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Equities

Canada’s main stock index started higher Friday with energy stocks getting a lift from a bounce in crude prices. South of the border, markets also opened in the black to cap a volatile week.

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At 9:31 a.m., the Toronto Stock Exchange’s S&P/TSX composite index was up 86.37 points, or 0.61%, at 14,337.46.

In the U.S., the Dow Jones Industrial Average rose 112.98 points, or 0.48 per cent, at the open to 23,628.24.

The S&P 500 opened higher by 14.84 points, or 0.53 per cent, at 2,812.64. The Nasdaq Composite gained 35.32 points, or 0.42 per cent, to 8,530.08 at the opening bell.

Late Thursday, European Union leaders agreed to the need for a trillion euro emergency fund to help bounce back from the impact of the COVID-19 pandemic, but details of the plan were delayed until summer.

Concerns over the development of a COVID-19 treatment also continued to weigh. The Financial Times, citing documents inadvertently published by the World Health Organization, suggested Gilead Life Sciences Inc.'s experimental antiviral drug had failed to help patients with severe COVID-19 in a clinical trial in China. Responding to the report, Gilead said the study was “inconclusive” and had been terminated early because of low enrollment.

“This is likely to be a familiar theme in the coming weeks with markets swinging around on the success or failure of antiviral, as well as vaccine trials, as investors look for crumbs of comfort on the treatment front, amidst the incessant flow of awful economic data,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

He also said there was little surprise in the EU summit ending with no real progress on a recovery fund.

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“While some would argue that there was some progress in that German Chancellor Angela Merkel said that Germany was prepared to contribute to a fund to aid a recovery, there was no real detail on how much of any new fund was likely to be made up of loans and grants, and more importantly how big it was likely to be,” he said in an early note.

Overseas, major European markets were down in afternoon trading but off earlier lows. The pan-European STOXX 600 was down 0.12 per cent. Germany’s DAX fell 0.37 per cent. Britain’s FTSE 100 fell 0.32 per cent. France’s CAC 40 lost 0.12 per cent.

In Asia, major markets ended the session on a down note. The Shanghai Composite Index fell 1.06 per cent. Hong Kong’s Hang Seng finished down 0.61 per cent. Japan’s Nikkei lost 0.86 per cent.

Commodities

Crude prices wavered with both Brent and West Texas Intermediate on track for weekly losses.

The day range on Brent so far is US$20.50 to US$22.70. The range on WTI is US$15.64 to US$17.95. Both benchmarks appeared to be seeking direction in early trading, moving from gains to losses and back again as the session progressed.

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At this point, Brent looks set for a weekly loss of about 27 per cent while WTI is on track to decline about 14 per cent.

“I expect more demand-driven oil price moves to be the key driver of oil as global supply rapidly drops due to a combination of voluntary, forced, and compensated shut-in,” Stephen Innes, chief market strategist with AxiCorp, said.

“This view has possibly put [Friday’s] Baker Hughes rig count report on a more prominent pedestal than usual.”

Early this week, the May contract for WTI made the historic drop into negative territory as the impact of global lockdowns dramatically reduces demand for oil. OPEC and its allies are set to cut production by 9.7 million barrels a day starting next months, although some traders have suggested that move isn’t enough to shore up markets.

Kuwait’s state news agency KUNA said on Thursday the OPEC producer will begin cutting supplies to international markets without waiting for the official start of the deal.

In an interview with Bloomberg on Thursday, Treasury Secretary Steven Mnuchin also said he’s weighing the creation of a government lending program for U.S. oil companies.

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“One of the components we’re looking at is providing a lending facility for the industry,” Mr. Mnuchin told Bloomberg. “We’re looking at a lot of different options, and we have not made any conclusions.”

The Bloomberg report, citing unnamed sources, said the program would be run out of the Federal Reserve. It also said the administration is considering taking financial stakes in return for loans and that some companies could be asked to cut production.

In other commodities, gold prices slid on profit taking.

Spot gold fell 0.4 per cent to US$1,724.05 per ounce, but was up over 2.3 per cent for the week.

Currencies

The Canadian dollar held above 71 US cents as crude prices steadied after a week of high volatility.

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The day range on the loonie so far is 70.85 US cents to 71.15 US cents.

“The Canadian dollar is consolidating in a narrow range, reflecting slightly softer crude oil prices—although price action here barely registers on the chart after this week’s swings in front month futures,” Shaun Osborne, Scotiabank’s chief FX strategist said in note.

“The CAD remains a slave to flows and risk appetite to a very large extent,” he said, adding that while markets remain “somewhat reluctant to embrace risk more fully” the loonie will likely struggle to extend gains.

There were no major Canadian economic releases on the calendar on Friday.

On global exchange markets, the U.S. dollar was firmer and looked set for its best weekly showing since early April while the euro slid on disappointment over the EU relief summit.

The euro weakened broadly, falling 0.4 per cent against the U.S. dollar to a one-month low at US$1.07275 and a three-year low versus the yen at 115.55 yen.

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Against a basket of world currencies, the U.S> dollar was up 0.2 per cent at 100.72 and has gained about 1 per cent for the week.

More company news

American Express Co posted a 76-per-cent drop in first-quarter profit on Friday, as it set aside US$2.6-billion to cover potential losses stemming from the coronavirus outbreak. The company’s net income fell to US$367-million, or 41 cents per share, in the quarter ended March 31 from US$1.55-billion, or US$1.80 per share, a year earlier.

Papua New Guinea has refused an application to extend mining at Barrick Gold Corp’s Porgera gold mine, Prime Minister James Marape said on Friday. The decision, which would have extended by 20 years Barrick’s rights, was based on the recommendation of the country’s mining advisory committee, Marape said in a statement. “In the best interests of the state, especially in lieu of the environmental damages, claims and resettlements issues, the Special Mining Lease will not be renewed,” he said.

Toronto-based construction firm Aecon Group Inc. says it continues to monitor the impact from COVID-19 after withdrawing its 2020 outlook on March 30, citing a slowing or suspension of work on some projects and on bidding even though most of its contracts have been deemed essential by governments. After Thursday’s close, Aecon reported a loss of $11.4-million or 19 cents per diluted share for the period ended March 31. That compared with a loss of $9.8-million or 16 cents per share a year earlier.

Apple Inc said it has found “no evidence” a flaw in its email app for iPhones and iPads has been used against customers, and that it believes the flaw does “not pose an immediate risk to our users.” San Francisco-based cybersecurity firm ZecOps on Wednesday detailed a flaw that it said may have left more than half a billion iPhones vulnerable to hackers.

The Wall Street Journal reports that retailer JC Penney is in advanced talks for bankruptcy funding from a group of lenders. The report said the debtor-in-possession financing would keep the company’s operations funded during a court-supervised bankruptcy.

Intel Corp. shares were down 4 per cent in premarket trading after the company forecast second-quarter earnings below Wall Street expectations as it cited the cost of readying a new PC chip and said it could not make a forecast for the full year because of economic uncertainty caused by the coronavirus pandemic.

Verizon Communications Inc lost 68,000 phone subscribers who pay a monthly bill in the first quarter, as people stayed indoors due to lockdowns to halt the spread of the coronavirus. Analysts had expected it to gain 100 subscribers in the quarter ended March 31.

Economic news

U.S. durable goods orders fell 14.4 per cent with much of the decline concentrated in the volatile aircraft sector. Excluding transportation, orders were down 0.2 per cent for the month.

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

With Reuters and The Canadian Press

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