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Equities

Canada’s main stock index started higher Friday buoyed by gains in the materials sector. Wall Street’s major indexes also opened up on gains by Walt Disney Co and Cisco on the back of upbeat earnings although concerns about the rise in coronavirus infections continues to temper sentiment.

At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 97.31 points, or 0.59 per cent, at 16,679.49.

In the U.S., the Dow Jones Industrial Average rose 123.73 points, or 0.43 per cent, at the open to 29,203.90.

The S&P 500 opened higher by 15.56 points, or 0.44 per cent, at 3,552.57, while the Nasdaq Composite gained 85.35 points, or 0.73 per cent, to 11,794.94 at the opening bell.

“This week brought a flurry of positive news flows,” Axi market analyst Milan Cutkovic said. “Despite that, some investors think that the rally went too far, as many questions about a potential COVID-19 vaccine remain unanswered.”

“Nevertheless, the events of this week had a significant impact on market sentiment and could pave the way for further gains towards the year-end. Vaccine hopes are driving investors´ optimism for a quicker than expected economic rebound,” he said.

On Thursday, Federal Reserve chair Jerome Powell said, while the likelihood of an effective coronavirus vaccine is good news, the coming months will remain challenging in the near term.

“That is certainly good and welcome news for the medium term,” Mr. Powell said in remarks to a virtual European Central Bank forum. But “from our standpoint it is too soon to assess with any confidence the implications of the news for the path of the economy especially for the near term...The next few months could be challenging.”

Several U.S. states have introduced stricter social distancing rules following reports of record hospitalizations. Reuters reports that the number of hospitalizations in Europe are now higher than at the peak of the first wave. In this country, many regions continue to struggle with rising numbers of infections. On Thursday, Ontario reported 1,575 new infections. Governments in Ontario and Quebec are grappling with the question of whether to extend winter school breaks.

On the corporate side, Canadian investors got results from Cineplex and Onex before Friday’s opening bell.

The Globe’s Susan Krashinsky Robertson reports that Cineplex posted an 85-per-cent decline in revenue, and a $121.2-million net loss in its third quarter, as restrictions on public gatherings continued to have a significant impact on the movie theatre industry. The Toronto-based company reported on Friday that 1.6-million visitors came to its theatres in the three months ended Sept. 30, compared to an audience of 17.5-million in the same period last year.

South of the border, shares of Walt Disney Co. were up about 2 per cent in early trading after the entertainment giant reported a smaller-than-expected drop in fourth-quarter revenue as it added new streaming customers and saw some of its theme parks - including its flagship Florida park - reopen after COVID-19 shutdowns.

Cisco Systems stock, meanwhile, jumped 6 per cent after the company reported smaller-than-expected drop in first-quarter revenue as more people working from home during the COVID-19 pandemic drove demand for its teleconferencing tools, networking equipment and cybersecurity products. The company’s revenue fell to $11.93-billion in the quarter ended Oct.24, from $13.16-billion, a year ago. Analysts on average were expecting $11.85-billion, according to IBES data from Refinitiv.

Overall revenue fell about 23 per cent to US$14.71-billion in the quarter ended Oct. 3, above analysts' average estimate of about US$14.2-billion, according to Refinitiv IBES data.

Overseas, major European markets were modestly higher by afternoon with the pan-European STOXX 600 rising 0.09 per cent. Britain’s FTSE 100 slid 0.39 per cent. Germany’s DAX and France’s CAC 40 were both up by 0.37 per cent.

In Asia, Japan’s Nikkei finished down 0.53 per cent. Hong Kong’s Hang Seng slid 0.05 per cent.

Commodities

Crude prices were weaker in early going as concerns over rising coronavirus infections mount, although oil still looked set to post a gain for the week.

The day range on Brent is US$42.67 to US$43.29. The range on West Texas Intermediate is US$40.16 to US$40.94. Both benchmarks finished lower on Thursday but remain on track to see gains of roughly 9 per cent for the week.

Sentiment took a hit after the U.S. Energy Information Administration reported that crude inventories rose by 4.3 million barrels last week. Analysts had been looking for a decline of about 913,000 barrels. That report came after the International Energy Agency cut its oil demand forecast for next year. The agency also said crude markets are unlikely to get a lift from the rollout of a potential vaccine until well into the new year.

“The EIA crude oil inventory delivered a surprise build and signaled economic activity is slowing down.,” OANDA senior analyst Edward Moya said.

“Crude demand will suffer as many Americans will voluntarily restrict their movements,” he said. " Jet fuel demand has been improving and stockpiles have decreased for a sixth straight week, but that trend can’t last if lockdowns are imminent.

In other commodities, gold prices were steady.

Spot gold was little changed at US$1,876.40 an ounce but was down 3.7 per cent for the week, heading for its worst weekly loss since September.

U.S. gold futures were up 0.1 per cent at US$1,875.50.

“Gold has rebounded because the pandemic and the COVID-19 numbers globally are still rising. The market optimism towards the vaccine and risk-on sentiment has faded,” Bank of China International analyst Xiao Fu told Reuters.

Currencies

The Canadian dollar was firmer as its U.S. counterpart slid on global markets.

The day range on the loonie is 75.93 US cents to 76.24 US cents. The dollar was last near the upper end of that spread.

There were no major economic releases on Friday’s calendar. On Thursday Bank of Canada senior deputy governor Carolyn Wilkins said in a speech that the COVID-19 pandemic would affect potential output through its impact on investment about the labour force.

“Tracking stocks is effectively the only major driver of the CAD at present; it retains one of the strongest, positive correlations with (U.S.) stocks among the major currencies in our correlation study,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.

“The positive tone for U.S. equity futures, at the moment, suggests the CAD may steady or improve a little more in our session.”

On global markets, the U.S. dollar slid as enthusiasm from earlier in the week over a potential COVID-19 vaccine faded.

In early London trading, the U.S. dollar index, which weighs the the greenback against a group of currencies, was down about0.1 per cent at 92.884.

“The rally on the markets following the U.S. elections and the news of an effective vaccine has petered out,” Commerzbank FX strategist Thu Lan Nguyen said in a note to clients.

“However, the chances are high that the market will not go back into panic mode too quickly,” she said,

The safe-haven yen, which dropped around 2 per cent against the U.S. dollar on Monday, continued to recover some of those losses, gaining about 0.1 per cent on the day at 105.07.

The euro was slightly up on the day at US$1.18105.

More company news

The Globe’s Andrew Willis reports that asset manager Onex Corp. continued to come back strong from pandemic-related setbacks, posting a US$515-million profit in the most recent quarter after losing US$1.1-billion in the first quarter of the year. Toronto-based Onex announced on Friday that the value of its private equity investments increased by 14 per cent in the last three months and are up nine per cent, year to date. The company’s US$38-billion of assets under management includes a US$265-million investment in WestJet Airlines Ltd.

Minnesota regulators on Thursday approved key permits for Enbridge Inc’s Line 3 crude pipeline replacement project, paving the way for federal permits from the U.S. Army Corps of Engineers after years of delays. The Minnesota Pollution Control Agency (MPCA) announced approvals for the Line 3 project, including the contested 401 Water Quality Certification, and the Minnesota Department of Natural Resources released the final eight permits for the project.

Economic news

(8:30 a.m. ET) U.S. producer price index for October.

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

With Reuters and The Canadian Press

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