The Nasdaq rose at the open on Friday, shaking off a two-day decline in heavyweight technology stocks, while worries about rising coronavirus cases and a patchy economic recovery weighed on the S&P 500 and Dow.
The Nasdaq Composite gained 63.17 points, or 0.58%, to 10,973.45 at the opening bell. The Dow Jones Industrial Average fell 37.11 points, or 0.13%, at the open to 27,864.87, while the S&P 500 opened higher by just 0.37 points at 3,357.38.
Canada’s S&P/TSX Composite Index was modestly higher at the open, despite weakness in the energy sector.
While moves in the indexes are modest, that doesn’t necessarily mean a dull trading session is ahead for North American stocks. Today is a so-called quadruple witching day, where options and futures on equities are set to expire every quarter. As positions roll over or expire, volumes are likely to surge on Wall Street - perhaps most notably at today’s close.
The price volatility that comes with this will be particularly interesting, given options buying from retail investors has been attributed to a lot of the runup in technology names this year. According to Bloomberg, open interest on bullish contracts linked to the Nasdaq and big tech stocks remains elevated, despite a more than 10 per cent drop this month.
The tech sector will also have to absorb a report from Reuters that the U.S. Commerce Department plans to issue an order Friday that will bar people in the United States from downloading Chinese-owned messaging app WeChat and video-sharing app TikTok starting on September 20.
Three officials told Reuters that the ban on new U.S. downloads of TikTok could be still rescinded by President Donald Trump before it takes effect late Sunday as TikTok owner ByteDance races to clinch an agreement over the fate of its U.S. operations. ByteDance has been talks with Oracle Corp and others to create a new company, TikTok Global, that aims to address U.S. concerns about the security of its users' data. ByteDance still needs Trump’s approval to stave off a U.S. ban.
Reaction has been fairly subdued so far to the news; Oracle is down 0.2%, Snap up 0.1% and Facebook up 1.1%.
In economic news this morning, Canadian retail sales in July rose by 0.6%, led by higher sales at motor vehicle and parts dealers and gasoline stations. In a preview for August, Statistics Canada said sales that month probably gained 1.1% on the month. Analysts in a Reuters poll had forecast retail sales would increase by 1.0% from June.
“Canadian economic indicators have, for the most part, reflected a faster-than-anticipated post-lockdown economic rebound but as pent-up demand eases it will be important to see whether the recent gains in household spending are sustainable. While the recent increase in COVID-19 cases nationwide is worth highlighting, it is still too early to judge how/if it has impacted consumer spending,” Scotiabank forex analysts said in a note today.
Overall, there’s still a bearish tone in global markets amid investors' concerns about a resurgence in coronavirus cases and lingering disappointment that central banks - most notably the U.S. Federal Reserve - merely affirmed their monetary support this week without promising new stimulus.
In choppy trade, the pan-European STOXX 600 was flat, clawing back from earlier losses, but the FTSE was 0.2% lower as Britain announced restrictions for more areas of the country to tackle rising coronavirus rates.
The mood remained cautious as France confirmed 10,593 new coronavirus infections on Thursday, its highest single-day count since the pandemic began, and Britain saw a surge in cases.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5%. Stocks in China made their strongest gains in three weeks, with the CSI300 index adding 2.2%, a move led by financial companies.
The U.S.-heavy MSCI world shares index was up 0.2%, heading for its first weekly gain in three weeks.
Oil prices have been trading on both sides of unchanged this morning after Libyan commander Khalifa Haftar said a blockade on Libyan oil exports, which has been in place since January, would be lifted.
Copper touched its highest in more than two years on Friday as speculators extended their buying spree on a recovery in top metals consumer China while the U.S. dollar weakened.
Benchmark copper on the London Metal Exchange hit $6,850 a tonne, its highest since June 2018.
Copper has surged by 55% since hitting 45-month lows in March.
“It’s just phenomenal, the strong market we’re seeing right now. It’s really the China story and also about the overall momentum that has come into the commodities space,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“As long as we stay above the key uptrend, which today is at $6,700, then there’s no reason for the speculators, who have accumulated quite a sizeable long position in copper, to make any adjustments.”
Data this week showed that China’s industrial output accelerated the most for eight months in August while the OECD upgraded its economic growth outlook for China.
Currencies and bonds
The Canadian dollar is close to unchanged this morning and trading in a familiar range.
Other corporate news
Kinross Gold Corp said it’s paying its first dividend in seven years as it provided guidance to 2023. Shares are up more than 4% in early trading.
Tesla Inc rose 2.1% in premarket trading after two analysts raised their price targets on the electric carmaker’s shares ahead of its highly anticipated “Battery Day” event next week.
Canadian retail sales in July rose by 0.6%, led by higher sales at motor vehicle and parts dealers and gasoline stations, Statistics Canada said on Friday, adding that August sales probably gained 1.1% on the month. Analysts in a Reuters poll had forecast retail sales would increase by 1.0% from June.
Statistics Canada says wholesale sales rose 4.3 per cent in July to a record high of $65.0 billion, boosted by the motor vehicle and motor vehicle parts and accessories subsector. Economists had expected an increase of 3.5 per cent in July, according to financial markets data firm Refinitiv.
Canadian home prices rose in August, led by the Victoria and Ottawa-Gatineau markets, with the pace of the advance just shy of the average gain for the month as the housing market showed signs of picking up, data showed on Friday. The Teranet-National Bank Composite House Price Index, which tracks data collected from public land registries to measure changes for repeat sales of single-family homes, showed prices were up 0.6% in August from July. The average gain for the month over the past 22 years was 0.7%.
The U.S. current account deficit soared to its highest level in nearly 12 years in the second quarter as the COVID-19 pandemic weighed on the exports of goods and services. The Commerce Department said on Friday the current account deficit, which measures the flow of goods, services and investments into and out of the country, jumped 52.9% to $170.5 billion last quarter. That was the highest level since the third quarter of 2008. Data for the first quarter was revised higher to show a $111.5 billion shortfall, instead of $104.2 billion as previously reported. Economists polled by Reuters had forecast the current account gap increasing to $157.9 billion in the April-June quarter
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for September.
(10 a.m. ET) U.S. leading indicator for August.
With files from Reuters