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Equities
Canada’s main stock index edged higher early Friday alongside world markets as concerns over the spread of the coronavirus eased. On Wall Street, the Nasdaq touched record levels with Intel Corp. shares spiking on solid results and an encouraging forecast.
At 9:48 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 1.98 points, or 0.01%, at 17,623.76.
Energy stocks were down 1 per cent on weaker crude prices. Financials slipped 0.1 per cent. Industrial and tech stocks were among the morning’s winners.
In the U.S., the Dow Jones Industrial Average rose 70.30 points, or 0.24 per cent, at the open to 29,230.39. The S&P 500 opened higher by 7.56 points, or 0.23 per cent, at 3,333.10. The Nasdaq Composite gained 43.73 points, or 0.47 per cent, to 9,446.21 at the opening bell.
On Thursday, the WHO said it was “a bit too early” to declare the outbreak of the coronavirus a global health emergency, even as China put millions of people into lockdown ahead of the week-long Lunar New Year holiday. In an effort to contain the virus, Wuhan, a Chinese city of 11 million people at the center of the outbreak, suspended most transport on Thursday. Similar measures were later announced for the neighbouring city of Huanggang, which has a population of about 7 million. The Globe’s Nathan Vanderklippe reported Friday that transportation has now been restricted in 14 cities and public spaces like theatres and cafes closed in some areas.
“The World Health Organization not designating the Wuhan coronavirus an international emergency has taken the fear gauge down a few notches,” Jasper Lawler, head of research for London Capital Group, said.
“The travel restrictions and cutback Lunar New Year celebrations will have some kind of dampening effect on Chinese growth. Only, based on what the WHO is saying, the same problem will not be felt globally.”
On the corporate front, shares of Intel were up more than 7 per cent in early trading after solid results from that company signalled a long-awaited turnaround in the chip sector. In releasing results for its latest quarter, Intel also forecast 2020 revenue above market expectations, saying it now expects fiscal year 2020 revenue of about US$73.5-billion. Analysts had been forecasting annual revenue of US$72.25-billion, according to IBES data from Refinitiv.
In the latest quarter, Intel posted net revenue of US$20.21-billion. That was up 8.3 per cent from a year earlier and ahead of the US$19.23-billion analysts were forecasting. Excluding items, the company earned US$1.52 per share, above Wall Street estimates of $1.25. The results were released after Thursday’s close.
“The largest U.S. chipmaker seems to have got its groove back as their revenue reach is expanding to include the auto industry and networking," OANDA senior analyst Edward Moya said.
American Express shares rose more than 6 per cent after the credit-card giant posted better-than-expected profit in the latest quarter on strong U.S. holiday season spending. AmEx reported net income of US$1.69-billion, or US$2.03 per share, in the quarter ended Dec. 31, down from US$2.01-billion, or US$2.32 per share, a year earlier. Analysts had been looking for earnings per share closer to US$2.01 in the most recent quarter.
On this side of the border, markets got a better-than-forecast reading on retail sales in November. Statistics Canada said sales for the month rose 0.9 per cent, largely offsetting the previous month’s 1.1-per-cent decline. Statscan said the November gains were largely the result of increased sales of autos and at food and beverage stores.
The numbers come just days after the Bank of Canada held its key policy rate steady but also said weakness seen in the final quarter of 2019 appeared to be spilling over into the start of this year. That has sparked some economists to predict the central bank will cut rates as early as this spring.
Overseas, European markets rebounded after the WHO comments on the spread of the coronavirus. The pan-European STOXX 600 rose 1.18 per cent by afternoon with industrials among the winners. Britain’s FTSE 100 rose 1.55 per cent. Germany’s DAX added 1.49 per cent. France’s CAC 40 gained 1.10 per cent.
Europe’s major markets also got a boost after a Purchasing Managers’ Index (PMI) survey showed Germany’s private sector gaining momentum. Similarly, PMI figures for Britain showed a return to growth in January in the services sector for the first time since last summer. That survey also signalled a slowing in the downturn in manufacturing.
In Asia, Hong Kong’s Hang Seng edged up 0.15 per cent. Japan’s Nikkei gained 0.13 per cent. Markets in China and South Korea were closed ahead of the Lunar New Year holiday, which starts on Saturday.
Commodities
Oil prices were heading for a weekly loss amid market concerns over the impact of the coronavirus on demand for crude.
Both Brent and WTI were lower early Friday. The day range on Brent so far is US$61.77 to US$62.46. The range on West Texas Intermediate is US$55.34 to US$55.95. Both benchmarks are on course for a loss for the week, with Brent tracking a decline of about 4 per cent. It would mark the third consecutive weekly decline for Brent crude.
