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Canada’s main stock index opened higher on Friday, following its worst session in nearly 11 weeks, after a sobering economic outlook from the U.S. Federal Reserve rattled investor sentiment and new cases of the coronavirus picked up pace in several American states.

Shortly after the opening bell, the Toronto Stock Exchange’s S&P/TSX composite index was up 316.81 points, or 2.1%, at 15,367.73.

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U.S. stocks opened sharply higher as well, a day after their biggest one-day dive in about three months. The Dow Jones Industrial Average rose 531.25 points, or 2.11%, at the open to 25,659.42. The S&P 500 opened higher by 68.94 points, or 2.30%, at 3,071.04. The Nasdaq Composite gained 223.14 points, or 2.35%, to 9,715.87 at the opening bell.

On Thursday, the Dow, S&P and Nasdaq saw losses of more than 5 per cent each, while the TSX closed down 4.1 per cent as concerns over a resurgence in the virus gripped global markets.

“There is an argument to be made that equities were due a decent correction in light of the gains made in the past three months,” David Madden, market analyst with CMC Markets U.K,, said.

“On the other hand, economies can’t stay locked down forever so a jump in the infection rate is going to be the cost of trying to get things back to normal. Policy makers will have difficult a task ahead of them as they try to balance the health and economic risks.”

U.S. Secretary of the Treasury Steven Mnuchin said Thursday that the U.S. can’t shut down the economy again.

“I think we’ve learned that if you shut down the economy, you’re going to create more damage,” Mr. Mnuchin said during an interview on CNBC.

According to a Reuters report, COVID-19 cases in New Mexico, Utah and Arizona rose by 40 per cent for the week ended Sunday. Florida and Arkansas are other hot spots, the news agency said.

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On the corporate side, Canadian investors got another look at how the pandemic lockdown affected retailers. Roots reported first-quarter sales of $29.9-million, down from $54.4-million as the COVID-19 pandemic shuttered stores. The retailer reported a quarterly loss per share of 18 cents compared with a loss of 23 cents a share in the year-earlier quarter. On an adjusted basis, the loss in the latest quarter was 22 cents, compared with a loss of 17 cents the year before.

Elsewhere, Air Canada’s chief executive officer says the federal government should loosen travel restrictions because they are “stifling” the recovery of both the airline sector and the economy. Measures undertaken by Canada, as well as certain other governments in the face of the pandemic, are too broad and represent “the most challenging impediment” to getting planes flying again, Calin Rovinescu said Thursday in a webcast organized by trade publication Aviation Week.

Overseas, Europe’s major markets held gains into the afternoon but were off earlier lows. The pan-European STOXX 600 rose 0.66 per cent. Britain’s FTSE 100 gained 0.68 per cent even as new figures showed that Britain’s economy shrank by 20.4 per cent in April from March and 24.5 per cent from a year ago. Germany’s DAX and France’s CAC 40 were up 0.27 per cent and 1.10 per cent, respectively.

In Asia, markets finished the week’s final session lower after a weak hand off from Wall Street. Japan’s Nikkei closed down 0.75 per cent. The Shanghai Composite Index slipped 0.04 per cent. Hong Kong’s Hang Seng lost 0.73 per cent.

Commodities

Crude prices stabilized in early going after seeing early losses with demand concerns continuing to weigh on sentiment.

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The day range on Brent so far is US$37.01 to US$38.57. The range on West Texas Intermediate is US$34.38 to US$36.36.

Both benchmarks were weaker through much of the predawn period but steadied alongside equities as the North American open approached.

Both Brent and West Texas Intermediate fell about 8 per cent on Thursday as worries about a resurgence in coronavirus infections would stall the early economic recovery. Brent and WTI both now look set for their first weekly declines in seven after spiking U.S. inventory numbers earlier renewed concerns over the pace of demand as economies reopen.

Some analysts expect continued volatility as markets sort through economic and health developments.

“The market inclination to take profits and or sell on any hint of bearish headlines, particularly around secondary COVID-19 outbreaks, will remain in full force,” AxiCorp chief market strategist Stephen Innes said in a note.

Gold prices turned higher Friday as ongoing uncertainty boosts bullion’s appeal as a safe-haven holding.

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Spot gold rose 0.3 per cent to US$1,732.08 per ounce after dipping as much as 0.3 per cent earlier in the session. Gold has risen more than 2 per cent so far this week.

Currencies

The Canadian dollar firmed somewhat after the previous session’s sharp decline alongside the broader market selloff.

The day range on the loonie so far is 73.17 US cents to 73.85 US cents.

Ahead of the open, Statistics Canada said first-quarter household credit market debt as a proportion of household disposable income rose to 176.9 per cent from 175.6 per cent. That translates to $1.77 in credit market debt for every dollar of household disposable income.

On world markets, other oil-sensitive currencies also saw gains. The Norwegian crown was the biggest mover, rising by 0.6 per cent to 9.5665 against the U.S. dollar, according to Reuters.

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The Australian dollar rose 0.4 per cent to 68.81 US cents after earlier hitting a 10-day low of 67.99 US cents in the Asian session.

Elsewhere, the euro rose 0.1 per cent to US$1.1315, not far from the three-month high recorded on Wednesday.

More company news

Lululemon Athletica Inc’s first-quarter revenue and profit fell below Wall Street expectations as the yoga apparel maker’s stores were closed due to coronavirus-led lockdowns, sending shares down 6% after the bell on Thursday. Net revenue came in at US$652-million in the first quarter ended May 3, below expectations of US$688.4-million. The company reported net income of US$28.6-million, or 22 US cents per share, compared with US$96.6-million, or 74 US cents per share, a year earlier. Analysts had forecast a profit of 23 US cents per share, according to IBES data from Refinitiv. The results were released after Thursday’s close.

EU antitrust regulators have set a July 16 deadline for a decision on whether to clear French TGV high-speed train maker Alstom’s bid for Bombardier Inc’s rail division, according to a filing on the European Commission website. Alstom announced the deal in February to create the world’s No. 2 train manufacturer.

China’s Zijin Mining Group Co., Ltd will buy TSX-listed Guyana Goldfields Inc. for $1.85 a share, the companies said Friday. The value of the deal totals $323-million. Guyana Goldfields is a Canadian based gold producer focused on the exploration, development and operation of gold deposits in Guyana, South America.

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U.S. airline American Airlines Group Inc said on Friday it expects its second quarter revenue to decline 90% compared with a year earlier. The company expects to reduce its cash burn rate to about zero by the end of 2020, as demand conditions continue to improve.

Economic news

(8:30 a.m. ET) Canada’s capacity utilization for Q1.

(8:30 a.m. ET) Canada's national balance sheet accounts for Q1.

(8:30 a.m. ET) Canada’s new motor vehicle sales for March and April.

(8:30 a.m. ET) Canada’s industrial product price index and raw materials price index for May.

(8:30 a.m. ET) U.S. import prices for May.

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

With Reuters and The Canadian Press

Editor’s note: (June 12, 2020) Steven Mnuchin's title has been corrected in the online version of this article.

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