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Equities
Canada’s main stock index slid at the open Friday with weaker crude prices weighing on sentiment despite new figures showing continued growth in the country’s economy. On Wall Street, indexes also started in the red with investors taking a breather after sending the S&P 500 to record levels during the previous session.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 91.19 points, or 0.47 per cent, at 19,164.73.
In the U.S., the Dow Jones Industrial Average fell 71.6 points, or 0.21 per cent, at the open to 33988.75. The S&P 500 fell 13.4 points, or 0.32 per cent, at the open to 4198.1, while the Nasdaq Composite dropped 111.8 points, or 0.79 per cent, to 13970.729 at the opening bell.
“Earnings season continues to play a key role in market sentiment, with Twitter and Amazon continuing the largely mixed role of tech over the course of the week,” IG senior market analyst Joshua Mahony said.
Shares of Amazon.com Inc. were up nearly 2 per cent in early trading after the company reported record profit in the latest quarter and said it expects consumers to continue spending as economies grow. Amazon said it expects operating income for the current quarter to be between US$4.5-billion and US$8-billion, which includes about US$1.5-billion in costs related to COVID-19. Net sales rose to US$108.52-billion in the first quarter ended March 31 from US$75.45-billion, beating analysts’ average estimate of US$104.47-billion, according to IBES data from Refinitiv.
Twitter shares, meanwhile, sank more than 13 per cent in morning trading as investors reacted to disappointing second-quarter revenue guidance and a warning that user growth seen during the pandemic could slow.
On Friday, energy stocks will be in focus with results due from Exxon Mobil and Chevron. In Canada, Imperial Oil, which is majority owned by Exxon, will also release results.
Exxon Mobil posted its first profit in five quarters, helped by higher oil and gas prices. Net income attributable to Exxon was US$2.73-billion, or 64 US cents per share, in the first quarter, compared with a loss of US$610-million, or 14 US cents per share, a year earlier.
Imperial Oil, meanwhile, posted a profit of $392-million, or 53 cents per share, for the quarter ended March 31, compared to a loss of $1.15-billion, or $1.56 per share, in the previous quarter. The company also raised its dividend to 27 cents per share from 22 cents. Imperial Oil shares were up nearly 3 per cent in early trading in Toronto.
Canadian investors also got earnings from Tim Hortons parent Restaurant Brands International ahead of the start of trading.
Elsewhere, Statscan says GDP grew by 0.4 per cent in February, just shy of the 0.5-per-cent increase economists had been expecting. The government agency also said early estimates suggest March growth of 0.9 per cent.
Statscan says February marked the tenth consecutive monthly increase although total economic activity was about 2 per cent below the level seen in February 2020, before the COVID-19 pandemic.
“The lull in between the second and third waves of the virus saw Canada’s economy recover further ground,” RBC senior economist Royce Mendes said.
“The country’s GDP expanded 0.4% in February, a touch below expectations, and a further 0.9% in March, according to the flash estimate. That suggests that GDP in March was just 1.3% below its pre-COVID peak, and that Q1 growth is tracking [at a] 6.7% seasonally adjusted annual rate, just slightly below the Bank of Canada’s forecast.”
Overseas, the pan-European STOXX 600 down 0.15 per cent by afternoon. Britain’s FTSE 100 rose 0.10 per cent. Germany’s DAX rose 0.26. France’s CAC 40 slid 0,15 per cent.
In Japan, the Nikkei closed down 0.83 per cent. Hong Kong’s Hang Seng lost 1.97 per cent.
Commodities
Crude prices pulled back from multiweek highs as concerns about the rise in COVID-19 infections in some regions and related lockdowns offset optimistic demand forecasts.
The day range on Brent is US$67.90 to US$68.40. The range on West Texas Intermediate is US$64.21 to US$64.95.
Brent is on track to gain roughly 8 per cent in April while WTI could see gains of nearly 10 per cent for the month, according to figures from Reuters. That would market the fifth monthly gain in six for crude prices.
Friday’s declines reflected continued concern about the situation in India, where spiking case numbers have left hospitals overrun. The number of COVID-19 cases in India, the world’s third biggest oil consumer, exceeded 18 million on Thursday.
“The post-COVID-19 demand recovery is still uneven and the surge in Indian cases serves as a timely reminder that any rally to $70 [for Brent] is too premature,” Energy Aspects analysts said in a note.
In other commodities, gold prices were down and looked set for the worst week in a month as U.S. Treasury yields rise.
Spot gold was down 0.1 per cent at US$1,770.41 per ounce. Prices are 0.3-per-cent lower for the week so far. U.S. gold futures were steady at US$1,769 an ounce.
Three-month copper on the London Metal Exchange was down 0.1 per cent at US$9,873.50 a tonne, pulling back after a five-session rally. It rose to as high as US$10,008 on Thursday, hovering close to a record US$10,190 hit in February 2011.
Currencies
The Canadian dollar was steady, trading near the mid-81-US-cent market, as its U.S. counterpart looked set for a fourth consecutive weekly decline against a group of world currencies.
The day range on the loonie is 81.38 US cents to 81.51 US cents. The Canadian dollar is on track for a weekly gain against the greenback of about 1.6 per cent, its best showing since early November.
“The biggest challenge for CAD resilience today might be weak risk appetite and softer crude (and commodities generally) but we still see the CAD trading a fair bit shy of fundamental equilibrium and expect limited potential for the USD to rebound at the moment,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index looked set to finish the week down 0.2 per cent, with April losses topping 2 per cent. A four-week string of losses would be the longest losing stretch since last July, according to figures from Reuters.
Rising commodity prices also supported the Australian dollar, which gained 0.2 per cent to US$0.77785, climbing back toward a six-week high of US$0.78180 seen Thursday.
The euro traded down 0.2 per cent at US$1.21020, near the two-month high of US$1.2150 set the previous session. The euro is up 0.2 per cent for the week and 3.3 per cent for the month.
More company news
EU antitrust regulators on Friday charged iPhone maker Apple with setting restrictive rules on its App Store that force developers to use its own in-app payment system and prevent them from informing users of other purchasing options. The move by the European Commission followed a complaint by Swedish music streaming service Spotify two years ago.
Restaurant Brands International Inc beat quarterly revenue estimates on Friday. Total revenue rose to US$1.26-billion in the first quarter ended March 31, from $1.23 billion a year earlier, and was above analysts’ average estimate of US$1.25-billion, according to IBES data from Refinitiv.
Chevron Corp’s first-quarter profit fell 29% compared with the same period a year ago as gains from oil and gas prices were undercut by weaker refining margins, production losses and the impact of an asset sale that benefited results last year. Chevron, the second-largest U.S. oil producer, reported a profit of US$1.72-billion, or 90 US cents per share, compared with US$2.45-billion, or US$1.31 per share, a year earlier. Year-ago results included about $680 million in asset sales and favorable tax items.
Clorox Co cut its full-year earnings per share forecast and forecast a drop in gross margins for the year, due to higher manufacturing, commodity and logistics costs. The company projected diluted earnings per share of US$5.94 to US$6.14 per share, compared with US$8.05 to US$8.25 per share earlier.
Economic news
(8:30 a.m. ET) Canada’s monthly real GDP for February.
(8:30 a.m. ET) Canada’s industrial product price index and raw materials price index for March.
(8:30 a.m. ET) U.S. personal spending and income for March.
(8:30 a.m. ET) U.S. core PCE price index for March.
(8:30 a.m. ET) U.S. employment cost index for Q1.
(9:45 a.m. ET) U.S. Chicago PMI for April.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for April.
With Reuters and The Canadian Press
Terry Weber