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Equities
Canada’s main stock index edged higher early Friday, helped by energy shares as crude prices steadied but still looked set for a weekly loss. On Wall Street, key indexes gained at the open in the wake of a better-than-expected reading on consumer spending.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 10.1 points, or 0.05 per cent, at 20,193.82.
The Dow Jones Industrial Average rose 20.9 points, or 0.06 per cent, at the open to 35007.94. The S&P 500 rose 7.4 points, or 0.17 per cent, to 4367.43, while the Nasdaq Composite rose 54.4 points, or 0.37 per cent, to 14597.508 at the opening bell.
Early Friday the U.S. Commerce Department said U.S. retail sales rose 0.6 per cent in June. Markets had been expecting a second month of declines. Those figures come after two days of testimony from U.S. Federal Reserve chair Jerome Powell, who continued to insist that high recent inflation is transitory and that the economic goal posts need to remove stimulus remain a way off.
“U.S. consumer spending has been fairly stop-start this year, with the significant amounts of fiscal stimulus, helping to drive a rebound in consumption, but the recovery has been patchy with significant numbers of U.S. consumers choosing not to spend all of their stimulus windfalls,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
In this country, Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts fell 1.5 per cent in June to 282,070. Economists had been forecasting a number closer to 270,000 in June. Urban starts fell 1.8 per cent. Multiple urban starts edged up 0.6 per cent while single-detached starts fell 8.5 per cent, CMHC said.
Meanwhile, Statistics Canada said Canadian wholesale sales rose 0.5 per cent in May, setting a record high for a third straight month.
Overseas, Britain’s FTSE 100 was up 0.10 per cent by afternoon. Germany’s DAX and France’s CAC 40 fell 0.03 per cent and 0.48 per cent, respectively. The pan-European STOXX 600 slid 0.03 per cent.
In Asia, Japan’s Nikkei closed down 0.98 per cent. Early Friday, the Bank of Japan held steady on monetary policy but downgraded its GDP forecast for 2021. Hong Kong’s Hang Seng rose 0.03 per cent.
Commodities
Crude prices steadied but still looked set for their biggest decline since spring after a compromise on output among OPEC+ members raised concerns about more supply coming into the market.
The day range on Brent is US$73 to US$73.92. The range on West Texas Intermediate is US$71.13 to US$72.09.
Brent is on track for a weekly decline of more than 3 per cent while WTI is heading for a drop of roughly 4 per cent.
Earlier this week, Saudi Arabia and the UAE reached a compromise on output, paving the way for OPEC+ to finalize an agreement that would allow more supply into the market.
“More importantly to markets, though, is whether it will lead to a flurry of demands from other members for similar concessions, leading to the spectre of much higher volumes of oil hitting global markets as growth start to slow in parts of the world,” OANDA senior analyst Jeffrey Halley said.
In other commodities, gold pulled back but still looked set for a fourth consecutive week of gains.
Spot gold fell 0.3 per cent to US$1,823.66 per ounce, having hit US$1,833.65 on Thursday, its highest since June 16. Bullion is up 0.8 per cent this week.
U.S. gold futures fell 0.2 per cent to US$1,825.40.
“Gold continues to show positive technical signals that more gains lie ahead,” Mr. Halley said in a note.
Currencies
The Canadian dollar was firmer while its U.S. counterpart looked set for a weekly gain against a group of world currencies as investors seek safer holdings.
The day range on the loonie is 79.36 US cents to 79.60.
“The CAD has edged a little higher overnight, finding some support from firmer commodities and a stabilization in risk sentiment,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
“While the CAD remains fundamentally undervalued, in our opinion, it is not clear at all that it can strengthen materially at this point,” Mr. Osborne said. “The good news is perhaps somewhat priced in and higher commodities and/or an even more hawkish BoC stance may be needed to persuade investors of the attractions that we continue to see in the CAD.”
Canadian investors get housing starts and wholesale trade figures before the North American open.
On global markets, the U.S. dollar index, which weighs the greenback against major currencies, is on course for a 0.5-per-cent gain this week. That would be close to the biggest weekly gain in about a month, according to figures from Reuters. Early Friday, the index was flat at 92.530.
The U.S. dollar gained around a fifth of a per cent on the Japanese yen, last at 110.08 yen. The euro was broadly flat against the U.S. dollar at US$1.18165.
More company news
The Wall Street Journal reports that Intel Corp is in talks to buy semiconductor manufacturer GlobalFoundries Inc for about US$30-billion. The report cites people familiar with the matter. Any deal talks don’t appear to include GlobalFoundries directly, as a spokesperson for the company told the Journal it was not in discussions with Intel, according to the report. Talks come as a semiconductor shortage is hitting industries around the globe.
U.S. railroad operator Kansas City Southern reported a 37-per-cent jump in quarterly revenue, helped by higher freight volumes and fuel surcharges. Revenue rose to US$749.5-million in the second quarter ended June 30, from US$547.9-million a year earlier. Kansas City has agreed to be taken over by Canadian National Railway Co for $33.6-billion and the planned merger is being scrutinized by regulatory authorities.
Ford Motor Co said on Friday it was recalling about 775,000 Ford Explorer SUVs worldwide for a steering issue linked to reports of six injuries in North America. The recall covers 2013-2017 model year vehicles that may experience a seized cross-axis ball joint that could cause a fractured rear suspension toe link, which could significantly diminish steering control, increasing the risk of a crash.
Economic news
815 a.m. (ET) Canada housing starts for June.
830 a.m. (ET) Canada wholesale trade.
830 a.m. (ET) Canada international securities transactions for May.
830 a.m. (ET) U.S. retail sales for June.
10 a.m. (ET) U.S. business inventories for May.
10 a.m. (ET) University of Michigan consumer sentiment.
With Reuters and The Canadian Press
Terry Weber