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Equities

Canada’s main stock index was treading water early Friday as with optimism over a potential COVID-19 vaccine offsetting rising numbers of coronavirus infections in some regions. South of the border, major indexes were positive in morning trading.

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At 9:39 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 0.01 points at 16,501.02 and was set to edge lower for the week.

On Wall Street, the Dow Jones Industrial Average rose 76.52 points, or 0.27%, at the open to 28,570.72.

The S&P 500 opened higher by 10.16 points, or 0.29%, at 3,493.50, while the Nasdaq Composite gained 47.96 points, or 0.41%, to 11,761.83 at the opening bell.

“There’s a significant amount of uncertainty for markets in the coming weeks which could pose a downside risk,” OANDA senior analyst Craig Erlam said.

“Under the circumstances, they’re doing very well. But you have to wonder how much investors can stomach. There seems to be an assumption that stimulus will be agreed, a COVID vaccine will be successful soon and the election won’t be as disruptive as it could be.”

Sentiment got a boost early Friday after Pfizer Inc said it could apply for U.S. emergency use of its COVID-19 vaccine candidate as soon as a safety milestone is achieved in the third week of November.

The gains, however, were tempered by continued uncertainty over a fresh relief package in the United States and increased restrictions in cities like London and Paris to offset the spread of the virus.

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On Thursday, U.S. President Donald Trump indicated he was willing to increase the size of a fiscal stimulus package to win support of Republicans and Democrats. The offer helped Wall Street narrow its losses late in the session Thursday and came after Treasury Secretary Steven Mnuchin sounded a note of doubt about whether a new package could be reached before the November election.

Ahead of the start of trading, U.S. investors also got a stronger-than-expected on retail sales in September. The U.S. Commerce Department said sales rose 1.9 per cent for the month. Economists had been expecting a more modest increase of 0.8 per cent.

In this country, Statistics Canada said factory sales fell 2 per cent in August after three months of strong gains. The biggest declines were in the transportation equipment and plastic and rubber industries. Excluding transportation, sales rose 1.1 per cent.

On the corporate side, Air Canada said CEO Calin Rovinescu will retire early next year after leading the country’s largest airline for almost 12 years. Deputy CEO and chief financial officer Michael Rousseau will take over as chief executive.

In Europe, markets rebounded in afternoon trading with the pan-European STOXX 600 rising 0.98 per cent. Britain’s FTSE 100 advanced 1.35 per cent. Germany’s DAX gained 1.15 per cent and France’s CAC 40 was up 1.66 per cent. The gains came after steep losses during Thursday’s session.

In Asia, markets were mixed following Wall Street’s weak hand off. Japan’s Nikkei closed down 0.41 per cent. Hong Kong’s Hang Seng advanced 0.94 per cent.

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Commodities

Crude prices were lower in early going, reflecting uncertainty over demand as coronavirus restrictions are implemented and the impact of a higher U.S. dollar.

The day range on Brent is US$42.58 to US$43.21. The range on West Texas Intermediate is US$40.40 to US$41.05.

Both benchmarks look set for a flat week.

“The fall in oil mid-morning Asia is being chalked up to a decline in U.S. oil exports and the omnipresent escalating coronavirus restrictions, which have cast a pall over the large draw in U.S. crude inventories,” Axi’s Stephen Innes said in a note.

“In a week dominated by virus headlines, global oil benchmark prices remained firmly anchored around the US$40/bbl price point even as COVID-19 cases climbed again in the U.S. and Europe ahead of what public officials have warned could be a winter of discontent.”

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On Thursday, the U.S. Energy Information Administration reported that an increase in U.S. petroleum demand last week helped cut crude inventories. The government agency also said U.S. distillate inventories fell by the most since 2003 as Hurricane Delta hit production.

A higher U.S. dollar also added pressure to crude prices on Friday with the greenback headed to its best weekly performance in a month on uncertainty over rising infections and U.S. stimulus plans.

