cent in afternoon trading with most major sectors in the black. Britain’s FTSE 100 rose 0.49 per cent. Germany’s DAX gained 0.73 per cent. France’s CAC 40 rose 0.69 per cent.

In Asia, Tokyo’s Nikkei lost 0.3 per cent, while Hong Kong’s Hang Seng gained 0.7 per cent and the Shanghai Composite climbed 1 per cent.

Commodities

Crude prices were up in early going but still looked set for heavy weekly losses as demand worries and rising supply weigh on sentiment.

The day range on Brent so far is US$59.40 to US$59.88. The range on West Texas Intermediate is US$54.07 to US$54.53.

Both benchmarks are heading toward losses for the week of about 4 per cent.

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“Oil prices are treading water this morning having spent much of the week paring gains,” OANDA’s Mr. Erlam said. "Brent has broken back below US$60 but I don’t think that’s anything to worry about. Crude has been closely tied to global growth expectations and while the outlook is still troubling, it’s arguably less so than it has been after the Fed cuts and trade talks. "

He said a move below US$58 for Brent would suggest diminishing optimism among traders, although “we’re still some way from that level at the moment.” On the upside, the key level remains US$62 a barrel.

Crude markets drew some support early Friday from the October factory report out of China, which showed manufacturing activity grew at its best pace since early 2017. That was offset somewhat by a report out of Japan which showed factory activity in that country sank to a three-year low.

Gold prices, meanwhile, were down slightly on profit taking in the wake of the strong China manufacturing figures.

Spot gold was down slightly at US$1,513 per ounce as of 0817 GMT, while U.S. gold futures were unchanged at US$1,515.30 per ounce. Spot gold is set to rise about 0.6 per cent for the week, building on the previous week’s 1-per-cent gain.

“Gold has been hugging the US$1510 region supported by the U.S. trade uncertainty, but the market has been lightening up on gold after the better-than-expected China Caixin PMI,” AxiTrader strategist Stephen Innes said. “Flow wise, it hasn’t been that busy, but if gold markets can hold above US$1510 for a significant duration or break above US$1525, we could see a pickup in actions.”

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Currencies

The Canadian dollar was trading around the 76-US-cent mark and had a day range of 75.91 US cents to 76.10 US cents.

The loonie held relatively steady through Thursday’s session after Statistics Canada reported that the Canadian economy grew by 0.1 per cent on a monthly basis in August. That was a shade below forecast but also slightly better than the flat reading seen the month before. Economists took some solace in the fact that the August gains were fairly broad based. They were also encouraged by the fact that that manufacturing, which had contracted in three of the four previous months, was a leading source of growth.

On Friday, there were no major economic releases due, suggesting the loonie will likely be driven by more global forces.

The loonie briefly fell after the U.S. dollar gained on the better-than-expected jobs reports south of the border but quickly steadied to return to near 76 US cents by midmorning.

In addition to the U.S. October employment numbers, traders will also be paying close attention to a report due later in the morning on U.S. factory activity. The ISM manufacturing PMI is seen rising to 48.9 in October from 47.8 a month before. That would suggest an improvement, although a number below 50 still suggests a contraction in the sector.

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The euro, meanwhile, was last up 0.1 per cent at US$1.1165, near a 10-day high. Britain’s pound rose 0.3 per cent to US$1.2973. The pound looked set for a 1-per-cent weekly gain against the greenback.

The U.S. dollar also lost against the yen, last trading at 107.89 yen, a three-week low, after Bloomberg reported that Chinese officials have doubts about reaching a comprehensive solution to the U.S.-Sino trade war. The U.S. currency is headed for a 0.6-per-cent decline against the yen this week, its biggest weekly loss since Oct. 4, according to Reuters.

In bonds, U.S. debt prices were slightly lower. The yield on the U.S. 10-year note edged up to 1.695 per cent. The yield on the 30-year note was also slightly higher at 2.186 per cent.

