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Equities

Major indexes in both Canada and the United States spiked early Friday as both countries got surprisingly positive readings on hiring last month.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 298.59 points, or 1.92 per cent, at 15,826.46.

In the U.S., the Dow Jones Industrial Average rose 554.98 points, or 2.11 per cent, at the open to 26,836.80. The S&P 500 opened higher by 51.49 points, or 1.65 per cent, at 3,163.84, while the Nasdaq Composite gained 87.73 points, or 0.91 per cent, to 9,703.54 at the opening bell.

The U.S. Labor Department said early Friday that nonfarm payrolls rose by 2.509 million jobs in May after a record drop of more than 20 million in April. The unemployment rate fell to 13.3 per cent from 14.7 per cent. Most forecasts had pegged the jobless rate as climbing to nearly 20 per cent in the latest report.

“This nonfarm payroll report was supposed to provide a baseline on how bad things got and not that the recovery was already taking hold in May,” OANDA senior analyst Edward Moya said.

“Now financial markets can move forward and it will be hard to build a case against seeing U.S. stocks return to record high territory.”

On this side of the border, Statscan said the economy created 290,000 jobs versus expectations for a loss of about 500,000 positions. The unemployment rate in this country rose to 13.7 per cent in May.

On the corporate side, Bombardier Inc. said it would cut its aviation unit workforce by about 2,500 employees, as the COVID-19 pandemic hits sales.

“Now with business jet deliveries, industry-wide, forecasted to be down approximately 30% year-over-year due to the pandemic, Bombardier must adjust its operations and workforce to ensure that it emerges from the current crisis on solid footing,” the company said in a statement.

Overseas, major European markets built on early gains in the wake of the strong U.S. employment report.

The pan-European STOXX 600 rose 1.93 per cent by afternoon. Britain’s FTSE 100 gained 1.72 per cent. Germany’s DAX rose 2.56 per cent. France’s CAC 40 advanced 3.10 per cent.

In Asia, Japan’s Nikkei ended up 0.74 per cent. The Shanghai Composite Index gained 0.4 per cent. Hong Kong’s Hang Seng gained 1.66 per cent.

Commodities

Crude prices advanced after reports suggested OPEC and its allies would meet on the weekend to weigh extending current production cuts.

The day range on Brent is US$39.72 to US$41.02. The range on West Texas Intermediate is US$37.05 to US$38.11.

Reuters reported early Friday that the OPEC+ group would meet Saturday by video conference to discuss extending current cuts of 9.7 million barrels a day and approve a new approach to force other countries comply with the existing caps.

The Reuters report, citing two OPEC+ sources, said both Russia and Saudi Arabia had agreed to back extending current cuts to the end of July, although Riyadh was also pushing to extend them to the end of August.

“Happy oil markets make for buoyant currency markets as, indeed, the impact of higher oil prices is leaving a profound effect on commodity-producing currencies,” Stephen Innes, chief market strategist with AxiCorp, said.

“The market lean suggests that OPEC+ will extend the existing first-stage agreement for output cuts, which should be bullish for commodity currencies,” he said.

In other commodities, gold prices were lower and looked set for a third weekly decline.

Spot gold was down 0.2 per cent at US$1,708.07 per ounce, while U.S. gold futures slid 0.9 per cent to US$1,711.80. Gold is down about 1 per cent so far this week.

Currencies

The Canadian dollar was trading above 74 US cents after Statscan said the Canadian economy created a surprise 290,000 jobs last month, defying expectations.

The day range on the loonie is 74 US cents to 74.61 US cents. The loonie spiked to the top end of that spread immediately after the latest employment figures were released but gave back some of the gains as markets worked through the details.

On Thursday, Bank of Canada Deputy Governor Toni Gravelle delivered the central bank’s latest economic update. TD senior economist Brian DePratto said Mr. Gravelle painted a “relatively optimistic figure" and suggested that the economic impact of the COVID-19 crisis had peaked.

“The Bank also sees room for hope in labour market, noting that 43 per cent of those laid off between February and April expect to return to that job, a much higher share than the 15 per cent who said the same during the global financial crisis,” Mr. DePratto said.

On world currency markets, the euro reached a three-month high against the U.S. dollar and looked set for a third week of gains after the ECB expanded its stimulus program.

The euro rose to US$1.1380 against a weakening U.S. dollar, its highest level since March 10, and was on course for a weekly jump of 2.5 per cent and a ninth straight day of gains, according to Reuters.

Risk sensitive currencies also saw gains.

The Australian dollar, often seen as a risk proxy in the currency market, rose 0.8 per cent to 69.99 US cents, briefly moving above $0.70 for the first time since early January.

“You’ve got the creeping optimism of the global economy being past the worst and thinking that things are going to be up from here,” Commonwealth Bank of Australia analyst Joe Capurso told Reuters.

More company news

Broadcom Inc on Thursday forecast current-quarter revenue with a midpoint slightly below analysts’ estimates, in part caused by a delay at a “large North American mobile phone” customer that analysts believe is Apple Inc. The company forecast fiscal third-quarter revenue of about US$5.75-billion, plus or minus US$150-million. Analysts on average were expecting US$5.79-billion, according to IBES data from Refinitiv.

Tesla Inc Chief Executive Elon Musk called for Amazon.com Inc to be broken up. “Time to break up Amazon. Monopolies are wrong!” Musk tweeted two days after saying he was taking a break from the social networking service. Musk does not have legal authority to break up Amazon. Musk’s tweets were prompted by an author who said on Twitter his book on the novel coronavirus pandemic was pulled from Amazon.

Slack Technologies Inc revenue grew 50 per cent in the first quarter, compared with 49 per cent in the fourth quarter. Slack also withdrew its 2021 billing outlook citing uncertainty driven by the COVID-19 pandemic, and said it had seen sales from some large customers slow down in the worst-affected industries, such as travel, hospitality and ride-sharing.

Gap Inc reported a first-quarter loss of US$932-million as the apparel retailer wrote down the value of some assets due to coronavirus-driven store closures. San Francisco-based Gap, which operates nearly 2,800 stores in North America, said 55% company-operated stores in North American were now open. Chief Executive Officer Sonia Syngal said sales continued to reflect “material declines in May as a result of closures” but added that online sales were improving. The results were released after the close on Thursday.

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Economic news

(8:30 a.m.) Canada employment report for May.

(8:30 a.m.) U.S. nonfarm payrolls for May.

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