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Equities

U.S. stock futures were weaker with tech shares under pressure as shares of Nvidia Corp. sank in premarket trading after the chip designer missed third-quarter sales forecasts and disappointed with its outlook for the holiday period. The results hit semiconductor-related stocks in Asia overnight and Nasdaq futures were down by more than 1 per cent ahead of the North American open. On Bay Street, futures were slightly weaker with oil prices rising but still set for the sixth weekly decline in a row.

Overseas, European markets stabilized despite the continued Brexit turmoil. Markets in London, Paris and Frankfurt all started the week’s final session higher despite questions about British Prime Minister Theresa May’s future and concerns that the U.K. could crash out of Brexit without a divorce deal.

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“Stocks in Europe have bounced back today, but some of the major indices have given up some of the early gains. Theresa May had a disastrous day yesterday, and investors are still on edge over the political situation in the U,K.,” CMC Markets U.K. analyst David Madden said. “Politics is also in focus in Italy as Rome and Brussels are still locked in a stand-off over the budget. For the time being, Brexit will grab more attention in the media, but the Italian problem could spark another round of the euro zone debt crisis.”

Ahead of the North American open, shares of Nvidia were down more than 17 per cent. Mr. Madden noted that, while the company’s third quarter earnings per share, topped market forecasts, the stock was hit by a narrow miss on revenue and a weaker outlook. “It was the disappointing forward guidance that did the damage. The company anticipates fourth-quarter revenue to be $2.7-billion, while one company was predicting $3.4-billion,” Mr. Madden said.

Similarly, shares of Applied Materials Inc., the world’s biggest supplier of equipment used to make chips, saw its stock drop 9 per cent in premarket trading after it forecast first-quarter profit and revenue below Wall Street forecasts. Applied Materials said it expects adjusted profit of between 75 US cents and 83 US cents in the quarter. Analysts had been looking for earnings by that measure of 92 US cents. It expects sales of between US$3.56-billion and US$3.86.billion. Analysts were looking for revenue of US$3.94-billion.

In other corporate news, shares of BlackBerry Ltd. could get some attention at the open after the company said it would acquire Cylance, a California artificial intelligence and cybersecurity company, for $1.4-billion in cash. BlackBerry says the deal will help expand its QNX unit that makes software for next-generation autonomous cars. BlackBerry’s U.S.-listed shares were up slightly in premarket trading on the news.

Overseas, European markets started higher but struggled to hold the gains as trading continued. The pan-European STOXX 600 was up 0.13 per cent in morning trading. Britain’s FTSE wavered around break even, edging down 0.12 per cent while Germany’s DAX gained 0.14 per cent and France’s CAC 40 was little changed.

In Asia, markets were mixed. Chinese markets reversed early weakness to close higher as attention continues to focus on trade tensions between China and the United States. On Thursday, a spokesman for U.S. Trade Representative Robert Lighthizer denied reports that he told business executives that another round of tariffs on Chinese goods is on hold. “Ambassador Lighthizer has made no representations to industry executives that future Section 301 tariffs are on hold,” the USTR spokesperson said in a statement.

The Shanghai Composite Index finished up 0.41 per cent. Hong Kong’s Hang seng ended up 0.31 per cent. Japan’s Nikkei, however, ended down 0.57 per cent on weakness in semiconductor stocks. Shares of game maker Nintendo Co, which uses Nvidia’s Tegra processors for its Switch consoles, also fell, finishing down more than 9 per cent.

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Commodities

Crude prices were higher heading into the North American open as markets continue to look ahead to prospect of OPEC supply cuts at an early December meeting. Despite the early gains, crude prices still looked set for their sixth weekly decline. Both Brent and West Texas Intermediate were firmer with the spread on Brent sitting at US$66.64 to US$68.16. The day range on WTI is US$56.42 to US$57.66.

Brent hit an eight-month low on Tuesday and looks set to finish the week down about 4 per cent. WTI appears set for a 5-per-cent decline on the week.

“Oil market not to unexpectedly, and despite the eye-watering U.S. inventory builds this week, traders are gingerly short covering positions while respecting OPEC intervention overtones to reduce output by 1.4 million barrels per day,” OANDA analyst Stephen Innes said. “Indeed, shorts may be a bit overextended, so we could see position squaring into the weekend respecting possible more weekend headline risk from OPEC and possibly Russia who have been pushing back on possible production cuts.”

A report Thursday by the U.S. Energy Information Administration showed that oil stocks posted their biggest weekly gain in almost two years last week. Crude inventories rose 10.3 million barrels or the week. Analysts had been expecting an increase closer to 3.2 million barrels.

On Thursday, Canada’s heavy-oil benchmark - Western Canada Select - fell to a record low of US$13.46, down $2.29 from the previous day’s finish. That was the lowest closing price for WCS in Bloomberg data that goes back to 2008.

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In other commodities, gold prices hit their highest levels in a week as investors sought out safety amid the current Brexit turmoil. Spot gold was up 0.2 per cent at US$1,214.93 per ounce in early morning trading in Europe. Earlier in the session, gold hit US$1,216.79, its highest since Nov. 9. Gold prices looked set for a weekly gain of about 2 per cent. U.S. gold futures were little changed.