More company news

BMO Financial Group says it plans to appoint BCE Inc. chief executive George Cope as chair of the BMO board next year, after his retirement from the telecommunications company in January. The Toronto-based banking group says it intends to appoint the long-time telecom industry executive upon his re-election as an independent director at BMO’s annual meeting in March 2020.

The Globe’s Andrew Willis writes that private equity fund Catalyst Capital Group Inc. claims to have gathered enough votes to block the planned $1.1-billion buyout of Hudson’s Bay Co. and is pushing HBC’s board of directors to put the retailer up for sale. Toronto-based Catalyst announced late Thursday that investors holding a 28.2-per-cent stake in HBC plan to oppose a bid to take the company private from a group led by HBC executive chairman Richard Baker. HBC owns real estate and more than 300 department stores under the Saks Fifth Avenue and Hudson’s Bay banners.

Imperial Oil Ltd reported 43-per-cent fall in quarterly profit as expenses rose and refining margins fell. The company, majority-owned by Exxon Mobil Corp, said net income fell to $424-million, or 56 cents per share, in the third quarter, from $749-million, or 94 cents, a year earlier.

The company’s gross production averaged 407,000 barrels of oil equivalent per day (boepd), up from 393,000 boepd in the year-prior quarter.

Exxon Mobil Corp’s third-quarter profit nearly halved, mainly hit by lower oil prices and weakness in its chemicals business. The largest U.S. oil producer’s earnings fell to US$3.17-billion, or 75 US cents per share, in the quarter, from US$6.24-billion, or US$1.46 per share, a year earlier.(

Insurer American International Group Inc posted a profit in the third quarter, compared with a year-earlier loss when it recorded more than a billion dollars in catastrophe losses. AIG’s net income attributable to common shareholders was US$648-million, or 72 US cents per share, in the third quarter ended Sept. 30, compared with a loss US$1.26-billion, or US$1.41 per share, a year earlier. AIG’s net pretax catastrophe loss narrowed to US$511-million in the quarter from US$1.6-billion a year earlier.

Danske Bank shares fell more than 4 per cent after the troubled lender said its annual profit would come in at the low end of forecasts, and unveiled plans to get costs and compliance under control by 2023. Denmark’s biggest lender has seen thousands of customers flee and its chief executive depart since reports emerged in 2017 of its involvement in one of the world’s biggest money-laundering scandals via its Estonia branch. The bank now expects annual net profit to come in at the lower end of its previously announced 13 billion to 15 billion Danish crown (US$1.9-billion-US$2.2-billion) range.

Apple TV+, the iPhone maker’s entry into the crowded streaming TV market, debuts on Friday as the first “all-original” subscription video service, according to Apple Inc Chief Executive Tim Cook. All of the programming is original because, unlike Netflix Inc and the forthcoming Disney+ from Walt Disney Co , Apple does not have rights to a back catalog of TV shows and movies.

Mazda Motor Corp cut its annual profit forecast by nearly half on Friday as the Japanese automaker expects a strong yen and falling cars sales in the United States and China, its biggest markets, to drive earnings to a seven-year low. Japan’s fifth-largest automaker expects to post 60 billion yen ($555.4 million) in operating profit for the year ending March, down from a prior outlook of 110 billion yen, and lower than a mean forecast of 69.5 billion yen from 20 analysts polled by Refinitiv.

Economic news

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, rose to a seasonally adjusted 51.2 in October, its highest level since February, from 51.0 in September.

The U.S. economy added 128,000 new jobs last month, the U.S. Labor Department said Friday. Economists had been expecting a gain closer to 80,000. The jobless rate rose to 3.6 per cent from 3.5 per cent.

(9:45 a.m. ET) U.S. Markit manufacturing PMI for October.

(10 a.m. ET) U.S. manufacturing ISM for September for October.

(10 a.m. ET) U.S. construction spending for September.

With Reuters and The Canadian Press

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