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Equities

Canada’s main stock index pulled back early Friday after touching a record high during the previous session, with energy and mining shares weighing. On Wall Street, the tech-heavy Nasdaq fell after retail giant Amazon offered a disappointing sales forecast.

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At 9:30 a.m., the Toronto Stock Exchange’s S&P/TSX composite index was down 78.19 points, or 0.38 per cent, at 20,233.59.

In the U.S., the Dow Jones Industrial Average fell 71.3 points, or 0.20 per cent, at the open to 35,013.26. The S&P 500 fell 24.0 points, or 0.54 per cent, at the open to 4,395.12, while the Nasdaq Composite dropped 162.4 points, or 1.10 per cent, to 14,615.851 at the opening bell.

Shares of Amazon were off by more than 6 per cent in early trading after the online retail giant posted a rare quarterly sales miss and said it expects sales growth to slow in coming quarters. Amazon’s net sales rose to US$113.08-billion in the second quarter ended June 30 from US$88.91-billion, a year earlier. Analysts on average had expected US$115.20-billion, according to IBES data from Refinitiv.

“Revenues for Q2 came in short of expectations, while Q3 guidance was also lower than expected, although this also needs to be set into some sort of context,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“Revenues were still in excess of $110-billion at $113-billion, while sales for Q3 were expected to be equally as good. They just weren’t good enough.”

In this country, investors have another heavy day of earnings with results from Telus and Telus International as well as Tim Hortons-parent Restaurant Brands, Enbridge and SNC-Lavalin.

Telus reported adjusted profit of $348-million or 26 cents per share in the latest quarter, compared with $316-million or 25 cents per share in the prior year quarter. Revenue increased 10.3 per cent to $4.1-billion, from $3.7-billion. Telus was expected to report 26 cents per share in adjusted profit on $4.08 billion of revenue, according to financial data firm Refinitiv.

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Telus stock was modestly higher in early trading in Toronto.

Ahead of the opening bell, Statistics Canada offered a reading on the health of the Canadian economy. The agency says GDP fell by 0.3 per cent in May. That was in line with early estimates. Statscan also offered an early forecast on June growth, suggesting the economy rebounded by 0.7 per cent as the economy reopened.

Overseas, the pan-European STOXX 600 was down 0.23 per cent in afternoon trading. Britain’s FTSE 100 fell 0.53 per cent. Germany’s DAX was off 0.47 per cent while France’s CAC 40 was little changed.

In Asia, Hong Kong’s Hang Seng ended down 1.35 per cent on weakness in tech stocks to record a decline of about 5 per cent for a volatile week. Japan’s Nikkei finished Friday’s session down 1.8 per cent.

Commodities

Crude prices were modestly lower in early going but still looked set for a weekly gain as optimism over vaccination progress offset concerns about the spread of the Delta variant in some regions.

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The day range on Brent is US$74.39 to US$75.13. The range on West Texas Intermediate is US$72.93 to US$73.62.

Both benchmarks look set for a weekly increase of about 2 per cent.

“With the supply side somewhat under control across OPEC+ and non-OPEC producers, crude prices could still reach US$80 [a barrel] over the next couple of months if the demand outlook doesn’t take any fresh hits,” OANDA senior analyst Edward Moya said.

He also said traders are anticipating more price increases from Saudi Arabia, although that might prove too aggressive give the short-term impact to demand over the spread of the Delta variant.

Reuters, citing trade sources, said Saudi Arabia is expected to raise prices across various grades of crude oil it sells to Asia in September for a second straight month, tracking the strength in Middle East benchmarks.

In other commodities, gold looked set for its best weekly performance in more than two months, helped by recent weakness in the U.S. dollar.

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Spot gold was steady at US$1,827.41 per ounce, after hitting its highest since July 15 at US$1,832.40 on Thursday. It is up 1.4 per cent so far for the week.

U.S. gold futures fell 0.3 per cent to US$1,830.80 per ounce.

“The Fed won’t be changing its game plan anytime soon and that should provide a short-term bullish environment for bullion,” Mr. Moya said.

“Gold will now be able to stomach progress on taper conditions and even a slowly steepening of the Treasury curve.”

Currencies

The Canadian dollar was firmer, holding above 80 US cents, as its U.S. counterpart looked set for its worst weekly showing since May.

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The day range on the loonie is 80.17 US cents to 80.48 US cents.

“The CAD is ignoring weaker commodity prices generally and the negative. knee-jerk response to weaker equities has failed to emerge,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said in an early note. “Spreads remain CAD supportive but the immunity to the broader risk mood is a little odd and should restrain the CAD’s rebound somewhat if it persists.”

On world markets, the U.S. dollar index, which measures the a basket of six other currencies, was last at 91.853, its lowest level since June 29.

For the week, the index is off 1.1 per cent, its worst weekly showing since early May, according to figures from Reuters. For the month, the index is down 0.5 per cent so far, after a 2.8 per cent rally in June.

The euro rose to a one-month high against the dollar to be last at US$1.18955. The British pound traded near its highest in more than a month helped by a weaker U.S. dollar.

More company news

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Enbridge Inc. says its net income attributable to common shareholders dropped 15 per cent in the second quarter despite rebounding demand for energy as economies recover from COVID-19. The Calgary-based energy company says it earned $1.39-billion or 69 cents per share in the three months ended June 30, compared with $1.65-billion or 82 cents per share a year earlier. Revenues surged nearly 38 per cent to $10.9-billion from almost $8 billion in the prior year quarter.

Restaurant Brands International Inc beat estimates for quarterly revenue, as more customers ate out after COVID-19 restrictions in Canada and the United States were eased. Total revenue rose to $1.44-billion in the second quarter ended June 30, compared with $1.05-billion a year earlier. IBES data from Refinitiv had estimated revenue of $1.37-billion.

Chevron Corp reported its highest profit in six quarters and joined an oil industry stampede to reward investors with share buybacks, as rebounding crude oil prices carried earnings and cash flow to pre-pandemic levels. It reported an adjusted profit of $3.27-billion, or $1.71 per share, compared with a loss of $2.92-billion, or $1.56 per share, the same quarter a year ago. Year-ago results included writedowns. Earnings topped Wall Street estimates of a $1.50 a profit, according to Zacks consensus of eight analysts.

Caterpillar Inc reported a rise in second-quarter adjusted profit, as a recovery in global economic activity from pandemic lows fueled demand for its heavy machinery and construction equipment. Adjusted profit for the three months ended June 30 rose to $2.60 per share, from $1.27 per share, a year earlier.

Imperial Oil Ltd reported a near 7% fall in second-quarter profit on a sequential basis, impacted by planned turnaround activity and weaker realized margins in the downstream. Imperial’s net income fell to $366-million, or 50 cents per share, in the second quarter ended June 30, from $392-million, or 53 cents per share, in the previous quarter.

Economic news

(8:30 a.m. ET) Canada’s monthly GDP for May.

(8:30 a.m. ET) Canadian industrial produce price index for June.

(8:30 a.m. ET) Canadian raw materials price index for June.

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

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

(8:30 a.m. ET) U.S. core PCE price index for June.

(9:45 a.m. ET) U.S. Chicago PMI for July.

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

With Reuters and The Canadian Press

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