“Ahead of the U.S open, gold prices have rallied a tad overnight, as investors sought safe haven assets amid fears of a chaotic departure for Britain from the E.U.,” OANDA analyst Dean Popplewell said in an early note.

Silver prices were also higher and are up about 1 per cent on the week so far.

Currencies and bonds

The Canadian dollar was higher against its U.S. counterpart, breaching 76 US cents overnight. The range for the day so far is 75.86 US cents to 76.05 US cents.

RBC chief currency strategist said the markets had a “risk off” tone overnight “but movements have been small.”

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“There have been no new developments on Brexit after PM [Theresa] May repeated that she is ‘determined to see this through’ in her press conference yesterday evening,” Mr. Cole said. " Environment Secretary [Michael] Gove is said to be considering his position, though we doubt that his resignation would add greatly to pressure on [the pound] if it came today."

The pound managed to recoup some of the previous day’s losses as Ms. May held to her Brexit plan. On Thursday, the pound saw its worst day against the euro since 2016. On Friday, the pound rallied about half a percent in early going.

For the loonie, the day’s main economic release is the release of September factory sales by Statistics Canada. The agency said sales rose 0.2 per cent in September after falling 0.5 per cent in August. Sales were up in eight of 21 industries. The latest reading came in just ahead of the 0.1-per-cent increase that most economists had been forecasting. The loonie pushed back above 76 US cents in the wake of the report..

The U.S. dollar index, meanwhile was down slightly at 96.81, although that remains close to the 16-month high seen at the start of the week of 97.69. The dollar index weighs the greenback against a basket of world currencies.

In bonds, the yield on the U.S. 10-year note was lower at 3.116 per cent. The yield on the 30-year note was also lower at 3.364 per cent.

Stocks set to see action

Viacom Inc, the owner of MTV, Comedy Central and Nickelodeon, beat Wall Street estimates for profit and revenue on Friday, as its Paramount Pictures division gained from the success of Mission: Impossible - Fallout. Viacom said worldwide affiliate revenue was $1.19 billion, beating estimates of $1.17 billion, according to data from Refinitiv. Total consolidated revenue in the fourth quarter ended Sept. 30 also rose 5 per cent to US$3.49-billion from US$3.32-billion a year earlier. Viacom shares were up almost 4 per cent in premarket trading.

Facebook Inc Chairman and Chief Executive Mark Zuckerberg on Thursday defended his response to Russian election meddling on the world’s largest social media network and issued a new plan aimed at stifling misbehavior while maintaining a vibrant hub for online speech. His comments in a conference call with journalists and in a Facebook post followed a New York Times report on Wednesday that contended that he and other executives tried to deflect criticism internally and in Congress about Russian propaganda spreading through Facebook during the last three years. Many U.S. lawmakers said after the report that the government must regulate or investigate Facebook, which has become a daily source of information for more than 2 billion people globally. Mr. Zuckerberg said on Thursday that he has acted swiftly to combat the Russian challenge and supports regulation that would encourage companies to reduce the prevalence of “harmful content.”

T-Mobile US Inc’s Chief Financial Officer said there is a possibility that its US$26-billion acquisition deal of Sprint Corp will close as early as the first quarter of 2019. T-Mobile, majority owned by Deutsche Telekom AG, agreed in April to buy wireless carrier Sprint and the deal was initially expected to close in the first half of 2019. The Federal Communications Commission (FCC) and the Department of Justice are currently scrutinizing the deal.

AstraZeneca said on Friday its immunotherapy drug Imfinzi did not meet the main goal of improving survival rates for patients with the most advanced form of lung cancer. Shares were down more than 1 per cent in London. The study, known as “Mystic,” was among the industry’s most anticipated clinical experiments and was viewed as central to proving the value of the group’s new drug pipeline and its future as an independent company, after it spurned a US$118-billion takeover attempt by Pfizer in 2014. The trial looked at stage IV patients – those with the most advanced form of cancer.

Quebec’s securities regulator says it is probing stock transactions by Bombardier Inc.'s executives. The Autorité des marchés financiers (AMF) made the announcement late Thursday, saying it is reviewing the transactions made under Bombardier’s implementation last August of a special share sale plan for senior executives, as well as various announcements made by the company since then. The executives include president and chief executive officer Alain Bellemare; chief financial officer John Di Bert; and divisional presidents David Coleal, Fred Cromer and Laurent Troger.

More reading:

Friday’s small-cap stocks to watch

Economic news

Statistics Canada said factory sales rose 0.2 per cent in September to $58.5-billion following a 0.5-per-cent decrease in August. Sales were higher in eight of 21 industries.

Foreign investment in Canadian securities hit $7.7-billion in September, mainly acquisitions of money market instruments, Statscan said. Meanwhile, Canadian investment in foreign securities resumed to reach $10.6-billion, led by purchases of non-US instruments, according to the agency.

U.S. manufacturing output increased for a fifth straight month in October. The Federal Reserve said on Friday manufacturing production rose 0.3 per cent last month. September’s figure was revised up to an increase of 0.3 per cent instead of the 0.2-per-cent gain that was previously reported.

With Reuters and The Canadian Press

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