Canada’s main stock index was muted at the start of trading Friday with investor concern over rising coronavirus infections in parts of the U.S. and other regions tempering global sentiment.
U.S. markets were closed ahead of the July 4 holiday.
At 9:33 a.m. EDT, the Toronto Stock Exchange’s S&P/TSX composite index was down 9.92 points, or 0.06 per cent, at 15,612.48.
A Reuters report on Thursday said that the U.S. reported 55,000 new cases of coronavirus infection on Thursday, a daily record. Those numbers came on the same day as the U.S. Labor Department said the U.S. economy added a record 4.8 million jobs last month as states began reopening their economies.
Analysts, however, also cautioned that hiring numbers could suffer in months to come as some states pause reopening plans to combat the latest surge in infections. As well, weekly jobless claims rose by a bigger-than-forecast 1.4 million last week.
“Now that the dust has settled in regards to the 4.8 million jobs that were added in the U.S. last month, dealers might reflect on the fact that the continuing [unemployment] claims reading actually ticked up from 19.23 million to 19.29 million – which is probably as a result of certain states reversing the easing of their lockdowns,” David Madden, market analyst with CMC Markets U.K., said.
“The infection rate in the U.S. and the pausing of the reopening of states is still a factor for traders to consider.”
Global sentiment drew some support early Friday from a private survey that showed China’s services sector expanded at the fastest pace in more than a decade in June as consumer demand rose alongside easing lockdown measures.
A purchasing managers survey out of Britain also showed that the historic slump across businesses had levelled off last month. The IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) rose to 47.1 from 29.0 in May, slightly higher than a preliminary reading of 47.0 but still below the 50 threshold for growth.
Overseas, major European markets saw early losses accelerate as the session progressed. The pan-European STOXX 600 was down 0.75 per cent by afternoon.
Britain’s FTSE 100 slid 1.42 per cent. Germany’s DAX lost 0.64 per cent and France’s CAC 40 slipped 1 per cent.
In Asia, the Shanghai Composite Index jumped 2 per cent, fuelled by the positive reading on growth in China’s services sector. Japan’s Nikkei gained 0.72 per cent and Hong Kong’s Hang Seng rose 0.99 per cent.
Crude prices gave back some of the previous session’s gains in early going as caution over rising cases of virus infection in the U.S. tempered some of the recent optimism over reopening global economies.
The day range on Brent so far is US$42.50 to US$42.99. The range on West Texas Intermediate is US$40.02 to US$40.50.
Both benchmarks rose more than 2 per cent on Thursday, helped by a strong reading on hiring in June in the U.S. economy. Brent is on track for a weekly gain of roughly 5 per cent.
“Oil prices traded very steady overnight; however, demand concerns continue to linger amid a rise in gasoline stockpiles as the number of confirmed coronavirus cases in the U.S. climbed to an all-time high of more than 50,000 on Thursday,” AxiCorp chief market strategist Stephen Innes said.
“And, as significantly, the infection curve rose in 40 out of 50 states in a reversal that has mostly spared only the Northeast. Indeed, faltering re-opening of U.S. States as COVID-19 cases rise remains the primary thorn in the oil bulls’ side.”
He said the fact that the densely populated southern U.S. states have been hard hit by the virus is particularly worrisome for crude prices because residents of those regions are among the biggest consumers in the U.S. for gasoline.
“With the latest state government health advisory imploring Sun Belt citizens to restrict movements coupled with the re-imposing of localized lockdowns, there is a detectable level of uncertainty in the oil market heading into what is traditionally one of the busiest driving weekend of the year, the July 4th celebration weekend,” Mr. Innes said.
In other commodities, gold prices were little changed, trading in a narrow range.
Spot gold was mostly unchanged at US$1,775.35 per ounce. U.S. markets are closed on Friday ahead of Independence Day on July 4.
U.S. gold futures eased 0.3 per cent to US$1,785.
The Canadian dollar was little changed as broader currency markets continue to track risk sentiment.
The day range on the loonie is 73.66 US cents to 73.78 US cents.
There were no major Canadian releases on Friday’s calendar.
“We still rather think the Canadian dollar looks a little undervalued, given the generally soft U.S. dollar tone, positive risk assets and crude oil prices that have rallied and held around the US$40/bbl level but slow summer markets may be holding the CAD back somewhat,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“We expect the CAD to remain well supported on modest softness at least for now.”
Against a basket of currencies, the U.S. dollar rose slightly in early London trading, up less than 0.1 per cent, according to Reuters. The U.S. dollar index is on track for its biggest weekly decline since the first week of June.
“In a week characterized by dropping FX volatility, the [U.S.] dollar looks to be re-establishing a gentle bear-trend as equities keep showing complacency to grim contagion news,” wrote ING strategists in a note to clients.
“Such complacency still indicates the short-term outlook for risk assets is not lacking hurdles, but there is still a material chance we have seen the peak in the [U.S.] dollar,” they added.
Riskier currencies strengthened, with the New Zealand dollar rising 0.3 per cent to 65.20 US cents. The Australian dollar was up 0.1 per cent at 69.30 US cents.
The euro was down slightly against the U.S. dollar, at 1.1226 .
euro was slightly lower against the U.S. dollar, at 1.1226.
More company news
Cannabis company Organigram Holdings Inc. said it has reduced its workforce by about 25 per cent. The decision includes about 220 employees including a small number who are not on temporary layoff. The company also said it expects to report a decline in net revenue in the fiscal third quarter compared with the fiscal second quarter.
Carnival Corp unit Costa Cruises on Friday extended its pause on operations until August 15 and cancelled all cruises in Northern Europe for the rest of the 2020 summer season. “The decision is linked to the uncertainty on the gradual reopening of ports to cruise ships and the restrictions that may still be in place for the movements of people due to the COVID-19 global pandemic,” the company said.
The European Commission said on Friday it had given conditional approval for the use of COVID-19 antiviral remdesivir following an accelerated review process. The EU executive said the drug, produced by Gilead Sciences Inc, was the first medicine authorized in the European Union for treating COVID-19 following a “rolling review” begun by the European Medicines Agency at the end of April.
U.S. markets closed
Japan, China and Euro zone services and composite PMI
With Reuters and The Canadian Press
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