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Equities

Canada’s main stock index started down Friday on weakness in cannabis shares and disappointing earnings. On Wall Street, major indexes pulled back modestly as investors look for progress on U.S. stimulus talks and the rollout of vaccines in the fight against COVID-19.

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At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 37.81 points, or 0.21 per cent, at 18,355.18.

In the U.S., the Dow Jones Industrial Average fell 9.9 points, or 0.03%, at the open to 31420.8. The S&P 500 fell 4.7 points, or 0.12 per cent, at the open to 3911.65, while the Nasdaq Composite dropped 46.6 points, or 0.33 per cent, to 13979.213 at the opening bell.

“The same old headlines about vaccines being distributed and optimism with respect to President Biden getting his US$1.9-trillion stimulus plan approved in the next few weeks continued to be the main focus of traders’ attention,” CMC Markets analyst David Madden said.

“Both topics are of major importance but neither is likely to see any serious progress anytime soon. The fact that new variants of Covid-19 have emerged has caused a little concern in relation to tackling the crisis but AstraZeneca has already announced that it will develop unique drugs for the different strains.”

Shares of Walt Disney Co. gave back premarket gains to trade lower in early going after the entertainment giant reported a smaller-than-expected decline in revenue in the latest quarter with its streaming business helping offset the pandemic’s impact on its theme park and movie operations. Overall revenue fell to US$16.25-billion from US$20.88-billion, but was still above analysts’ average estimate of about US$15.93-billion, according to IBES data from Refinitiv.

In this country, investors got results from Air Canada ahead of the start of trading.

Air Canada’s net loss for 2020 was $4.65-billion, or $16.47 per share, compared with a profit of $1.48-billion, or $5.44 per share. Full-year operating revenue fell 70 per cent to $5.83-billion.

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On Thursday, the federal government approved Air Canada’s takeover of rival Transat AT Inc. but applied conditions to the deal. The federal government said in reviewing the deal it took into account the effect of the COVID-19 pandemic on the companies, and said the takeover was in the public’s best interest. The conditions it imposed include a minimum number of jobs that must be preserved, the use of a price monitoring mechanism and a commitment to protect Transat’s Montreal head office and brand, The Globe’s Eric Atkins reports. Air Canada shares were up about 5 per cent in Toronto.

The deal still needs regulatory approval in Europe.

Overseas, the pan-European STOXX 600 was off 0.09 per cent. Britain’s FTSE 100 edged up 0.08 per cent. Figures released Friday showed that Britain’s economy contracted by a record 9.9 per cent last year, but the report also showed that GDP rose 1 per cent in the final three months of the year. Germany’s DAX fell by 0.65 per cent. France’s CAC 40 slid 0.15 per cent.

In Asia, Japan’s Nikkei lost 0.14 per cent. Many Asian markets were closed for the start of the Lunar New Year holiday.

Commodities

Crude prices were down for a second day, pulling back from recent highs after OPEC cut its demand forecast and oversupply concerns temper the advance.

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The day range on Brent is US$60.35 to US$60.83. The range on West Texas Intermediate is US$57.41 to US$57.97. Both benchmarks touched their best levels in more than a year at midweek

“Crude prices are taking a moment after the February breakout took prices above levels some analysts thought couldn’t be touched until a couple years down the road,” OANDA senior analyst Ed Moya said in a note this week.

“The key for whether the crude rally continues is if we don’t see a spike in cases as restrictive measures are eased,” he said. “With most of Asia celebrating the Lunar New Year holiday, price action on crude could become rather choppy and warrant some profit-taking.”

Crude’s progress was slowed by an OPEC report suggesting that demand around the world this year will recover more slowly than previously expected. At the same time, the International Energy Agency said supply is continuing to outstrip demand, although the rollout of COVID-19 vaccines should aid the recovery.

However, Mr. Moya said prices weren’t overly affected by the two reports, which also suggested an improved picture as the year goes on.

“Both acknowledge the hit to demand in the first quarter and point to an upbeat second half of the year,” he said.

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Gold eased as the U.S. dollar and Treasury yields rose, but still looked headed for their best week in three.

