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Equities

Canada’s main stock index opened in the red Friday with energy and materials shares exerting downward pressure. On Wall Street, the Nasdaq and S&P 500 looked to recoup some of the previous session’s heavy losses.

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At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 28.75 points, or 0.16%, at 18,194.79.

In the U.S., the Dow Jones Industrial Average fell 0.7 points, or flat at the open to 31401.29. The S&P 500 rose 10.3 points, or 0.27%, at the open to 3839.66, while the Nasdaq Composite rose 113.5 points, or 0.86%, to 13232.901 at the opening bell.

On Thursday’s Wall Street saw sharp declines as bond yields spiked, with the U.S. 10 year Treasury yield breaching 1.6 per cent at one point. Early Friday, 10-year Treasury yields eased back to 1.453 per cent, while 10-year German government bond yields were down nearly 4 basis points and French and Austrian bonds were back in negative territory, according to figures from Reuters.

“Looking back on the week, financial markets have been chasing their tails,” OANDA senior analyst Jeffrey Halley said. “Jerome Powell’s soothing comments, in hindsight, have had a half-life of fewer than 24 hours.”

“Markets have become myopically fixated on inflation. The expectations being that we will see an explosion in demand as vaccines reopen developed market economies. The fact is, data has shown we have seen an increase in demand anyway up till now, despite the pandemic walls erected globally.”

On Friday, Canadian investors for corporate results.

Onex Corp. reported its fourth-quarter profit rose compared with a year ago. The Toronto-based private equity manager says it earned a net profit of US$597 million or US$6.61 per diluted share for the quarter ended Dec. 31. The result compared with net earnings of US$187 million or US$1.86 per diluted share in the fourth quarter of 2019.

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South of the border, shares of Airbnb Inc. shares rose about 2 per cent in premarket trading after the company posted better-than-expected gross bookings in its first quarterly earnings report since going public, suggesting a rebound in North American vacation rentals as COVID-19 restrictions ease in some regions.

Airbnb said it expects wider vaccine rollouts in 2021 to bolster travel demand. It said both nights booked as well as gross bookings in the current quarter are expected to be higher than a year ago, but lower than the same period in 2019.

Overseas, European markets were down in morning trading with the pan-European STOXX 600 sliding 0.42 per cent. Germany’s DAX fell 0.22 per cent while Britain’s FTSE 100 lost 0.37 per cent. France’s CAC 40 slipped 0.39 per cent.

In Asia, markets felt the sting of Thursday’s Wall Street selloff. Japan’s Nikkei closed down nearly 4 per cent. Hong Kong’s Hang Seng shed 3.64 per cent.

Commodities

Crude prices pulled back as spiking bond yields pushed the U.S. dollar higher and markets began to weigh the likelihood of increased supply in the wake of the recent rebound.

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The range on Brent so far is US$65.85 to US$66.90. The range on West Texas Intermediate US$62.54 to US$63.57.

Despite Friday’s declines, both benchmarks look set for monthly gains of about 20 per cent, according to Reuters.

“A rebound in the U.S. dollar along with chatter that calls are growing within OPEC+ for the oil production curbs that have been in place, to be relaxed at next week’s meeting has seen oil prices start to slide back, having hit thirteen-month highs earlier this week,” CMC Markets chief market analyst Michael Hewson said.

OPEC and its allies are set to meet next week to weigh current production curbs, with markets questioning how soon the group will start increasing supply.

“The stakes at play this time around are particularly large (for OPEC+) insofar as oil prices have more than recovered to pre-pandemic levels, global inventories are continuing to trend down, and vaccine rollouts are accelerating,” Lachlan Shaw, National Australia Bank’s head of commodity research, said.

In other commodities, gold prices fell to their lowest in eight months and looked set for a second consecutive weekly decline.

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Spot gold eased 0.1 per cent to US$1,767.81 per ounce, having earlier fallen to its lowest since June 26 at US$1,755.45. Prices were down 1.4 per cent for the week.

U.S. gold futures fell 0.6 per cent to $1,765.70 on Friday.

“Gold’s recovery from the sell-off last week was asthmatic, as it struggled to hold above US$1,800 an ounce,” OANDA’s Jeffrey Halley said.

“At the first signs of trouble in the US bond market, as yields pushed higher, gold has retreated.”

Currencies

The Canadian dollar retreated from three-year highs seen during the previous session as the U.S. dollar advanced against most world currencies on spiking bond yields.

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The day range on the loonie is 79.06 US cents to 79.44 US cents. On Thursday, the loonie topped 80 US cents for the first time in three years.

“The CAD retains a defensive tone this morning as commodity prices remain on the back foot and we suspect that yesterday’s market tremors will reverberate around markets for a little longer,” Shaun Osborne, chief FX strategist with Scotiabank, said in a note.

“This risks driving USD/CAD a little higher still in the short run but there is no reason to adjust our longer run views at this point as the underlying fundamental story has not changed.”

On Friday, Statscan will release figures on January industrial prices, but there were no other major releases on the calendar.

On global markets, the U.S. dollar index edged up to 90.39, holding on to a 0.2-per-cent gain from the previous session. The index is now down 0.2 per cent for the month following January’s 0.6-per-cent advance, according to figures from Reuters.

The U.S. dollar lost 0.1 per cent to trade at 106.115 yen after earlier touching 106.43 for the first time since September.

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The euro slid 0.3 per cent to US$1.2142 after managing a seven-week high of US$1.22435 on Thursday.

More company news

Beyond Meat Inc said it has signed multi-year supply deals with McDonald’s Corp and Yum! Brands Inc .The maker of the Beyond Burger said its three-year global deal with McDonald’s would make it the world’s biggest restaurant chain’s preferred supplier for the patty in its new McPlant burger. The two companies will also develop other menu items like plant-based chicken, pork and eggs.

Economic news

G20 finance ministers and central bank governors videoconference

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

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

(8:30 a.m. ET) U.S. core PCE price index for January.

(8:30 a.m. ET) U.S. goods trade deficit for January.

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

With Reuters and The Canadian Press

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