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Equities
Canada’s main stock index opened higher Friday with steadying crude prices helping support energy shares. South of the border, major indexes managed early gains as stimulus measures helped inject a degree of calm into volatile global markets.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was up 140.86 points, or 1.16 per cent, at 12,311.38. The energy subindex rose about 5 per cent in early trading.
TSX/S&P Composite Index jumped 3.8 per cent Thursday, driven in part by a 25-per-cent spike in crude prices.
On Wall Street, the Dow Jones Industrial Average rose 165.96 points, or 0.83 per cent, at the open to 20,253.15. The S&P 500 opened higher by 22.55 points, or 0.94 per cent, at 2,431.94, while the Nasdaq Composite gained 97.49 points, or 1.36 per cent, to 7,248.07 at the opening bell.
“It’s too early to say the new central bank policies are working,” Jasper Lawler, head of research with London Capital Group, said.
“There is at least an appreciation in markets that central banks aren’t taking the situation lightly. Governments are promising big things but there are big questions about how the whole thing can work. It’s a tough ask to get workers and businesses the cash they need to stay afloat in time.”
He said there’s a chance the relative calm in the markets could carry into the weekend as long as spending plans by governments like the United States and Germany remain on track.
The U.S. Federal Reserve and the Bank of Canada have both taken actions, including emergency rate cuts, to underpin the economies of those countries.
On Thursday, the Fed detailed measures aimed at supporting money-market funds and the borrowing of funds as investors shift holdings into cash to shield themselves from volatile markets.
Meanwhile, the European Central Bank on Thursday launched a program to inject money into credit markets by purchasing as much as US$820-billion in bonds. The Bank of England cut its key interest rate to a record low. Australia’s central bank also cut its benchmark lending rate.
In this country, The Globe reports that the Canadian government is preparing a multibillion-dollar bailout package for Canada’s oil and gas sector as it struggles with the collapse of crude prices. The measures are expected to be unveiled early next week. While few details were available, the report suggests that the sector can expect more access to credit, especially for small and medium-sized businesses, and significant funding to create jobs for laid-off workers to clean up abandoned oil and gas wells.
Overseas, major European markets held onto early gains in afternoon trading. The pan-European STOXX 600 was up 2.22 per cent. Britain’s FTSE 100 gained 2.20 per cent. Germany’s DAX rose 3.18 per cent and France’s CAC 40 advanced 3.76 per cent.
In Asia, Hong Kong’s Hang Seng finished up 5.05 per cent. The Shanghai Composite Index rose 1.61.
Commodities
Crude prices struggled to hold the previous session’s gains as market volatility offset government stimulus efforts and reports suggesting that Washington could intervene in the price war between Saudi Arabia and Russia.
The day range on Brent so far is US$27.93 to US$30.68. The range on West Texas Intermediate is US$24.73 to US$27.49. WTI had been up through most of the early part of the morning but dipped into the red just ahead of the opening bell.
Crude prices jumped on Thursday, helped by U.S. plans to buy up to 30 million barrels of crude for its emergency stockpile by the end of June. Reuters also reported that two of the biggest oil producers in Texas are asking the state regulator to consider curtailing the amount of oil companies can pump in a bid to stem spiralling prices.
Crude markets were also encouraged by suggestions from U.S. President Donald Trump that he would act on the Saudi-Russia price war at the appropriate time. However, by Friday morning crude gave back some of the early gains after the Kremlin said it has a good relationship with Saudi Arabia and doesn’t need outside intervention.
“Although usually one of the world’s most prominent proponents of lower oil prices, the President is acknowledging the U.S. shale oil industry is getting caught in the middle of the market share contest between Saudi Arabia and Russia,” AxiCorp strategist Stephen Innes said.
“U.S. job losses and domestic credit concerns are too much to bear, so the U.S. administration will jump in and attempt to resolve this battle of the oil producer behemoths.”
In other commodities, gold prices advanced after seeing declines during the previous session.
Spot gold gained 1 per cent to US$1,484.88 per ounce. U.S. gold futures climbed 0.6 per cent to US$1,487.90.
“It’s definitely risk hedge buying. If only for a day ... what can you buy to hedge weekend risk? You can be in cash or precious metals, that’s about it,” Jeffrey Halley, a senior market analyst at OANDA, said.
Currencies
The Canadian dollar pushed back above 70 US cents early Friday, helped by a rebound in crude prices.
The day range on the loonie so far is 68.80 US cents to 70.67 US cents.
“The Canadian dollar is nearly 2-per-cent stronger at $1.425 (70.2 U.S. cents), with WTI up another US$2 to just over US$27,” Benjamin Reitzes, director, Canadian rates & macro strategist with Bank of Montreal, said.
“Note that with Norges Bank cutting rates 75 basis points to 0.25 per cent overnight, Canada once again has the highest policy rate among developed economies…making one wonder, what is the BoC waiting for?”
On the domestic front, the markets get a reading on January retail sales, although those figures will likely be largely ignored by investors. Economists are expecting an increase of about 0.3 per cent following a flat reading the previous month.
On global markets, the U.S. dollars recent advanced slowed after a rally earlier in the week put it on track for its biggest weekly increase since the financial crisis of 2008.
The U.S. dollar index, which weighs the greenback against a basket of world currencies, was down about 1 per cent just after 5:30 a.m. ET. According to Reuters, the index is up about 3.5 per cent on the week as investors moved into cash holdings.
The euro was among the major gainers, up more than 1 per cent to US$1.0832. Sterling rose 3.3 per cent from a 35-year low to US$1.1878.
“People are selling everything and the common thread is they just want cash,” Stuart Oakley a Singapore-based executive with Nomura, told Reuters.
“People just want cash because at the end of the day, people don’t know where their next revenue is coming from and they’ve got payments to meet. I don’t think that’s going to change.”
More company news
BRP Inc. beat profit expectations for its fourth quarter, but suspended its dividend in an effort to preserve its financial flexibility as it deals with the issues related COVID-19. The maker of Ski-Doo snowmobiles and Sea-Doo watercraft had paid a quarterly dividend of 10 cents per share. The suspension of the payment to shareholders came as the company reported a fourth-quarter profit attributable to shareholders of $118.4-million or $1.32 per diluted share, up from $82.7-million or 84 cents per diluted share a year earlier.
Tesla Inc said it will suspend production at its San Francisco Bay Area vehicle factory on March 24, ending a standoff with California authorities concerned about the spread of the coronavirus. The company said its New York solar roof tile factory also will temporarily suspend production, while operations at its Nevada battery plant will continue.
Luxury jeweler Tiffany & Co on Friday pointed to a significant hit to results this year as it temporarily closed stores around the world, and said it had lost about half of its operating days in mainland China since the coronavirus otbreak. Tiffany earlier this week said it would temporarily close several stores, including its Fifth Avenue flagship store in New York, and reduce working hours at other outlets, to contain the spread of the novel coronavirus. Excluding items, Tiffany earned US$1.80 per share in the most recent quarter, beating Wall Street expectations of US$1.77.
Marlboro maker Altria Group Inc Chief Executive Officer Howard Willard has contracted coronavirus and is taking temporary medical leave, a regulatory filing showed on Friday. Chief Financial Officer William Gifford Jr will take over for Willard during his absence, the company said in a memo to employees.
Economic news
Statistics Canada said retail sales rose for the third consecutive month in January, rising 0.4 per cent to $52-billion. The agency also said, while the impact of the coronavirus on the retail trade sector will be more noticeable in subsequent months, respondent comments for February note that business activities have been impacted.
(10 a.m. ET) U.S. existing home sales for February.
With Reuters and The Canadian Press
Terry Weber