Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index tracked positive global sentiment higher at Friday’s open and looked set for its best weekly showing in two months. South of the border, key indexes were also positive in early trading, helped by new economic figures suggesting inflation could be peaking.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 76.44 points, or 0.37 per cent, at 20,608.62.
In the U.S., the Dow Jones Industrial Average rose 97.90 points, or 0.30 per cent, at the open to 32,735.09.
The S&P 500 opened higher by 19.59 points, or 0.48 per cent, at 4,077.43, while the Nasdaq Composite gained 129.04 points, or 1.10 per cent, to 11,869.69 at the opening bell.
OANAD senior analyst Ed Moya says the latest moves came after the Federal Reserve minutes were seen as committing to only gradual tightening of policy to fight inflation and after a handful of U.S. retailers, including Macy’s and Dollar General, provided positive outlooks.
“The Fed locked itself into delivering a couple of half-point rate increases until the Jackson Hole Symposium and that has removed the risk of aggressive tightening in the short term,” Mr. Moya said.
“For some traders, having a strong idea on when the Fed will end its hiking cycle is the key for giving everyone the greenlight to buy equities and that could happen at the end of the summer.”
Friday marks the last session before a long weekend in the U.S. U.S. markets will be closed on Monday for Memorial Day.
Sentiment on Wall Street got a booster early Friday with new figures suggesting inflation could be peaking. The personal consumption expenditures (PCE) price index gained 0.2 per cent in April after rising 0.9 per cent in March. In the 12 months through April, the PCE price index advanced 6.3 per cent after jumping 6.6 per cent in March. The PCE index is one of the Fed’s preferred measures of inflation because of its scope and ability to reflect changing consumer behaviour in response to rising prices. The core PCE price index, which excludes the food and energy components, increased 4.9 per cent year-on-year in April after rising 5.2 per cent in March.
In Canada, bank earnings wrap up with results from National Bank. Ahead of the start of trading, National Bank said it was raising its quarterly dividend to 92 cents from 87 cents. The bank also reported adjusted earnings per share in the second quarter of $2.55, ahead of the $2.27 analysts had been forecasting. Shares were up nearly 3 per cent in early trading in Toronto.
The Globe’s James Bradshaw reports that Royal Bank of Canada and Toronto-Dominion Bank on Thursday both reported profits for the fiscal second quarter ended April 30 that beat estimates, while Canadian Imperial Bank of Commerce’s earnings fell short of expectations as its costs swelled. All three banks saw revenue and loan balances in their core Canadian retail and business banking operations post strong gains compared with a year earlier.
Overseas, the pan-European STOXX 600 was up 0.60 per cent in morning trading. Britain’s FTSE 100 edged up 0.03 per cent. Germany’s DAX and France’s CAC 40 gained 0.58 per cent and 0.70 per cent, respectively.
In Asia, Japan’s Nikkei ended up 0.66 per cent. Hong Kong’s Hang Seng added 2.89 per cent.
Commodities
Crude prices looked set for weekly gains as supply concerns continue to buoy the market amid optimism over demand ahead of the summer travel season.
The day range on Brent is US$117.00 to US$118.26. The range on West Texas Intermediate is US$113.61 to US$114.74.
Brent is up about 5 per cent on the week while WTI is up about 1 per cent so far.
“There is likely a lot of short-term [strength] in crude markets as speculators and Johnny-come-lately tourists position for the EU Russian embargo bounce,” Stephen Innes, managing partner with SPI Asset Management, said.
Prices have been underpinned by continued efforts of the European Union to push ahead with a gradual phaseout of Russian fossil fuels, despite reluctance from member nations like Hungary.
Reuters reports that a top Hungarian aide said the country needed 3-1/2 to 4 years to shift away from Russian crude and make huge investments to adjust its economy.
Meanwhile, the OPEC+ group meets again next week to consider production targets. Traders expect the group to hold to its current production deal and raise July output by about 400,000 barrels a day.
In other commodities, gold prices gained as the U.S. dollar pulled back. Gold prices looked set for their second consecutive week of gains.
Spot gold was up 0.4 per cent at US$1,857.79 per ounce by early Friday morning. U.S. gold futures also rose 0.4 per cent to US$1,855.50. For the week so far, gold is up about 0.7 per cent.
Currencies
The Canadian dollar is higher in early going helped by improved risk sentiment while its U.S. counterpart looked set for its biggest weekly drop in four months against a group of world currencies.
The day range on the loonie is 78.19 US cents to 78.51 US cents.
There were no major Canadian economic releases on Friday’s calendar. Markets are now looking ahead to next week’s Bank of Canada rate decision and another expected half percentage point interest rate hike.
On world markets, the U.S. dollar index, which measures the greenback against a basket of six peers, fell as low as 101.43 for the first time since April 25, according to figures from Reuters. On a weekly basis, it was down 1.3 per cent, its biggest weekly drop since early February.
The euro rose to its highest levels in a month at US$1.0765. Britain’s pound was steady at US$1.2666.
The risk-sensitive Australian dollar gained 0.6 per cent to US$0.7142, while the New Zealand dollar advanced 0.65 per cent to $0.6520.
In bonds, the yield on the benchmark 10-year note was marginally lower at 2.754 per cent in the predawn period.
More company news
Canopy Growth Corp. reported a smaller quarterly loss compared with a year ago as its net revenue fell 25 per cent. The cannabis company says it had a net loss of $578.6-million or $1.46 per diluted share for the quarter ended March 31 compared with a net loss of $616.7-million or $1.85 per diluted share a year earlier. Net revenue in what was Canopy’s fourth quarter totalled $111.8-million, down from $148.4-million in the same quarter last year. Shares slumped more than 15 per cent in early trading in Toronto on Friday.
CWB Financial Group is raising its dividend as it reports its second-quarter common shareholders’ net income rose three per cent compared with a year ago. The Edmonton-based company says it will now pay a quarterly dividend of 31 cents per share, up a penny from 30 cents per share. The bank says its common shareholders’ net income amounted to $74.2-million or 82 cents per share for the quarter ended April 30, up from $72-million or 82 cents per share a year ago when it had fewer shares outstanding. Revenue totalled $258.8-million, up from $247.1-million in the same quarter last year as CWB’s total provision for credit losses amounted to $11.2-million for the quarter, down from $14.8-million a year ago.
Economic news
(8:30 a.m. ET) U.S. personal spending and income for April.
(8:30 a.m. ET) U.S. Core PCE Price Index for April.
(8:30 a.m. ET) U.S. goods trade deficit for April.
(8:30 a.m. ET) U.S. wholesale and retail inventories for April.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for April.
With Reuters and The Canadian Press
Terry Weber