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Equities
Canada’s main stock index slid at Friday’s opening bell, tracking weaker broader market sentiment. On Wall Street, major indexes traded down on mixed results from some of the biggest U.S. banks and continued weakness in tech shares.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 83.36 points, or 0.39 per cent, at 21,209.6.
In the U.S., the Dow Jones Industrial Average fell 117.19 points, or 0.32 per cent, at the open to 35,996.43.
The S&P 500 opened lower by 21.04 points, or 0.45 per cent, at 4,637.99, while the Nasdaq Composite dropped 98.79 points, or 0.67 per cent, to 14,708.02 at the opening bell.
U.S. bank earnings will be key Friday with results from JPMorgan, Wells Fargo and Citigroup.
“Good earnings are the only thing that could clear investors’ heads from the Fed-induced bearish thoughts,” Swissquote senior analyst Ipek Ozkardeskaya said.
Federal Reserve Governor Lael Brainard, in a hearing for her nomination to become the U.S. central bank’s vice chair, said on Thursday that rates will need to rise to combat rising inflation and a move could come “as soon as” the Fed halts a separate asset purchase program in March.
“The earlier and steeper rate expectations are a boon for the bank earnings expectations,” Ms. Ozkardeskaya said. “But, expectations on bank earnings got quite high, which means that they now they must live up to these strong expectations to keep the rally going. Therefore, if we see anything less than amazing in the big bank results, the wind could rapidly change direction.”
JPMorgan posted a profit of US$10.4-billion, or US$3.33 per share, in the quarter ended Dec. 31, compared with US$12.1-billion, or US$3.79 per share, a year earlier. Analysts on average had expected earnings of $3.01 per share in the latest quarter, according to Refinitiv. Wells Fargo, meanwhile, said profit rose to US$5.8-billion, or US$1.38 per share, in the three months ended Dec. 31, from US$3.09-billion, or 66 US cents per share, a year earlier. Analysts on average had expected a profit of US$1.13 per share.
Citigroup’s profit fell to US$3.2-billion, or US$1.46 per share, for the quarter ended Dec. 31, from US$4.3-billion, or US$1.92 per share, a year earlier. Excluding the impact of costs stemming from Asia divestitures, the bank earned US$1.99 per share. Analysts on average had expected a profit of $1.38 per share, according to Refinitiv IBES data.
JPMorgan shares were down more than 5 per cent in early trading while Wells Fargo stock advanced roughly 2 per cent. Citi shares fell about 2 per cent shortly after markets opened.
Friday's analyst upgrades and downgrades
On the economic side, U.S. investors also got a weaker-than-expected reading on U.S. retail sales. The U.S. Commerce Department said sales fell 1.9 per cent in December, more than the 0.1-per-cent decline economists had been forecasting.
In this country, Cogeco Communications Inc. said profit attributable to shareholders was $106.8-million or $2.27 per diluted share in the first quarter, compared with $106.7-million or $2.22 per share a year earlier. Revenue rose 16.1 per cent to $718.5-million in the three months ended Nov. 30, from $618.9-million in the first quarter of 2021. The results were released after Thursday’s close.
Overseas, the pan-European STOXX 600 was down 0.52 per cent in morning trading. Britain’s FTSE 100 fell 0.07 per cent. Germany’s DAX and France’s CAC 40 were off 0.52 per cent and 0.73 per cent, respectively.
In Asia, Japan’s Nikkei lost 1.28 per cent. Hong Kong’s Hang Seng finished down 0.19 per cent.
Commodities
Crude prices were on track for their fourth week of gains, supported by a softer U.S. dollar and expectations that demand will continue to outstrip supply.
The day range on Brent is US$83.99 to US$85.44. The range on West Texas Intermediate is US$81.58 to US$82.84.
“The fundamentals continue to look bullish for oil,” OANDA senior analyst Craig Erlam said.
“Temporary disruptions in Kazakhstan and Libya are close to being resolved, with the latter taking a little longer to get fully back online. But OPEC being unable to hit output targets at a time when demand remains strong is ultimately keeping prices elevated and will continue to do so.”
Prices have been underpinned by recent weakness in the U.S. dollar, which looks set for its biggest weekly decline in a year. A lower greenback makes commodities priced in U.S. dollars more attractive to holders of other currencies.
Gains, however, were offset somewhat by a Reuters report that China is poised to release crude reserves.
The news agency, citing unnamed sources, said that China plans to release oil reserves around the Lunar New Year holidays between Jan. 31 and Feb. 6 as part of a plan coordinated by the United States with other major consumers to reduce global prices.
Gold prices, meanwhile, were set for their biggest weekly rise since November, also drawing support from a lower greenback.
Spot gold rose 0.3 per cent to US$1,827.34 per ounce by early Friday morning, and has added about 1.8 per cent so far this week. U.S. gold futures also rose 0.3 per cent to US$1,827.20.
“It could be argued that the bullish case for gold is its reputation as an inflation hedge, especially given central banks’ recent record for recognizing how severe the situation is,” Mr. Erlam said.
“But with inflation likely nearing its peak, that may not last. That said, fear around Fed tightening may also be peaking which could support gold in the short-term.”
Currencies
The Canadian dollar was higher, trading around 80 US cents in early going, as its U.S. counterpart marks a fourth day of declines against a group of world currencies.
The day range on the loonie is 79.83 US cents to 80.21 US cents.
There were no major Canadian economic releases due Friday. U.S. investors get new retail sales figures ahead of the opening bell.
“Focus will revert to domestic developments next week amid a fuller data calendar (Bank of Canada Business Outlook Survey, CPI and Retail Sales are among the data reports ahead of the BoC policy decision the following week),” Shaun Osborne, chief FX strategist at Scotiabank, said in an early note. “The top tier data are expected to remain firm, supporting the idea that Q4 growth retained strong momentum; a sharp deceleration in Q1 is expected to be temporary and is unlikely to affect BoC thinking in the coming months.”
On world markets, the U.S. dollar index fell 0.2 per cent to 94.62, its lowest since early November. On a weekly basis, it is set to weaken 1.11 per cent, its biggest drop since December 2020, according to figures from Reuters.
The euro is up more than 1 per cent for the week so far and has broken out of a range it has held since late fall, hitting its highest since Nov. 11 at $1.1483.
Britain’s pound gained and was headed for a fourth weekly gain. It last traded at US$1.3730.
In bonds, the yield on the U.S. 10-year note was higher at 1.74 per cent in the predawn period.
More company news
BlackRock Inc reported a 2.5% rise in fourth-quarter profit on Friday as the world’s largest money manager’s fee income rose with assets under management scaling a new peak of over $10-trillion. Adjusted profit rose to $1.61-billion, or $10.42 per share, in the quarter ended Dec. 31, from $1.57-billion, or $10.18 per share, a year earlier. Analysts on average were expecting the company to report a profit of $10.16 per share, according to IBES data from Refinitiv.
Tesla Inc will accept meme-based cryptocurrency dogecoin as payment for its merchandise such as the “Giga Texas” belt buckle and mini models of electric vehicles, Chief Executive Officer Elon Musk said in a tweet on Friday. The move, which sent dogecoin prices 14% higher, comes a month after Musk said Tesla w ould test out the digital token as a payment option.
Economic news
(8:30 a.m. ET) U.S. retail sales for December.
(8:30 a.m. ET) U.S. import prices for December.
(9:15 a.m. ET) U.S. industrial production for December.
(10 a.m. ET) U.S. business inventories for November.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for January (preliminary reading).
With Reuters and The Canadian Press
Terry Weber