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Equities

Canada’s main stock index edged higher at the opening bell Friday helped by a rebound in crude prices in the wake of a continued transport blockage in the Suez Canal. On Wall Street, main indexes also gained in early trading with bank stocks advancing on optimism over the U.S. economic recovery.

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At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 43.99 points, or 0.24 per cent, at 18,695.09.

In the U.S., the Dow Jones Industrial Average rose 61.6 points, or 0.19 per cent, at the open to 32681.07. The S&P 500 rose 7.6 points, or 0.19 per cent, at the open to 3917.12, while the Nasdaq Composite rose 18.3 points, or 0.14 per cent, to 12996.026 at the opening bell.

“While we are seeing a positive end to the week, market sentiment has been decidedly mixed across most of the week as worries about rising COVID numbers and tighter lockdown restrictions weighed on market sentiment,” OANDA market analyst Sophie Griffiths said.

“Upbeat data plus a fresh pledge by Biden to accelerate the vaccine program is giving equity bulls plenty to sink their teeth into,” she said. “Rising yields are a potential dampener to that Friday feeling, after a lacklustre seven-year note auction.”

U.S. President Joe Biden vowed on Thursday that the U.S. will administer 200 million doses by the end of his first 100 days in office. The initial target of 100 million doses has already been met.

Meanwhile, sentiment also got a lift after the Federal Reserve said, as of June 30, it will end for most banks temporary limits imposed on their ability to make dividend payments and buy back shares. The restrictions were put in place las summer by the Fed, which cited the need for banks to conserve capital during the pandemic.

Markets will be keeping a close eye on the situation in the Suez Canal and the impact on crude prices. Brent and West Texas Intermediate prices were up more than 2 per cent in early going. A container ship has been wedged in the canal since Tuesday, blocking traffic in both directions. The route is one of the busiest shipping channels for oil and refined fuels. On Thursday, officials stopped ships from entering the canal and a salvage company suggested it could take weeks to free the vessel.

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“The Suez Canal blockage seems like it will at the very least last into next week,” OANDA senior analyst Ed Moya said in a note.

Overseas, the pan-European STOXX 600 was up 0.58 per cent by afternoon. Britain’s FTSE 100 gained 0.66 per cent. Germany’s DAX and France’s CAC 40 rose 0.74 per cent and 0.38 per cent, respectively.

In Asia, Japan’s Nikkei ended up 1.56 per cent. Hong Kong’s Hang Seng rose 1.57 per cent.

Commodities

Crude prices rose in early going on optimism over the rollout of COVID-19 vaccines in the United States and the impact of the continued shipping blockage in the Suez Canal.

The day range on Brent is US$61.85 to US$63.46. The range on West Texas Intermediate is US$58.32 to US$60.16. Both saw sharp declines on Thursday, with WTI falling more than 4 per cent.

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Despite Friday’s early gains, both benchmarks looked set for a third straight week of losses. Modest declines are likely for the week after the prior week’s 6-per-cent decline.

“Oil prices are having another change of heart this morning, possibly driven by no end in sight to the Suez Canal worst-case scenario but more likely inspired by the bounce in broader risk sentiment on the back of Joe Biden’s ‘economic rejuvenation plan’,” Axi chief market strategist Stephen Innes said.

During his first formal news conference, U.S. President Joe Biden on Thursday doubled his original goal on COVID-19 vaccines, vowing that the U.S. will administer 200 million doses by the end of his first 100 days in office. The original goal of 100 million doses was met earlier this month.

Meanwhile, prices were also boosted by the blockage in the Suez Canal and the uncertainty over timing around resumption of traffic in the route.

Reuters reports that, of the 39.2 million barrels per day (bpd) of total seaborne trade in crude in 2020, 1.74 million bpd went through the Suez Canal. Additionally, 1.54 million bpd of refined oil products such as gasoline and diesel fuel flow through the canal, about 9 per cent of global seaborne product trade.

