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Equities
Canada’s main stock index slid at the start of trading Friday on weaker materials stocks but still looked set for a weekly gain. South of the border, indexes were mixed after the S&P 500 set another record in the previous session and Federal Reserve chair Jerome Powell again assured markets that the central bank has no immediate plans to withdraw support for the U.S. economy
At 9:45 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 54.51 points, or 0.28 per cent, at 19,174.36. Despite the weaker open, the index still looked on track to record its fifth consecutive weekly gain.
The materials sector, which includes precious and base metals miners and fertilizer companies, fell on weaker gold prices.
Energy stocks rose 0.2 per cent. Financials gained 0.1 per cent.
In the U.S., the S&P 500 opened lower by 1.06 points, or 0.03 per cent, at 4,096.11, while the technology-heavy Nasdaq Composite dropped 42.30 points, or 0.31 per cent, to 13,787.02 at the opening bell.
The Dow Jones Industrial Average rose 22.62 points, or 0.07%, at the open to 33,526.19.
“It took some time, but Powell is now doing great in taming the beast that’s the market; his dovish stance goes through, the US yields are under control and the risk appetite is here, yet fragile,” Ipek Ozkardeskaya, senior analyst with Swissquote, said.
In remarks on Thursday, Mr. Powell showed he is more concerned with rising COVID-19 cases than higher inflation expectations and noted that, while some parts of the U.S. economy are doing well, there is still a large group of people who are not, she said in an early note.
“And as long as the American economy is not doing ‘great’ again, the Fed is here to give a hand,” she said. “As such, Powell’s commitment to the ultra-supportive monetary policy stance regardless of the rising inflation worries isn’t only boosting the jobs market, but continues boosting the U.S. stock markets as well.”
In this country, Canada’s jobs market will be in focus with the release of Statistics Canada’s labour force survey for March.
The agency said the economy added a surprisingly strong 303,100 positions. Economists had been expecting a number closer to 100,000 positions. The gains follow February’s sharp increase. The jobless rate fell to 7.5 per cent.
“As officials continued to relax restrictions needed to curb the second wave of the virus, jobs reappeared in droves in sectors hardest hit by those measures,” CIBC senior economist Royce Mendes said.
“However, with another round of shutdowns needed to bend the curve once again, there will likely be another round of job losses set for the coming months which could offset some of the recent gains.”
On the corporate side, Corus Entertainment beat analysts’ profit forecasts in its latest quarter.
Corus reported a second-quarter profit of $35.3-million or 17 cents per diluted share for the quarter ended Feb. 28, up from $18.5 million or nine cents per diluted share a year earlier. Revenue totalled nearly $358.9-million, down from nearly $376 million. On an adjusted basis, Corus earned 18 cents per share in its latest quarter, up from an adjusted profit of 12 cents per share in the same quarter a year earlier. Analysts on average had expected an adjusted profit of 12 cents per share for the quarter, according to financial data firm Refinitiv.
Overseas, major European markets were mixed after hitting record highs. The pan-European STOXX 600 edged up 0.04 per cent by early afternoon. Britain’s FTSE 100 slid 0.21 per cent. Germany’s DAX rose 0.05 per cent. France’s CAC 40 gained 0.17 per cent.
In Asia, Japan’s Nikkei closed up 0.20 per cent. Hong Kong’s Hang Seng fell 1.07 per cent.
Commodities
Crude prices slid amid higher COVID-19 cases and related restrictions in some regions and increased market supply
The day range on Brent is US$62.57 to US$63.49. The day range on West Texas Intermediate is US$59.13 to US$59.95. Both benchmarks are headed for a decline of between 2 per cent and 3 per cent on the week.
Prices came under pressure this week after OPEC and its allies agreed to gradually increase supplies by 2 million barrels per day between May and July. At the same time, increased COVID-19-related restrictions in some regions, including parts of Canada, have again raised concerns about the recovery in demand.
“The conflicting signals around OPEC+ supply coming back to market amid spiking coronavirus case numbers in India plus parts of Canada as well as Tokyo backtracking into the lockdown abyss, together with reports linking the U.K.’s covid-19 vaccine workhorse to the higher frequency of blood clots, continues to hold the bulls at bay,” Axi chief market strategist Stephen Innes said.
In other commodities, gold prices pulled back from the one-month high seen during the previous session, although the precious metal was still on track to post its first weekly gain in three.