Spot gold dipped 0.4 per cent to US$1,818.83 per ounce. Prices were up 0.4 per cent this week. U.S. gold futures slipped 0.4 per cent to $1,819.10.

Currencies

The Canadian dollar slid in early going as global markets pulled back and crude prices eases, while its U.S. counterpart edged higher but still looked set for a losing week against a basket of world currencies.

The day range on the loonie is 78.40 to 78.76 US cents.

“Softer crude and weaker risk appetite have combined to nudge the CAD a little lower on the session,” Shaun Osborne, chief FX strategist with Scotiabank, said.

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Ahead of the opening bell, Statistics Canada said wholesale trade fell 1.3 per cent in December. That was the first decline after seven consecutive gains. The drop was mostly because of lower sales in the auto and machinery equipment sectors.

get this country’s sole economic release this week with Statscan’s report on December wholesale sales. An early estimate from the government agency pointed to a decline of 1.7 per cent for the month.

On world markets, the U.S. dollar was headed for its first down week in three, hurt by signs of weakness in the U.S. jobs market.

In early European trade, the U.S. dollar index rose 0.15 per cent to 90.55 after subdued volumes in Asia due to the Lunar New Year. It was on track to fall 0.5 per cent for the week, according to figures from Reuters.

The U.S. dollar was slightly up against the yen at 104.940.

The euro slipped 0.17 per cent to US$1.2115, consolidating for a third day near that level as it looked set for a 0.5 per cent weekly advance.

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In cryptocurrencies, bitcoin was holding near record levels and looked headed for a gain of 20 per cent on the week after receiving the endorsement of companies like Tesla Inc.

Bitcoin last traded 1.1 per cent down at US$47,451, just off a record high of US$49,000, Reuters reported Friday morning.

More company news

Enbridge Inc on Friday reported a 79% jump in fourth-quarter profit, as the pipeline operator shipped higher volumes of crude on its liquids system on the back of a price recovery. Net income attributable to common shareholders rose to $1.78-billion, or 88 cents per share, in the quarter ended Dec. 31, from $990-million, or 49 cents per share, in the third quarter. However, the company also raised the cost estimate for its Line 3 replacement project. Shares were down more than 1 per cent in Toronto Friday morning.

CAE Inc reported a 50% drop in third-quarter profit, as pandemic-battered air travel weighed on demand for the company’s full-flight simulators and pilot training. The world’s largest civil aviation training specialist said its net income attributable to shareholders fell to $48.8-million, or 18 cents per share, in the quarter ended Dec. 31, from $97.7-million, or 37 cents per share, a year earlier. Shares were down slightly in early trading in Toronto.

Glenview Capital Management, a shareholder in Bausch Health Companies Inc, said the Canadian drugmaker should spin off its eye care unit, Bausch Global Eyecare, in an “optimal fashion” in 2021. Glenview Capital currently owns more than 21 million shares, or about 6% of the Canadian company, primarily in voting securities. In August, Bausch Health said it would spin off its eye care unit, Bausch + Lomb, into a separate publicly listed company.

Britain’s takeover regulator said on Friday it would hold an auction for G4S to resolve a drawn-out bidding war between Canada’s GardaWorld and Allied Universal for the London-listed private security firm. Takeover Panel’s decision to set up auction comes after multiple offer deadline extensions by both GardaWorld and Allied Universal, which the panel said have until Feb. 20 to make revised offers for G4S outside the auction process.

Tesla must recall around 12,300 Model X cars worldwide due to car body mouldings problems, Germany’s motor vehicle authority (KBA) said on its website. KBA said the recall affects cars built in 2015 and 2016, adding there was a risk that the moulding could fall off the vehicle.

Expedia Group Inc reported its fourth straight quarterly loss on Thursday, as the online travel agency’s bookings were dented by a resurgence in COVID-19 infections and renewed restrictions. Net loss attributable to the company was $412-million, or $2.89 per share, in the quarter ended Dec. 31, compared with a profit of $76-million, or 52 cents per share, a year earlier.

Economic news

(8:30 a.m. ET) Canadian wholesale trade for December. Estimate is a decline of 1.7 per cent from the previous month

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

With Reuters and The Canadian Press

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