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Equities

Canada’s main stock index dipped in early trading Friday even as crude prices looked set for a weekly gain. South of the border, the S&P 500 touched fresh highs with new U.S. inflation figures tempering concerns about potential action by the Federal Reserve.

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Shortly after the opening bell, the S&P/TSX composite index was down 35.79 points at 20,179.33. Despite the decline, the index was still on track for a weekly gain.

Tech, energy and telecom stocks were weaker in early trading in Toronto.

In the U.S., the S&P 500 opened higher by 7.96 points, or 0.19 per cent, at 4,274.45, while the Nasdaq Composite gained 31.10 points, or 0.22 per cent, to 14,400.81 at the start of trading.

The Dow Jones Industrial Average rose 131.28 points, or 0.38%, at the open to 34,328.10.

Sentiment was helped by an announcement by U.S. President Joe Biden of a bipartisan agreement on a pared down infrastructure plan valued at $1.2-trillion over eight years. Of that total, $579-billion is new spending.

“The new spending would include money for roads, bridges, rail and public transit, all areas that have been sorely neglected over the years,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“While the agreement is welcome it still faces a high bar in passing into law given the Democrats narrow majorities on Capitol Hill.”

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Ahead of the start of trading, the U.S. Commerce Department said consumer spending was flat while the May personal consumption expenditure index, a key measure of underlying inflation for the Fed, rose 3.4 per cent year-over-year, matching economists’ forecasts. The core index rose 0.5 per cent for the month, slightly below expectations.

“The acceleration in inflation has been anticipated by the Fed and is being amplified by base effects, suggesting that the Fed will look through the temporary increase and focus on the recovery in the labor market,” CIBC economist Katherine Judge said in a note.

On the corporate side, shares of Nike were up roughly 14 per cent in early trading after the company’s quarterly earnings and revenue topped analysts’ forecasts and its outlook for full-year sales beat Wall Street estimates.

Nike said fiscal 2022 revenue is estimated to grow by low double-digits and surpass $50-billion. Analysts had expected revenue of $48.46-billion for fiscal 2022, according to Refinitiv.

In this country, BlackBerry Ltd. said revenue fell to US$174-million in the first quarter ended May 31 from US$206-million a year earlier. Net loss in the quarter narrowed to US$62-million, or 11 US cents per share, from US$636-million, or US$1.14 cents per share, a year earlier. Shares were down in Toronto in morning trading.

Overseas, major European markets were mixed with the pan-European STOXX 600 hovering around the flat line. Britain’s FTSE 100 edged up 0.38 per cent by afternoon. Germany’s DAX slid 0.12 per cent. France’s CAC 40 fell 0.13 per cent.

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In Asia, Japan’s Nikkei ended up 0.66 per cent. Hong Kong’s Hang Seng gained 1.4 per cent.

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Commodities

Crude prices were steady and looked set for a fifth week of gains as investors await next week’s meeting of OPEC and its allies.

The day range on Brent is US$75.44 to US$75.90. The range on West Texas Intermediate is US$73.21 to US$73.63. Brent and WTI are both up more than 2 per cent on the week so far.

“Although physical demand has kept prices on both contracts comfortably at the top of their ranges this week, oil is now vulnerable to a short-term correction lower,” OANDA senior analyst Jeffrey Halley said.

“The relative strength indexes (RSIs) on both contracts have moved well into overbought territory, which is typically a decent signal of an impending correction.”

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He said ‘tap-opening rhetoric’ from OPEC+ officials on Friday or over the weekend could trigger a sharp correction lower.

Members of the OPEC+ group are scheduled to meet on July 1 and will have to weigh economic openings in the U.S., Europe and China against COVID-19 outbreaks in other areas.

“The producer group has ample space to boost supply without derailing the drawdown in oil stocks, given the rosier demand outlook,” Stephen Brennock of oil broker PVM, said.

In other commodities, gold prices were higher and looked set for their first weekly gain in four, helped by a subdued U.S. dollar.

Spot gold was up 0.2 per cent at US$1,779.50 per ounce while U.S. gold futures were 0.2 per cent higher at US$1,780.20.

“In the bigger picture, gold needs to complete a daily close above US$1,800 an ounce, or below US$1,760.00 an ounce, to signal its next directional move,” Mr. Halley said in an early note. “Otherwise, patience is required in a range-trader’s market.”

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Currencies

The Canadian dollar was firmer, buoyed by positive risk sentiment, while its U.S. counterpart slid against world currencies.

The day range on the loonie is 81.11 US cents to 81.30 US cents.

There were no major Canadian economic releases due Friday.

On world markets, risk-sensitive currencies rose against the greenback, as did the euro, gaining 0.1 per cent to US$1.1943, and the Japanese yen, which rose by about the same margin to 110.77 per U.S. dollar, according to figures from Reuters.

The New Zealand dollar edged back above its 200-day moving average to US$0.7076, although it remains short of February highs above 74 US cents. The Australian dollar rose 0.2 per cent to US$0.7595.

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More company news

Panasonic Corp sold its stake in electric car maker Tesla Inc for about 400 billion yen (US$3.61-billion) in the year ended March, a spokesperson for the Japanese company said on Friday. The sale comes as the conglomerate is seeking to reduce its dependence on Tesla and raise cash for investments.

Richard Branson’s spaceship company Virgin Galactic Holdings Inc said on Friday it received an approval from the U.S. aviation safety regulator to fly people to space, following a successful test flight last month. Virgin Galactic completed its first manned space flight from its new home port in New Mexico in May, as its SpaceShipTwo craft, which can hold six passengers, glided to a landing on a runway safely with its two pilots.

Shareholders at Toshiba Corp voted out its board chairman and one other director on Friday, a forceful rebuke of the company after it was found to have colluded with the government in suppressing foreign investor interests. For many, the result at the annual general meeting marks a new watershed moment for corporate governance in Japan after activist Toshiba shareholders prevailed earlier this year in securing a probe into the allegations of pressure on overseas investors. “This result is a sign of a paradigm shift in Japan and will only embolden activist investors whether foreign or domestic,” said Justin Tang, head of Asian research at United First Partners in Singapore.

Economic news

(8:30 a.m. ET) U.S. personal spending for May.

(8:30 a.m. ET) U.S. personal income for May.

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

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

With Reuters and The Canadian Press

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