Spot gold fell 0.6 per cent to US$1,745.99 per ounce, having hit its highest since March 1 at US$1,758.45 on Thursday. For the week, prices were up 1 per cent so far.
U.S. gold futures slipped 0.7 per cent to US$1,745.20.
“Gold’s had a fairly decent week on the back of weaker U.S. yields and the dollar,” but they are slightly up now and that’s weighing on prices, CMC Markets U.K.’s chief market analyst, Michael Hewson said.
Currencies
The Canadian dollar turned positive in the wake of a surprisingly strong employment report while its U.S. counterpart gained against a group of world currencies but still look set for its worst weekly showing in about a year.
The day range on the loonie is 79.30 US cents to 79.65 US cents. The dollar had been weaker in the predawn period but managed modest gains after Statistics Canada said the economy added more than 300,000 new jobs last month. Economists had been looking for a more modest increase of 100,000 positions.
On world markets, the U.S. dollar index, which weighs the greenback against a group of global currencies, recovered slightly in early going but still looked set for a drop for the week of about 1 per cent.
“Fed Chairman Jerome Powell stayed solidly on message [Thursday], emphasizing once again the Fed’s priority in assisting the U.S. employment recovery while dismissing inflation concerns as transitory,” OANDA senior analyst Jeffrey Halley said.
“The dovish tone was enough to push U.S. Treasury yields lower, dragging the US dollar with it while propelling stock markets higher with the S&P 500 recording a record close.”
The euro and yen are poised for their largest weekly percentage gains of the year, around 1 per cent up each, according to figures from Reuters.
The euro fell a quarter of a percent against the U.S. dollar on the day after mixed economic data from Germany, showing a rise in exports in February but a decline in industrial output.
The Australian and New Zealand dollars were among the currencies to lose ground and were both down around 0.5 per cent on the day against the U.S. dollar.
More company news
Barrick Gold Corp has reached a deal that gives the Papua New Guinea government a majority share in the Porgera gold mine as part of plans to restart operations, the company said on Friday. The deal will set a benchmark for further resources projects in the region, Prime Minister James Marape said in a statement, and help shape the terms of new developments by the likes of Australian gold miner Newcrest Mining. Porgera has been shut for a year after a dispute over the terms of benefit-sharing between the operator, landowners and the government, but the new framework pact paves the way to resume operations, though it gave no timeframe.
MTY Food Group Inc. reported a first-quarter profit of $13.4-million, down from $19-million a year ago, as it continued to deal with the impact of the pandemic. The restaurant franchising company says the profit amounted to 54 cents per diluted share for the quarter ended Feb. 28, down from 76 cents per diluted share a year earlier. Revenue totalled nearly $119-million, down from $150.8-million a year ago.
Southwest Airlines is removing 30 of its 58 Boeing 737 MAX 8 planes from its schedule after a notification from the planemaker over a potential electrical issue, it said on Friday. The airline said it has not experienced any known operational challenges related to the issue but has removed the 30 MAX 8s for further review. “Southwest anticipates minimal disruption to our operation,” it said in a statement.
Levi Strauss & Co raised its half-year revenue growth forecast, banking on COVID-19 vaccine rollouts to spur a return to normalcy, after the denim maker beat quarterly sales estimates on a pandemic-led e-commerce boost. The jeans maker said it expected its revenue to increase 24 per cent to 25 per cent, up from a prior range of 18 per cent to 20 per cent, for the first half of its fiscal 2021. Levi also said it expected adjusted per-share profit for the period to be 41 cents to 42 cents. Analysts on average expect a profit of 30 cents per share for the first and second quarter, according to IBES data from Refinitiv.
Roughly 500 ballots submitted in Amazon.com Inc’s landmark union election have been challenged in a contest that will determine whether an Alabama warehouse becomes the online retailer’s first organized workplace in the United States, people familiar with the matter told Reuters. With about half of roughly 3,200 ballots counted, the election is currently poised to result in workers rejecting a unionization push by a more than 2-1 margin, the news agency reported.
Economic news
(8:30 a.m. ET) Canadian employment for March.
(8:30 a.m. ET) U.S. PPI Final Demand for March.
(10 a.m. ET) U.S. wholesale inventories for February.
With Reuters and The Canadian Press
Terry Weber