Meanwhile, a technical committee of the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers, a group know as OPEC+, ended their meeting on Thursday expressing concerns about rising oil supply as social restrictions to curb the spread of COVID-19 limit fuel usage, according to a Reuters report.

There is an OPEC+ meeting scheduled for Nov. 30 to Dec. 1 to set policy.

In other commodities, gold prices slid and looked headed for the first weekly drop in three.

Spot gold fell 0.2 per cent to US$1,903.24 per ounce, losing 1.4 per cent so far this week. U.S. gold futures dipped 0.1 per cent to US$1,907.50.

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“There’s some further upside for the [U.S.] dollar and that’s been a major headwind for gold, in addition to the ongoing (U.S.) stimulus negotiations which have yielded no progress,” Edward Moya, senior market analyst at OANDA, said.

Currencies

The Canadian dollar was modestly higher as its U.S. counterpart paused on global markets but still looked set for its best weekly gain in a month.

The day range on the loonie so far is 75.54 US cents to 75.73 US cents.

“Crude prices are modestly lower and risk sentiment is more neutral than anything, judging by intraday trends in stocks, which perhaps leaves the CAD still somewhat vulnerable to a reversal of last week’s gains against the USD,” Shaun Osborne, chief FX strategist with Scotiabank, said.

" We think risk sentiment will remain the primary influence on the CAD for now."

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He also noted that the Bank of Canada announced Thursday that it was scaling back or halting some of its emergency liquidity programs.

“The move reflects improving functioning and conditions in funding markets that were under stress during the initial phase of the pandemic crisis but no longer need central bank support (though these programs could be restarted if conditions deteriorate again),” Mr. Osborne said.

On global markets, the U.S. dollar index, which weighs that currency against a group of world counterparts, was down 0.1 per cent in European trading. The U.S. dollar looks set for a weekly gain of about 0.7 per cent, according to figures from Reuters.

On a monthly basis, the U.S. dollar index is up 0.7 per cent, its biggest rise since end-September.

“The fight against corona is not a sprint but a marathon and that is becoming increasingly clear on the FX market too,” said Esther Reichelt, FX analyst at Commerzbank, in a note.

“The winners will be all those economies and their respective currencies that do best at overcoming the economic challenges posed by the pandemic...Until then, the FX market will be dominated by risk considerations.”

More company news

Papua New Guinea Prime Minister James Marape said that a joint venture of Barrick Gold Corp and China’s Zijin Mining was set to remain operator of the Porgera gold mine following talks in Port Moresby. In April, Marape had refused to extend the expired mining lease of operator Barrick Niugini Ltd (BNL), citing environmental and social problems.

Carmaker Daimler posted forecast-beating third-quarter results, citing a faster than expected market recovery and strong business in September. Third-quarter earnings before interest and tax reached 3.07 billion euros (US$3.59-billion), Daimler said, beating the 2.14 billion Refinitiv forecast.

Glencore CEO Ivan Glasenberg said on Friday that the company is talking with carmakers and battery makers about nickel - a key component in electric vehicle batteries which Tesla CEO Elon Musk has asked miners to produce more of. “A lot of the automobile guys and the battery guys are talking to us about nickel,” Glasenberg said, speaking during the Financial Times Mining Summit. Glencore this year signed an agreement with Tesla to supply it with cobalt from the Congo.

Bankrupt car rental company Hertz Global Holdings Inc said on Friday it had lined up US$1.65-billion in debtor-in-possession financing. Hertz plans to invest up to US$1-billion in vehicle acquisitions in the United States and Canada, and up to US$800-million for working capital and general corporate purposes. The financing will be provided by some of the company’s creditors, Hertz said. It has filed a motion for approval of the financing by the U.S. Bankruptcy Court for the District of Delaware.

Economic news

(8:30 a.m. ET) Canadian manufacturing sales and new orders for August.

(8:30 a.m. ET) Canada’s international securities transactions for August.

(8:30 a.m. ET) U.S. retail sales for September.

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

With Reuters and The Canadian Press

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