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Equities

Canada’s main stock index opened lower Friday as warnings of possible retaliatory tariffs by the U.S. against China weighed on global markets. Wall Street also started deep in the red with tech shares falling in the wake of the latest results from Apple and Amazon.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 237.37 points, or 1.61%, at 14,543.37.

In the U.S., the Dow Jones Industrial Average fell 224.94 points, or 0.92 per cent, at the open to 24,120.78.

The S&P 500 opened lower by 43.34 points, or 1.49 per cent, at 2,869.09. The Nasdaq Composite dropped 208.26 points, or 2.34 per cent, to 8,681.29 at the opening bell.

On Thursday, U.S. President Donald Trump said the recent U.S.-China trade deal was now of secondary importance to the pandemic and warned of the possibility of new tariffs as part of retaliatory measures over the outbreak. Two U.S. officials told Reuters that a range of options against China were under discussion, but cautioned that efforts were in the early stages. Recommendations have not yet reached the level of Mr. Trump’s top national security team or the president, one official told Reuters.

“Some people might think this is just a ploy by Mr Trump to make himself look good ahead of the Presidential election, but either way it has prompted traders to trim their exposure to stocks,” CMC Markets analyst David Madden said.

In stocks, shares of Apple Inc. were down 0.5 per cent in early trading after the tech giant reported sales and profit that topped Wall Street forecasts, but also said it was was difficult to forecast overall results for the current quarter because of uncertainty brought on by the COVID-19 pandemic.

Shares of Amazon.com Inc. were down nearly more than 6 per cent after the online retailer said it would spend about US$4-billion in the second quarter related to the COVID-19 pandemic.

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“Under normal circumstances, in this coming Q2, we’d expect to make some $4-billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4-billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe,” Chief Executive Officer Jeff Bezos said in a statement.

In this country, earnings are due from TC Energy, Imperial Oil and Tim Hortons-parent Restaurant Brands International.

Elsewhere, Finance Minister Bill Morneau announced at a morning news conference that Tiff Macklem, dean of the business school at the University of Toronto, as the new governor of the Bank of Canada. Mr. Macklem is a former senior deputy governor of the bank.

In Asia, Japan’s Nikkei closed down 2.84 per cent. Markets in China and Hong Kong were closed for public holidays.

Commodities

Crude prices recovered from early losses as production cuts by OPEC and its allies take effect.

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The day range on Brent so far is US$25.85 to US$27.88. The range on West Texas Intermediate is US$18.50 to US$20.48. Both benchmarks had fallen below break even in the predawn period but later rebounded as the North American open approached.

On Thursday, Brent rose 12 per cent while WTI gained 25 per cent.

OPEC-led cuts of 9.7 million barrels a day go into effect on Friday as major producers look to shore up a market hit by oversupply and collapsing demand. Prices have been bolstered in recent days as some economies now move toward reopening.

“The fact that economies are reopening and that OPEC production cuts are getting enforced today is positive for oil markets and puts the supply and demand curve in a much more favorable position than it was a week ago,” AxiCorp chief market strategist Stephen Innes said.

In other commodities, gold prices fell after seeing early gains and looked set for their worst weekly showing in more than a month.

Spot gold fell 0.6 per cent to US$1,670.88 per ounce. U.S. gold futures fell 1 per cent to US$1,677.50.

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Gold was down about 3.3 per cent for the week. That’s the biggest weekly decline since the middle of March.

“Comments about easing restrictions in a number of countries and some encouraging news about the drug Remdesivir for treating the coronavirus has led to increased optimism, and lowered demand for gold,” National Australia Bank economist John Sharma said.

Currencies

The Canadian dollar fell early Friday as concerns about U.S.-China relations and big-tech earnings hit risk sentiment.

At last check, the loonie was trading near the lower end of the day range of 71.21 US cents to 71.79 US cents.

“Two factors are weighing on risk sentiment,” RBC chief currency analyst Adam Cole said.

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“Firstly, disappointing earnings announcements/trading updates from Apple and Amazon after the close, with the latter warning of a possible Q2 loss. Secondly, an increase in tension between the U.S. and China and hints at possible additional U.S. tariffs.”

On Thursday, the loonie had already been losing steam, sideswiped by falling equities and a Statistics Canada report showing economic growth had stalled in the month ahead of the coronavirus lockdown.

On global markets, the U.S. dollar was down slightly against the Japanese yen trading at 107.07 yen.

The euro stabilized against the U.S. dollar on Friday after hitting a two-week high a day earlier. The euro was last up 0.1 per cent at US$1.0969.

Britain’s pound gave up some of the previous session’s gains, trading down 0.4 per cent against both the U.S. dollar and the euro, at US$1.2550 and 87.31 pence respectively.

More company news

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Restaurant Brands International Inc said comparable sales at its Popeyes fast-food chain surged 26.2%, surpassing Wall Street expectations, powered by demand for its popular chicken sandwiches. Still, the company’s quarterly total revenue fell 3% to $1.23-billion for the first quarter ended March 31, as stay-at-home orders due to the COVID-19 pandemic dented sales of breakfast and coffee at Tim Hortons chains, where comparable sales fell 10.3%.

Imperial Oil Ltd posted a first-quarter loss, recording a $301-million non-cash charge as crude prices plunged because of excess supply and a drop in demand due to the COVID-19 pandemic. Imperial posted a loss of $188-million, or 25 cents per share, for the first-quarter ended March 31, compared to a profit of $293-million, or 38 cents per share, last year.

Keystone pipeline operator TC Energy Corp reported a 15-per-cent rise in first-quarter profit, helped by higher contribution from its U.S. natural gas pipelines. The Calgary, Alberta-based company’s net income attributable to common shares rose to $1.15-billion, or $1.22 per share, in the three months ended March 31, from $1-billion, or $1.09 per share, a year earlier.

Barrick Gold Corp said on Friday it welcomed a court ruling ordering the Papua New Guinea (PNG) government to negotiate over a lease extension for the Porgera gold mine. PNG Prime Minister James Marape said last week that the country would not grant the mine a 20-year operating extension due to environmental damage and social unrest.

Honeywell International Inc became the latest aerospace supplier to withdraw its full-year outlook, as it faces weak demand due to the COVID-19 pandemic that has battered businesses globally. Net income attributable to Honeywell rose to US$1.58-billion, or US$2.21 per share, in the first quarter ended March 31, from US$1.42-billion, or US$1.92 per share, a year earlier.

Economic news

(9:30 a.m. ET) Canada's Markit manufacturing PMI for April.

(9:45 a.m. ET) U.S. Markit manufacturing PMI for April.

(10 a.m. ET) U.S. ISM Index for April.

(10 a.m. ET) U.S. construction spending for March. Estimate is a decline of 3.6 per cent from February.

With Reuters and The Canadian Press

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