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Canada’s main stock index edged higher at the opening bell Friday following a better-than-forecast reading on jobs creation in June. On Wall Street, indexes were largely treading water as concerns over the impact of rising numbers of coronavirus infections weighs on sentiment.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 16.31 points, or 0.1 per cent, at 15,584.95.
In the U.S., the Dow Jones Industrial Average fell 15.74 points, or 0.06 per cent, at the open to 25,690.35. The S&P 500 opened higher by 0.42 points, or just 0.01 per cent, at 3,152.47. The Nasdaq Composite dropped 1.84 points, or 0.02 per cent, to 10,545.91 at the opening bell.
“The week got off to a promising start but its all been downhill from there and stock markets are on course to spend another day in the red on Friday,” OANDA senior analyst Craig Erlam said.
“The obvious exception here is the Nasdaq which continues to defy gravity thanks to the ever-growing popularity of the tech sector,” Mr. Erlam said, noting that the Nasdaq is now up nearly 60 per cent from its March lows and 10 per cent higher than its pre-pandemic peak.
Broadly speaking, he said, stock markets now appear to be going through a consolidation period in the run up to earnings season, which kicks off with big U.S. banks next week.
Meanwhile, sentiment continues to be tempered by spiking numbers of coronavirus infections in parts of the United States
Reuters reports that more than 60,500 new infections were reported across the U.S. on Thursday. That was the biggest single-day tally of cases by any country since the virus emerged in China late last year, the news agency says.
“The sharp increase in confirmed cases has led to growing concerns that a return to broad lockdowns lies ahead,” Goldman Sachs said in a note. “While lockdowns can slow down virus spread effectively, they come at very high economic cost.”
In this country, Statscan said the Canadian economy generated about 953,000 jobs last month. Economists had been expecting a number closer to 700,000. Combined with the gain seen in May, the economy has now recouped about 40 per cent of the job losses experienced during the COVID-19 pandemic.
The unemployment rate fell to 12.3 per cent from May’s record of 13.7 per cent.
Both the Bank of Canada and the federal government have indicated that the worst of the pain caused by the spread of the coronavirus is now likely over although the unemployment rate is expected to remain elevated into next year.
On the corporate side, Shaw Communications Inc. releases its latest quarterly results after the close of trading.
Overseas, major European markets edged higher after a lower start. The pan-European STOXX 600 gained 0.12 per cent. Britain’s FTSE 100 rose 0.20 per cent. Germany’s DAX and France’s CAC 40 wree up 0.24 per cent and 0.14 per cent, respectively.
In Asia, markets finished the week’s final session on a down note. The Shanghai Composite Index lost 1.95 per cent after a run of gains earlier in the week. The Hong Kong Hang Seng fell 1.84 per cent. Japan’s Nikkei closed down 1.06 per cent.
West Texas Intermediate fell back below US$40 a barrel early Friday with demand concerns continuing to weigh on crude prices as U.S. virus infections rise.
The day range on Brent so far is US$41.44 to US$42.56. The range on West Texas Intermediate is US$38.66 to US$39.81.
Brent now looks set to record a weekly decline of about 3 per cent while WTI is likely to fall by more than 4 per cent on the week.
“The $40 mark seems to be a widely accepted fair price for now, with WTI seeing resistance around $42 and support in the high 30′s,” OANDA’s Craig Erlam said.
“The fact that we’re seeing rising support may indicate that the path higher is still looking more plausible but many downside risks still remain, including second waves and a messy end to an otherwise successful coordinated [OPEC-led] production cut,” he said.
Markets remain concerned about the impact of rising coronavirus infections on the economic recovery and related crude demand. U.S. crude oil inventories rose by nearly 6 million barrels last week. Analysts had been forecasting a decline.
“With COVID-19 weekend playbooks getting dusted off again, I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” AxiCorp chief market strategist Stephen Innes said.
On Friday, the International Energy Agency raised its oil demand forecast for the year but also cautioned that the spread of COVID-19 poses a risk to that outlook.
“While the oil market has undoubtedly made progress ... the large, and in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control,” the IEA said.
In other commodities, gold prices pulled back early Friday but continued to hold near the key US$1,800-an-ounce mark.
Spot gold was down 0.4 per cent at US$1,796.03 per ounce, but was up about 1.2 per cent for the week. U.S. gold futures fell 0.1 per cent to US$1,801.10.
The Canadian dollar was relatively steady as drifting risk sentiment on global markets offset a better-than-forecast reading on hiring in June.
The day range on the Canadian dollar is 73.36 US cents to 73.66 US cents. The loonie moved closer to the upper end of that spread after Statscan reported that the economy generated 953,000 new positions in June. Economists had been expecting to see the creation of about 700,000 positions.
“June is likely to be the strongest month for rising employment as businesses begin to reopen, but we would still expect net employment gains again in July,” Citi Global Markets economist Veronica Clark said in a note.
On world markets, the U.S. dollar paused as the jump in coronavirus infections gave support to the safe-haven yen and weighed on more risk-sensitive currencies.
The yen rose by 0.4 per cent to a two-week high of 106.81 per U.S. dollar, according to Reuters. The U.S. dollar gained against most other currencies, although the strong performance of the yen meant its index was last broadly flat, the news agency said.
The Chinese yuan was down about 0.2 per cent at 7.0098 yuan per U.S. dollar, after touching a near-four-month high of 6.9808 during the previous session. The Chinese currency has gained almost 1 per cent this week.
More company news
Barrick Gold Corp said on Friday its subsidiary, Barrick (PD) Australia Pty Limited, an investor in the Porgera Mine, has given notice to Papua New Guinea (PNG) that a dispute has arisen under the bilateral investment treaty (BIT) between PNG and Australia. Barrick PD said the dispute arises out of the PNG Government’s decision not to extend the Porgera special mining lease (SML) in violation of the terms of the treaty and international law governing foreign investment.
European Union antitrust regulators have set a new deadline of July 31 to rule on Alstom’s bid for Bombardier Inc’s transport business after the French TGV high-speed train maker offered to sell assets to address competition concerns. The European Commission, which posted the new deadline on its site on Friday, will now seek feedback from rivals and customers of both companies before deciding whether to accept the package or demand more in line with its procedures.
Walt Disney Co is planning to reopen its Orlando-based Walt Disney World theme park on July 11, ending the longest shutdown of the company’s U.S. theme park division in its history.
The Globe reports that Canadian convenience store giant Alimentation Couche-Tard Inc. is hunting for a partner willing to take over a major block of gas stations in the United States as it lays the groundwork to mount a multibillion-dollar takeover offer for Marathon Petroleum Corp.‘s Speedway chain, according to a person with knowledge of the situation. Laval, Que.-based Couche-Tard, owner of the Circle K banner, is engaged with Marathon in a sales process for Speedway, and other suitors, including 7-Eleven parent Seven & I Holdings, are also in the picture, the person said. Winning Speedway could cost upward of US$15-billion, dwarfing any of the Canadian company’s previous acquisitions.
(8:30 a.m. ET) Canadian employment for June.
(8:30 a.m. ET) U.S. producer price index for June.
With Reuters and The Canadian Press