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Equities
Canada’s main stock index rose at the opening bell, helped by gains in energy stocks alongside higher crude prices and positive news on hiring in this country’s economy. South of the border, Wall Street’s key indexes advanced in early trading, rebounding from the previous session’s sharp selloff on growth concerns.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 75.19 points, or 0.37 per cent, at 20,136.4.
The Dow Jones Industrial Average rose 35.6 points, or 0.10 per cent, at the open to 34,457.51. The S&P 500 rose 8.6 points, or 0.20 per cent, at the open to 4,329.38, while the Nasdaq Composite rose 18.6 points, or 0.13 per cent, to 14,578.428 at the opening bell.
“Despite the discouraging COVID developments, there is no apparent reason for the U.S. equity prices to come down significantly, or the bubble to burst, as the U.S. yields remain comfortably on a fading path,” Ipek Ozkardeskaya, senior analyst with Swissquote, said in an early note.
“The market rhetoric is clearly shifting from transitory inflation to transitory recovery, and that’s probably what keeps the inflows in U.S. treasuries elevated, combined with a seasonally low issuance of treasuries in July and Fed coming back to the market after the July 4 break,” she said.
In this country, investors got the latest reading on employment. Statistics Canada says the economy added 230,700 new jobs in June, better than the 175,000 to 200,000 positions economists had been expecting. The unemployment rate fell to 7.8 per cent.
The gain comes as parts of the country emerged from strict lockdowns aimed at curbing the spread of COVID-19. The June increase follows two months of declines.
On the corporate side, Montreal-based restaurant operator MTY Food Group Inc. says it will restart paying a dividend after swinging to a profit of $23-million in the latest quarter. That compared to a loss of $99.1-million in the same period a year earlier. The company suspended its dividend last year as a result of the impact of the pandemic on business. MTY will pay a quarterly dividend of 18.5 cents per share next month.
Overseas, the pan-European STOXX 600 was up nearly 1 per cent by afternoon. The index fell almost 2 per cent during the previous session. Britain’s FTSE 100 rose 0.83 per cent. Germany’s DAX gained 1.02 per cent. France’s CAC 40 was up 1.8 per cent.
In Asia, Japan’s Nikkei ended down 0.63 per cent following a weak handoff from Wall Street. Hong Kong’s Hang Seng gained 0.70 per cent.
Commodities
Crude prices were higher in early going, helped by a drop in weekly U.S. inventories, but still looked set for a loss for the week amid ongoing uncertainty after OPEC output talks failed.
The day range on Brent is US$73.80 to US$74.86. The range on West Texas Intermediate is US$72.72 to US$73.78.
Both benchmarks are down about 2 per cent for the week.
Sentiment got a late-week boost after the U.S. Energy Information Administration reported that crude stocks fell by 6.9 million barrels last week to 445.5 million barrels. Analysts had been expecting a decline closer to 4 million barrels.
Gasoline stocks fell by 6.1 million barrels in the week to 235.5 million barrels. Analysts had forecast a 2.2 million-barrel drop.
However, the failure of OPEC+ talks earlier in the week continues to temper crude’s advance.
“The collapse of the OPEC+ talks has weighed on oil prices this week,” OANDA senior analyst Edward Moya said.
“The overriding concern is that the current output agreement will be abandoned, and producers will ramp up production to boost market share.”
He said, while near-term demand is outpacing supply, the markets are concerned that won’t remain the case heading toward the end of the year if the OPEC impasse remains.
“Currently, OPEC is retaining supply by around six million barrels a day,” he said. “The group was looking to lower this to four million, but the United Arab Emirates dissented and no agreement could be reached.”
In other commodities, gold prices moved higher in choppy trading and looked headed to a third week of gains as concerns about the spread of the Delta variant and a drop in U.S. Treasury yields lifted bullion’s appeal.
Spot gold was up 0.1 per cent at U$1,803.92 an ounce, up 0.9 per cent on the week. U.S. gold futures rose 0.1 per cent to US$1,802.10.
Currencies
The Canadian dollar edged higher as risk sentiment steadied while the U.S. dollar managed modest gains against a group of currencies after the previous session’s decline.
The day range on the loonie is 79.64 US cents to 80.17 US cents.
“We think the CAD is gearing up for a period of outperformance with a relatively hawkish central bank horizon and the latest gains in the USD should ease while the Fed only begins to lay the groundwork for tapering,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said in an early note.
The loonie moved back above 80 US cents after Statscan reported a better-than-expected reading on hiring in June.
On world markets, the U.S. dollar index recouped part of Thursday’s 0.36-per-cent decline, rising less than 0.1 per cent to 92.426. On Wednesday, it had pushed to a three-month high of 92.844, according to figures from Reuters.
Safe-haven currencies including the yen and the Swiss franc weakened by 0.3 per cent against the U.S. dollar in early London trading, the yen was on track to rise 0.9 per cent this week, its biggest weekly gain since early November 2020.
The euro held on to most of a 0.45-per-cent rise from overnight, slipping less than 0.1 per cent to US$1.18395.
More company news
Chinese aviation officials have expressed willingness to conduct flight tests on Boeing Co’s 737 MAX, potentially paving the way for the fastest-selling jet’s return in China, Bloomberg News reported on Thursday. Deals of a validation flight are still being worked out and the planemaker plans to send a team of 35 pilots and engineers to meet the officials in late July, the report said, citing people familiar with the matter.
Airbus shares rose sharply on Friday after the planemaker confirmed a surge of deliveries in June, bringing the total number of aircraft handed over in the first half of the year to 297. Deliveries, which have been recovering from a pandemic-related slump, rose 52% in the first six months from 196 at the mid-point of 2020 and compare with a total of 389 in the first half of 2019 before the coronavirus crisis crippled air travel.
Economic news
G20 finance ministers and central bank governors meet in Venice
(8:30 a.m. ET) Canadian employment for June.
(10 a.m. ET) U.S. wholesale inventories for May.
With Reuters and The Canadian Press
Terry Weber