“The energy [market] has had a tough time lately,” CMC market analyst David Madden said. “Once it was clear the U.S. and Iran were not going to war, it quickly reversed the gains it made on the back of the heightened tensions.”
On Wednesday, he said, crude fell after the head of the International Energy Agency, Fatih Birol, warned that an oversupply situation was on the horizon.
“The health crisis in China has been the latest story to knock oil seeing as the country is a major importer of commodity,” Mr. Madden said.
Friday’s declines were slowed somewhat by the latest weekly inventory figures out of the United States. The U.S. Energy Information Administration said crude stocks fell 405,000 barrels in the week to Jan. 17.
Still, Reuters reports that the upside for prices from that report was limited given that inventories in the industrialized world are still above the five-year average according to OPEC figures. That limits the positive impact on prices from production shutdowns, such as the one seen earlier this week in Libya.
Gold prices were lower as investors awaited more information on the impact of the coronavirus on the global economy.
Spot gold fell 0.2 per cent to US$1,560.24 per ounce, but was on track to gain 0.2 per cent for the week. U.S. gold futures slipped 0.3 per cent to US$1,560.40.
“Gold prices remain supported by defensive positioning due to the unknowns around the coronavirus,” AxiTrader strategist Stephen Innes said.
Currencies
The Canadian dollar failed to find its footing Friday morning despite a better-than-forecast reading on retail sales in November.
The day range on the loonie so far is 76.09 US cents to 76.21 US cents.
The loonie initially advanced after Statscan said sales rose a better-than-expected 0.9 per cent in November, recouping much of October’s 1.1-per-cent decline. However, the currency gave back those early gains as investors weighed the numbers, settling near the middle of the day range. Excluding autos, sales were up 0.2 per cent.
“Canadian retail sales zoomed back in the fast lane in November after a big October drop, but putting the two months together, sales were still lower than back in September, and volumes have shown virtually no growth since early 2018,” CIBC chief economist Avery Shenfeld said, describing the numbers as a “mixed bag” for the markets given the upside surprise on the headline number but the “tepid” showing excluding autos.
On world currency markets, the euro was near a seven-week low after the European Central Bank struck a more dovish tone in its latest policy statement.
The euro fell against the U.S. dollar to US$1.1049. The bloc’s currency was also near a five-week low against Britain’s pound and a 33-month low against the Swiss franc.
The U.S. dollar index, which measures the greenback against a basket of currencies, was steady at 97.717 and looked set for a third weekly gain.
In bonds, the yield on the U.S. 10-year note was a touch lower at 1.732 per cent.
More company news
The Globe’s Eric Atkins reports that Swoop Airlines, the discount wing of WestJet Airlines Group, has embarked on an aggressive expansion, adding new flights and selling tickets for as low as $1, sparking new accusations of predatory pricing by a rival airline.
Tanzania signed agreements with Canadian miner Barrick Gold Corp on Friday which aim to end a long-running and costly tax dispute, giving the state a holding in three gold mines whose output is among the country’s biggest export earners, Reuters reports. Barrick Chief Executive Officer Mark Bristow and Tanzanian minerals minister Doto Biteko signed nine agreements at a ceremony in the commercial capital Dar es Salaam.
Shares in seeds and pesticides maker Bayer opened 2.3-per-cent higher on Friday, driven by a report on a possible out-of-court settlement of a U.S. jury trial over allegations that its weed killer Roundup causes cancer. Bloomberg said late on Thursday that lawyers for some plaintiffs were discussing deals that could lead to a total payout of about US$10-billion.
Wells Fargo & Co’s U.S. regulator on Thursday announced it had banned former Chief Executive John Stumpf from the banking industry and charged him and seven other former executives combined more than US$58-million in civil penalties for their roles in the bank’s multi-year sales practices scandal. The action by the Office of the Comptroller of the Currency (OCC) marks a rare example of senior executives being held personally accountable for failing to put a stop to misconduct at their bank. It also broke new ground for the regulator, which forced Stumpf to pay US$17.5-million to settle the charges against him - the largest ever penalty it has secured from an individual.
Economic news
Retail sales rose 0.9 per cent in November to $51.5-billion, offsetting October’s 1.1-per-cent decline, Statistics Canada said. Markets had been expecting an increase of 0.6 per cent for the month.
(9:45 a.m. ET) U.S. Markit Manufacturing PMI
With Reuters and The Canadian Press
Terry Weber