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Equities

Canada’s main stock index drifted higher in early trading Friday despite a weaker-than-expected on retail sales. South of the border, stocks also edged higher with the tech-heavy Nasdaq leading the advance.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 17.95 points, or 0.1 per cent, at 18,292.02.

In the U.S., the Dow Jones Industrial Average rose 10.8 points, or 0.03 per cent, at the open to 31504.13. The S&P 500 rose 7.2 points, or 0.18 per cent, at the open to 3921.16, while the Nasdaq Composite rose 63.8 points, or 0.46 per cent, to 13929.2 at the opening bell.

“Markets are struggling to find a direction though vaccine hopes and prospects of another massive stimulus package in the United States are keeping the rally alive,” Axi market analyst Milan Cutkovic said. “However, there is a lack of catalysts that could push shares to new record highs.”

“At the same time, inflation fears have appeared and the surge in U.S. yields are worrying investors. Rising yields could soon become a problem for the stock market.”

On Friday, Canadian investors will get more earnings, with auto parts giant Magna International reporting ahead of the opening bell.

Magna posted a 67-per-cent jump in fourth-quarter profit and forecast full-year revenue above analysts forecasts as vehicle sales rebound. The company expects full-year revenue of $40-billion to $41.6-billion, above analysts’ average estimate of $38.41-billion, according to Refinitiv I/B/E/S data. Magna also raised its quarterly dividend to 43 cents per share, up from 40 cents.

Magna shares jumped 7 per cent in morning trading in Toronto.

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Elsewhere on the corporate landscape, The Globe’s Tim Kiladze reports that Inter Pipeline Ltd.’s board of directors is adopting a new approach in response to Brookfield Infrastructure Partners L.P.’s hostile takeover bid, with independent directors launching a strategic review that may ultimately recommend a sale of the company. To date, Inter Pipeline’s board has preferred to privately reject takeover offers. The board turned down a $30 per share offer in 2019, and also quietly refused Brookfield’s approaches last fall that were priced between $17 and $18.25 per share.

Shares of Uber Technologies were up modestly, recouping early losses in the premarket, after Britain’s Supreme Court ruled that a group of drivers are entitled to worker rights such as the minimum wage at the ride-hailing service. In a case led by two drivers, a London employment tribunal ruled in 2016 that they were due entitlements such as paid holidays and rest breaks. Uber had appealed the ruling.

Overseas, major European markets firmed as the session progressed with the pan-European STOXX 600 gaining 0.48 per cent. Britain’s FTSE 100 added 0.20 per cent. Germany’s DAX and France’s CAC 40 rose 0.75 per cent and 0.72 per cent.

In Asia, Japan’s Nikkei closed down 0.72 per cent. Hong Kong’s Hang Seng edged up 0.16 per cent.

Commodities

Crude prices pulled back from recent highs as traders weighed the impact of weather-related disruptions in the southern United States with expectations that OPEC+ could soon begin easing production caps.

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The day range on Brent is US$62.09 to US$63.54. The range on West Texas Intermediate is US$58.59 to US$60.20.

“Oil registered a new 13-month high yesterday but it rolled over on itself as the wider negative sentiment in the markets prompted profit taking,” CMC Markets analyst David Madden said in an early note.

“Some refineries in Texas have been shut due to the big freeze, so near-term demand woes hit crude prices.”

Some analysts have suggested that the lack of demand from refiners in Texas will likely lead to builds in crude stocks in the weeks ahead despite the offsetting impact of shuttered output.

At the same time, a looming change to production caps from OPEC and its allies weighed on sentiment. Reuters, citing OPEC+ sources, has reported that the group’s producers are likely to ease supply curbs after April given the recent jump in crude prices.

Those factors were offset somewhat by figures from the U.S. Energy Information Administration showing that crude inventories fell by 7.3 million barrels, far more than the markets had been expecting. The figures cover the period just before a major storm slammed Texas.

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In other commodities, gold prices fell to a seven-month low on Friday, extending its seven-day long streak of declines, hit by rallying U.S. Treasury yields.

Spot gold fell 0.2 per cent to US$1,772.91 per ounce, falling for a seventh consecutive session, which was last seen in November 2018.

Gold hit its lowest since July 2 at US$1,759.29 earlier in the session and has declined over 2.7 per cent so far this week.

Currencies

The Canadian dollar was higher, trading above 79 US cents in early going, as its U.S. counterpart slid against world currencies following a weaker-than-expected reading on that country’s jobs market.

The day range on the loonie is 78.66 US cents to 79.11 US cents.

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“The CAD has joined the rally party against the USD but it’s participation has been somewhat reluctant and funds remains contained within recent trading ranges,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Marginally lower oil prices as US wells start pumping again should not have too much impact on the CAD because spot did not really react to prices popping above $60 in the first place. We think the broader rise on commodity prices recently still leaves the CAD looking somewhat “cheap” relative to fair value, in fact, and prone to more gains.”

Canadian investors, meanwhile, got a below-forecast reading on retail sales in December. Statistics Canada says sales for the month fell 3.4 per cent. Early estimates had pointed to a decline of 2.6 per cent. The agency also estimated that sales fell 3.3 per cent in January.

On world markets, the U.S. dollar index was down 0.1 per cent early Friday at 90.474. The index, which weighs the greenback against a basket of world currencies, took a hit after the U.S. Labor Department reported a rise in weekly jobless claims.

The euro, meanwhile, rose 0.2 per cent to US$1.2113. The single currency showed little reaction to German and French flash purchasing manager index data, which unsurprisingly showed a slowdown in activity in January, according to Reuters.

Britain’s pound rose to US$1.3987, nearing a three-year high.

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More company news

CGI Inc. has signed a deal to buy back and cancel 4.2 million of its class-A subordinate voting shares from the Caisse de dépôt et placement du Québec for $400-million. The technology consulting company says it will pay $95.13 per share, a slight discount to where the shares closed on the Toronto Stock Exchange on Thursday at $98.07. CGI says the transaction will be made in connection with a periodic portfolio rebalancing by CDPQ.

Chorus Aviation Inc. says an acquisition proposal from an unnamed bidder that it received last fall is no longer being considered, but that it remains in talks regarding a potential investment. The aviation company said in October that it had received a preliminary, non-binding acquisition proposal that was subject to a number of significant conditions.

Renault reported a record 8 billion euro ($9.68-billion) loss for 2020 as the COVID-19 pandemic hit sales and production at the French carmaker and its Japanese partner Nissan. Renault was already reeling from a 141 million euro loss in 2019 before the pandemic hit. Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020.

Deere & Co upgraded its fiscal 2021 earnings forecast after profit more than doubled in the first quarter on the back of improving demand for farm and construction machines. The Moline, Illinois-based company now expects annual net income in the range of $4.6-billion to $5-billion, higher than $3.6-billion-$4-billion forecast earlier. Earnings for the first quarter came in at $3.87 per share compared with $1.63 per share last year. Analysts surveyed by Refinitiv, on average, expected quarterly earnings of $2.14 per share.

Economic news

(8:30 a.m. ET) Canada’s retail sales for December.

(8:30 a.m. ET) Canada’s wholesale trade for January.

(9:45 a.m. ET) U.S. Markit PMIs for February.

(10 a.m. ET) U.S. existing home sales for January.

With Reuters and The Canadian Press

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