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Equities

Canada’s main stock index gained early Friday buoyed by positive trade developments and gains by BlackBerry Ltd. on the back on better-than-expected earnings. On Wall Street, U.S. indexes started at record highs on the prospect of a phase-one agreement being signed next month.

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At 09:45 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 56.25 points, or 0.33 per cent, at 17,120.29. Ten of the index’s 11 major sectors were higher, led by a 0.7-per-cent gain in tech shares.

In the U.S., the Dow Jones Industrial Average rose 231.68 points, or 0.82 per cent, at the open to 28,608.64.

The S&P 500 opened higher by 17.96 points, or 0.56 per cent, at 3,223.33. The Nasdaq Composite gained 24.62 points, or 0.28 per cent, to 8,911.84 at the opening bell.

MSCI’s all-country index edged up 0.1 per cent, helped by the latest trade headlines. The index was on track for a fourth weekly gain.

On Thursday, U.S. Treasury Secretary Steven Mnuchin told CNBC that a phase-one agreement between the United States and China had been finished and was undergoing a technical “scrub”. He said the pact would be signed early next month. The S&P 500, Nasdaq and the Dow Jones Industrial Average all posted record closing highs Thursday in the wake of the comments.

“U.S. Treasury Secretary Steve Mnuchin sought to assure investors that the phase one trade deal with China will be ready to sign at the beginning of January, after undergoing a “technical scrub”,” OANDA senior analyst Craig Erlam said. “I’m not quite sure what that means exactly, but hopefully this isn’t the same “done” as we were told in October because those final details took some time to iron out.”

In other trade news, the U.S. House of Representatives overwhelmingly approved a new North American trade deal on Thursday in a vote 385 to 41. The vote now sends the measure to Senate. The timing of that vote remains unclear. Senate Republican leader Mitch McConnell has said the USMCA vote would likely follow an impeachment trial in the Senate. That is expected in January.

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On the corporate side, Bay Street got third-quarter results from BlackBerry Ltd. The company’s adjusted revenue rose 23 per cent to US$280-million, topping analysts’ estimates of US$275.7-million, according to IBES data from Refinitiv. BlackBerry shares jumped 11 per cent at the open in Toronto.

On Wall Street, cruise line operator Carnival reports its latest results.

Nike Inc. shares were down more than 1 per cent in early trading, despite profit and revenue in the latest quarter that easily topped market forecasts. Investors appeared concerned by lower-than-expected sales growth in North America. North American sales in the quarter rose 5.3 per cent to US$3.98-billion. Analysts had been looking for sales of US$4-billion in the quarter. The results were released after the close on Thursday.

Overseas, trade relief helped major European indexes advance in afternoon trading. The pan-European STOXX 600 rose 0.60 per cent. Britain’s FTSE 100 rose 0.07 per cent. Germany’s DAX added 0.55 per cent. France’s CAC 40 rose 0.06 per cent.

In Asia, Japan’s Nikkei finished down 0.20 per cent. The Shanghai Composite Index slid 0.40 per cent. Hong Kong’s Hang Seng gained 0.25 per cent.

Commodities

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Crude prices were lower but still looked set for a weekly gain on positive trade developments.

The day range on Brent so far is US$66.27 to US$66.72. The range on West Texas Intermediate is US$60.91 to US$61.20. Brent looks set for a weekly gain of about 2 per cent. WTI is heading to a weekly increase of about 1.5 per cent.

In addition to Mr. Mnuchin’s indication that a phase-one agreement had been put onto paper, China on Thursday announced a list of import tariff exemptions for six oil and chemical products from the United States, helping bolster market confidence that a resolution was at hand.

“Oil is having a strong end to 2019 and on Thursday extended its winning run to six days,” OANDA’s Craig Erlam said in an early note. "Marginal gains are being squeezed out in early trade which may suggest the run is about to come to an end, but broadly speaking, there’s no lack of momentum in the oil rally yet."

He said the combined impact of an OPEC+ production agreement, a U.S.-China trade deal and an improved global outlook have created “quite the bullish case” for crude recently and “it seems traders think there is more room to run.”

Gold prices, meanwhile, slipped as investors opted for riskier holdings.

