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Equities

Canada’s main stock index opened lower Friday with weaker crude prices weighing on energy stocks and new figures showing the country’s economy slowed in the third quarter. U.S. stocks started an abbreviated session in the red for the first time this week with trade tensions hitting investor sentiment.

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At 9:43 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 23.83 points, or 0.14 per cent, at 17,090.69. Energy stocks were down 1.1 per cent.

The Dow Jones Industrial Average fell 60.84 points, or 0.22 per cent, at the open to 28,103.16. The S&P 500 opened lower by 6.45 points, or 0.20 per cent, at 3,147.18, while the Nasdaq Composite dropped 23.16 points, or 0.27 per cent, to 8,682.01 at the opening bell.

MSCI’s all-country index, which weighs shares in 49 countries, was down 0.2 per cent but still just shy of the record high seen in January 2018. That record was set before the current trade row between the United States and China broke out. European markets managed to shake off early losses and looked to finish with a gain for November, marking a third consecutive monthly increase.

U.S. markets close at 1 p.m. ET on Friday as part of the American Thanksgiving weekend.

The latest round of trade-relative nervousness came after U.S. President Donald Trump signed a bill backing protesters in Hong Kong. The move triggered a sharp response from Beijing and a warning that the U.S. was meddling in China’s affairs. Investors are worried the dispute could derail already contentious trade negotiations and delay a partial agreement, although some analysts suggest recent market reaction indicates a more measured response.

“If investors were really concerned about a significant escalation in tensions, yesterday’s price action certainly didn’t show it,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“Asia markets this morning have seen more of a decline and this is likely to see a similarly weak European open this morning though some of the losses could also be some month end portfolio readjustment, after a fairly decent November.”

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On Wall Street, Black Friday puts retail stocks in focus. This year, the timing of U.S. Thanksgiving - it fell on the fourth Thursday in November, the latest possible date - means an abbreviated holiday shopping period with six fewer days than in 2018.

The U.S. National Retail Federation is still predicting U.S. holiday sales will climb between 3.8 per cent and 4.2 per cent, supported by a solid jobs market. In November and December last year, sales grew by 2.1 per cent, marking a disappointing showing for retailers.

Shares of Target Corp. opened slightly weaker in New York. Walmart and Amazon were trading higher just after the opening bell.

On Bay Street, the economy is at the forefront with the release of third-quarter GDP figures. Statistics Canada said third-quarter GDP grew at an annual rate of 1.3 per cent. That’s well below the revised 3.5-per-cent annual rate seen in the second quarter but roughly inline with forecasts from economists.

Overseas, major European markets were mixed by afternoon with the pan-European STOXX 600 sitting just below break even. Trade-sensitive resource stocks were among the weakest performers. Britain’s FTSE 100 fell 0.34 per cent. Germany’s DAX edged up 0.19 per cent. France’s CAC 40 rose 0.13 per cent.

In Asia, markets put in a weak showing. Hong Kong’s Hang Seng fell more than 2 per cent. The Shanghai Composite Index lost 0.61 per cent. Japan’s Nikkei 225 slid 0.49 per cent.

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“Traders are probably getting a tad jittery about turning the page on November without a trade talk venue as Dec. 15 and the possible imposition of 15-per-cent tariffs on US$160-billion of Chinese goods looms ominously,” AxiTrader strategist Stephen Innes said.

Commodities

Crude prices turned lower in a choppy session as traders await next week’s meeting of OPEC and its allies.

The day range on Brent so far is US$63.33 to US$63.86. The range on West Texas Intermediate is $57.64 to US$58.30. Trading was relatively quiet due to the U.S. Thanksgiving holiday.

AxiTrader’s Stephen Innes says trade continues to remain at the forefront for the crude market, but there are several other factors also at play.

“At least some clarity is starting to emerge surrounding the OPEC meeting where all parties concerned will attempt to enforce stricter compliance with the existing agreement,” he said. "Supply/demand fundamentals suggest more stringent compliance could be enough to bring the market close to balance in 2020, although deeper cuts are probably needed to prevent sentiment from turning more negative."

