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Equities

Weakness in energy shares weighed on Canada’s main stock index early Friday while tech stocks pressured Wall Street’s major indexes as investors looked past positive earnings headlines from big players and focused on the details.

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At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 54.05 points, or 0.34 per cent, at 15,616.65.

In the U.S., the Dow Jones Industrial Average fell 86.84 points, or 0.33 per cent, at the open to 26,572.27.

The S&P 500 opened lower by 15.85 points, or 0.48 per cent, at 3,294.26, while the Nasdaq Composite dropped 82.12 points, or 0.73 per cent, to 11,103.47 at the opening bell.

“While the numbers from tech giants such as Amazon, Apple, Microsoft and Alphabet were far from being bad, they could not meet the high expectations,” Milan Cutkovic, Market Analyst at Axi, said.

“There is no imminent end to the stock market correction in sight. Risk appetite remains low ahead of the U.S. presidential election, and few investors are keen to buy the dip as they have been before. The new restrictions across Europe are also weighing significantly on market sentiment.”

Early Friday, Apple shares were down more than 4 per cent in early trading after iPhone sales fell short of estimates even as the tech giant’s quarterly revenue and profit topped market expectations. Apple also gave no forecast for the holiday quarter.

Amazon stock, meanwhile, was down more than 3 per cent. The online retail behemoth forecast a jump in holiday sales but also said it expects costs related to COVID-19 to rise as well. Amazon’s response now includes an estimated $4-billion in costs related to COVID-19 this holiday, up from $2.5-billion last quarter.

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In this country, investors got the latest reading on the state of the Canadian economy. Statistics Canada said GDP grew by 1.2 per cent in August, slightly better than the 1 per cent markets had been expecting but down from 3.1 per cent in July. A total of 15 of 20 industrial sectors posted gains.

will get the latest reading on how the economy is fairing as it recovers from the COVID-19 lockdown earlier this year when Statistics Canada releases its report on August GDP. Markets will also be paying close attention to the agency’s early snapshot of September growth.

Alvin Tam, Asia FX associate with RBC, said that bank expects to see a monthly gain of 0.7 per cent in August GDP, just short of Statscan’s early 1-per-cent forecast.

“Most categories have by now seen their post-lockdown spike, with the three sales report categories (manufacturing, wholesale, retail) likely to net out close to flat,” he said.

For September, he said, RBC is expecting to see growth of about 0.5 per cent, which would put third-quarter GDP on track for annualized growth of 45 per cent.

In earnings, Canadian investors got results from Imperial Oil and Shaw Communications early Friday.

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Overseas, major European markets were mixed by afternoon with the pan-European STOXX 600 down 0.10 per cent. Britain’s FTSE 100 fell 0.36 per cent. Germany’s DAX slid 0.52 per cent. France’s CAC 40 was just above break even.

In Asia, Japan’s Nikkei closed down 1.52 per cent. Hong Kong’s Hang Seng lost 1.95 per cent. Shares of Apple suppliers were down in Asia after the company held back on issuing guidance for the holiday quarter.

Commodities

Crude prices wavered early Friday but still looked set for a second monthly decline as rising COVID-19 infections and restrictions in some countries weigh on sentiment.

The day range on Brent so far is US$36.80 to US$38.10. The range on West Texas Intermediate is US$35.35 to US $36.60.

WTI fell to its lowest level since June on Thursday and now looks headed for a monthly decline of about 10 per cent. Brent looks set for a drop for the month of about 8 per cent.

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“Fresh worries that politicians worldwide will be pressured to lock down Christmas this year is hitting the oil markets like a ton of bricks,” Axi chief market analyst Stephen Innes said.

“We are in the thick of the Covid-19 haze now. Winter is coming to the northern hemisphere, where crowding and social- behavioural patterns could be a frightening source of a seasonality bounce in the COVID-19 curve.”

In other commodities, gold gained as the U.S. dollar rally paused.

Spot gold edged up 0.1 per cent at US$1,869.16 per ounce after sharp declines during the two previous sessions.