In other commodities, gold prices were flat on Friday, as lower U.S. yields and worries about the global economic recovery following a surge in COVID-19 cases across Europe countered a rising U.S. dollar.

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Spot gold was little changed at US$1,727.10 per ounce. U.S. gold futures were up 0.1 per cent at US$1,726.30 per ounce. Gold looked set for its first weekly decline in three.

“The strength of the [U.S.] dollar has definitely put a cap on gold and now that Treasury yields have gone down a bit on the short end, that’s technically supposed to be positive for gold,” Brian Lan, managing director at GoldSilver Central, said.

Currencies

The Canadian dollar was firmer as crude prices rebounded and global risk sentiment steadied while its U.S. counterpart held near its highest level since November against a group of world currencies.

The day range on the loonie is 79.27 US cents to 79.55 US cents.

“The CAD has found a little support from the rebound in — still volatile — crude oil prices and the bounce in broader risk sentiment so far today but is heading for a slight decline on the week against the USD,” Shaun Osborne, chief FX strategist with Scotiabank, says.

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“Bank of Canada tapering focus will help keep the CAD better supported against currencies where central bank policy risks continue to tilt towards more accommodation at least until we get some clarity on the BoC’s thinking next month,” he said in an early note. “The CAD may also start to find some bargain-hunting support against the USD.”

There are no major Canadian economic releases scheduled for Friday.

On world markets, the U.S. dollar index, which weighs the greenback against a basket of global currencies, held near a four-month higher at 92.793 and looked set for a weekly gain of nearly 1 per cent.

The U.S. dollar rose to 109.44 against the Japanese yen, its highest since June. Against the Swiss franc, it rose to its highest since July, holding onto a 0.5 per cent gain from the previous session, according to figures from Reuters.

Against the euro, the U.S. dollar slipped 0.1 per cent to US$1.17630 but remained near its strongest level since November.

More company news

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Telus Corp. is raising $1.3-billion in a stock sale as it looks to accelerate the expansion of its fibre-optic broadband network and its deployment of 5G wireless technology. A syndicate of underwriters, led by RBC Dominion Securities and CIBC World Markets, has agreed to purchase 51,300,000 Telus shares, at $25.35 per share, and resell them to the public in a bought deal. Other banks in the syndicate include BMO Nesbitt Burns, Scotia Capital and TD Securities.

The Globe’s Andrew Willis reports Slate Asset Management is investing US$2.33-billion on the prospects of an expected recovery in U.S. retail, office and hotel sectors by acquiring the commercial real estate division of New York-based Annaly Capital Management Inc. Toronto-based Slate, which currently manages approximately $6.5-billion of property assets for clients, is purchasing real estate loans and properties from Annaly, and hiring the team that ran the portfolio. The largest portion of Annaly’s holdings is a US$400-million portfolio of grocery store-anchored properties, which will be acquired by Slate Grocery REIT, a Toronto Stock Exchange-listed division of the parent company. Slate Grocery REIT already owns US$1.3-billion of U.S. properties, with tenants that include Walmart, Kroger and Publix.

WeWork has agreed to go public through a merger with blank-check firm BowX Acquisition Corp, in a deal that values it at $9-billion, the office-sharing startup said on Friday. It marks a steep drop from the $47 billion that WeWork was valued for a listing in 2019, ahead of a botched listing plan that imploded due to investor concerns over its business model and its founder Adam Neumann’s management style.

Victoria’s Secret-owner L Brands Inc raised its first-quarter earnings forecast, boosted by government stimulus payments and relaxation of pandemic-led restrictions on movement. The company now expects an adjusted profit of $0.85 to $1.00 per share, compared with its previous forecast of $0.55 to $0.65.

Canada’s First Cobalt Corp. entered into a deal with Glencore Plc’s unit under which it will repay an existing loan of about $5.5-million by issuing shares, the cobalt miner said on Friday. First Cobalt will issue 23.8 million common shares to Glencore AG at $0.29 per share, representing about 4.8% of the company’s current outstanding shares.

Economic news

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

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

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

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

With Reuters and The Canadian Press

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