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Next week’s OPEC meeting is expected to see participants agree to extend current production caps, which run through to March, into the middle of the year. Some are also hoping for signals that the group will deepen cuts.

Mr. Innes also said recent airstrikes in Libya, which put the El Feel oilfield out of production on Thursday, also highlighted geopolitical risks. Production has since resumed.

Gold prices, meanwhile, were little changed.

Spot gold was flat at US$1,458.47 per ounce, having shed 0.2 per cent so far this week. U.S. gold futures rose 0.3 per cent to US$1,458.

“Gold hasn’t escaped the dull week in the markets, having spent the week stumbling between US$1,450 and US$1,460,” OANDA senior analyst Craig Erlam said. “I [wouldn’t] get too excited if I was a gold bull though as the outlook for the yellow metal hasn’t improved.”

Currencies

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The Canadian dollar was weaker but off early morning lows after Statistics Canada reported third-quarter economic growth inline with market forecasts.

The day range on the loonie so far is 75.14 US cents to 75.30 US cents. In the wake of the report, the dollar recovered some lost ground to trade near the middle of that spread.

Statistics Canada said the economy grew at an annual rate of 1.3 per cent in the third quarter. That roughly matched economists’ forecasts. On a monthly basis, the economy grew by 0.1 per cent in September.

The number is the last piece of significant economic data ahead of next week’s Bank of Canada interest rate decision.

“Consumer spending didn't improve as much as we expected (up 1.4 per cent), but there were hefty gains in business capital spending and homebuilding to offset that, with inventory destocking and exports dropping to keep the headline in check,” said CIBC World Markets chief economist Avery Shenfeld.

“Q3 didn’t end on a great note, with GDP only up 0.1 per cent on the month, matching the prior month, and leaving not much momentum heading into Q4. Over all, a mixed bag, but perhaps a bit better than it looks in the headline given the strength in domestic demand," he said.

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On global markets, the euro was last trading little changed at US$1.1009, after climbing back from the two-week low of below US$1.10 it hit this week.

The U.S. dollar was flat against the safe-haven Japanese yen at 109.52, though close to touching another six-month high, according to Reuters.

In bonds, the yield on the U.S. 10-year note was lower at 1.76 per cent. The yield on the 30-year note was also slightly weaker at 2.182 per cent.

More company news

Daimler on Friday announced at least 10,000 job cuts across the globe over the next three years after reaching an agreement on its plans with labour unions. It marks the third announcement on cost cuts this week by a major German car company as car makers grapple with huge investments into cleaner and self-driving technologies while demand in China, their biggest market, is falling and a trade war between Washington and Beijing is curbing economic growth. “The automotive industry is in the middle of the biggest transformation in its history,” Daimler said in a statement.

The owner of the Daily Mail newspaper on Friday said it would buy the “i” newspaper and website from JPI Media for a US$63.64-million cash consideration. Daily Mail and General Trust said that while the deal to buy the “i” provided opportunities for cost synergies, the publication would retain its editorial independence and distinctive tone.

The Globe’s Mark Rendell reports Ontario cannabis grower WeedMD Inc. is acquiring union-backed cannabis company Starseed Holdings Inc., according to an individual with knowledge of the deal. As part of the transaction, Starseed’s main backer, the Laborers’ International Union of North America (LiUNA), is making a multimillion-dollar investment in WeedMD, the source said. The Globe and Mail is not identifying them because they were not authorized to speak publicly.

Economic news

Canada’s economy grew at an annual rate of 1.3 per cent in the third quarter, roughly in line with estimates.

Canadian producer prices rose by 0.1 per cent in October, on higher energy and petroleum prices, Statistics Canada data showed on Friday. Analysts in a Reuters poll had predicted prices would hold steady in October, following a 0.1-per-cent decline in September.

With Reuters and The Canadian Press

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