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Spot gold fell 0.1 per cent to US$1,477.28 per ounce. U.S. gold futures were down 0.2 per cent to US$1,481.10 per ounce.

“Any way you slice the pie, a lot hinges on developments on U.S.-China trade talks and implications on growth,” AxiTrader strategist Stephen Innes said. “But for right now, trade risks have cooled, and with it, so have top side bullish ambitions for gold.”

Currencies

The Canadian dollar dropped below 76 US cents after the latest reading on retail sales in this country fell short of market forecasts.

After the release of Statistics Canada’s October report on retail sales, the loonie fell to the lower end of the day range of 75.87 US cents to 76.20 US cents. The Canadian dollar had been trading near its best levels in seven weeks through the week on a positive outlook for the global economy in the wake of the latest developments in the U.S.-China trade talks.

In its report, Statscan said retail sales fell 1.2 per cent in October on weakness in auto and parts segment as well at building material and garden equipment retailers. Economists had been expecting an increase of about 0.5 per cent for the month.

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Sales were lower in eight of 11 subsectors. Taking out the impact of price changes, retail sales in volume terms were down 1.4 per cent.

“The fact that all three major inputs into monthly GDP (manufacturing, wholesaling and retailing) were down this week, means that the quarter will be starting on soft footing,” CIBC economist Royce Mendes said. “The big headline miss will be bearish for the loonie and bullish for fixed income.”

On broader currency markets, the U.S. dollar was mostly steady against a basket of its world counterparts. The dollar index was up slightly at 97.41. It has recovered almost 0.9 per cent from five-month lows hit last week and is up 0.3 per cent this week, putting it on trace for its biggest weekly rise in a month, according to Reuters.

Britain’s pound, which has been hard hit over concerns over a hard Brexit, is heading for its worst week in two years against the U.S. dollar. At last check, the pound was up 0.15 per cent at US$1.3023.

Company news

Boeing’s top supplier Spirit Aerosystems Inc said on Friday it would stop making fuselages for the grounded 737 MAX jets, the first major indication of disruption spreading to the planemaker’s suppliers facing thousands of potential layoffs. Shares of Spirit, which gets about 50 per cent of its annual revenue from the 737 MAX, were down nearly 3 per cent in early trading. “This suspension will have an adverse impact on Spirit’s business, financial condition, results of operations, and cash flows,” the company said, adding it would halt production in January.

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Carnival Corp reported better-than-expected quarterly revenue, as the world’s largest cruise operator benefited from higher on-board spending. The company’s net income fell to US$423-million, or 61 US cents per share, in the fourth quarter ended Nov. 30, from US$494-million, or 71 US cents per share, a year earlier. Net revenue rose 7.3 per cent to US$4.78-billion, beating the average analyst estimate of US$4.57-billion, according to IBES data from Refinitiv.

Just Eat backed a final offer from Takeaway.com and rejected a rival cash bid from Prosus on Friday, saying the combination with Takeaway would create one of the leading online food delivery companies in the world. Takeaway and Prosus both made increased final bids for the British company on Thursday, with Takeaway’s all-share offer trumping Prosus’ 800 pence-a-share offer, based on its current share price.

The European Commission said on Friday that reservations site Booking.com had committed to changes in the way it presented offers to comply with EU consumer law. The changes relate, for example, to the way the website presents hotel rooms as been the last available and offers as being time-limited and are also designed to ensure that “discounts” do indeed represent genuine savings.

Australian miner South32 Ltd and Canadian base metal explorer Trilogy Metals Inc will become equal partners in a joint venture that will own and operate an Alaskan copper and base metal project, the two companies said on Friday. South32 said it has exercised its option to acquire a 50% stake in the joint venture company that will own Upper Kobuk Mineral Project located in the Ambler mining district in Alaska.

Economic news

Canadian retail sales fell 1.2 per cent in October. Economists had been looking for an increase of 0.5 per cent.

U.S. GDP growth was 2.1 per cent in the third quarter, unchanged from a previous reading. Friday’s figure was the third estimate on growth in the quarter.

The U.S. Commerce Department said consumer spending rose 0.4 per cent last month as U.S. households increased purchases of motor vehicles and spent more on healthcare. Consumer spending increased by an unrevised 0.3 per cent in October.

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

With Reuters and The Canadian Press

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