U.S. gold futures also rose 0.1 per cent to US$1,869.

“Leading into the U.S. elections I see it (gold) staying weak,” Michael Langford, executive director at corporate advisory and consultancy firm AirGuide, told Reuters.

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But “regardless of whoever wins the election, there is going to be some form of stimulus program and that’s positive for gold.”

Currencies

The Canadian dollar was trading just above 75 US cents as weak crude prices weigh on commodity currencies and the U.S. dollar’s rally paused, although the greenback remains near its best levels in four weeks.

The day range on the loonie is 74.93 US cents to 75.22 US cents. The Canadian dollar is on track for its worst week since April.

The loonie saw modest gains early Friday after Statscan reported that the economy grew by a better-than-expected 1.2 per cent in August.

On global markets, the U.S. dollar index was flat at 93.889 but within reach of Thursday’s four-week high at 93.916, setting it up for the biggest weekly gains since the end of September, according to figures from Reuters.

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Commodity currencies, meanwhile, remained under pressure.

Russia’s rouble dropped 0.5 per cent to near 80 per U.S. dollar on course for a 4 per cent weekly drop. Norway’s krone was down at 9.57 per U.S. dollar after a near 3.5 per cent drop for the week.

More company news

Imperial Oil Ltd posted a lower profit for the third quarter on Friday, hurt by a coronavirus-driven slump in crude prices and fuel demand. The Calgary, Alberta-based company posted a net income of $3-million for the quarter ended Sept. 30, compared with a profit of $424-million a year earlier.

SNC-Lavalin Group Inc. reported a loss of $85.1 million in its latest quarter compared with profit of $2.76 billion a year ago when its results were boosted by the sale of a 10.01 per cent stake in Highway 407 ETR. The company says the loss amounted to 48 cents per diluted share for the quarter ended Sept. 30 compared with a profit of $15.70 per diluted share a year ago. The results last year included a net gain of $2.59 billion or $14.74 per diluted share from the sale of the stake in Highway 407 ETR.

Google parent Alphabet Inc returned to sales growth in the third quarter as businesses initially hobbled by the coronavirus pandemic resumed advertising with the internet’s biggest supplier of ads, the tech giant said on Thursday. Wall Street had expected a rebound from Alphabet because the company said in July that advertiser spending was inching back following a March plummet due to lockdowns. Google competitors Snap Inc and Microsoft Corp also reported third quarter revenue ahead of expectations in recent days.

Twitter Inc added fewer users than Wall Street had expected, sending its shares tumbling 9%, though it beat analyst expectations for quarterly revenue. The San Francisco-based social media company said it had 187 million monetizable daily active users (mDAU) during the third quarter, missing consensus analyst expectations of 195.2 million users, according to IBES data from Refinitiv. The figure stood at 186 million in the previous quarter. Twitter shares sank nearly 17 per cent in morning trading on the results.

Chevron Corp reported an adjusted third-quarter profit as oil prices recovered from spring lows and spending cuts benefited operating results. The second-largest U.S. oil producer reported earnings of $201-million, or 11 cents per share, excluding one-time items. That compared with a profit of $2.9-billion, or $1.55 per share, a year earlier. Net loss including the effect of foreign exchange and charges was $207-million.

Under Armour Inc beat quarterly revenue estimates, helped by online demand from shoppers looking for athletic apparel for home or outdoor workouts. The company’s revenue stayed roughly flat at $1.43-billion for the third quarter ended Sept. 30, beating analysts' average estimate of $1.16-billion, according to IBES data from Refinitiv.

Economic news

(8:30 a.m. ET) Canada’s monthly real GDP for August.

(8:30 a.m. ET) Canada’s industrial product index for September.

(8:30 a.m. ET) Canada’s raw materials price index for September.

(8:30 a.m. ET) U.S. employment cost index for Q3.

(8:30 a.m. ET) U.S. personal income and spending for September.

(8:30 a.m. ET) U.S. Core PCE Price Index for September.

(9:45 a.m. ET) U.S. Chicago PMI for October.

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

With Reuters and The Canadian Press

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