Equities
Canada’s main stock index slid at Friday’s opening bell with mining and growth stocks dragging on sentiment. On Wall Street, key indexes also started in the red after a much better-than-expected U.S. jobs report raised concerns about the Federal Reserve’s path forward on interest rates.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 25.16 points, or 0.12 per cent, at 20,715.28.
In the U.S., the Dow Jones Industrial Average fell 127.64 points, or 0.37 per cent, at the open to 33,926.30. The S&P 500 opened lower by 43.07 points, or 1.03 per cent, at 4,136.69, while the Nasdaq Composite dropped 253.96 points, or 2.08 per cent, to 11,946.86 at the opening bell.
Early Friday, the U.S. Labor Department said non-farm payrolls in January spiked by 517,000 positions. Economists had been looking for much weaker gains of 187,000 jobs. Markets had been waiting for the reading on the U.S. employment situation, hoping for a clearer picture of the Federal Reserve’s path ahead on interest rates. A stronger report suggests the Fed continues to have latitude to continue raising rates. Canada’s January jobs numbers are due next week.
“In terms of market reactions, the initial reaction has been negative as traders are concerned that the Fed may adopt a more hawkish monetary policy given the strength of the labour market and their target of inflation reading,” AvaTrade chief market analyst Naeem Aslam. “However, the reality is that today’s number is good for the U.S. economy and this is likely to encourage traders to back riskier assets once the dust settles.”
After Thursday’s closing bell, Google parent Alphabet posted revenue below market forecasts as ad revenue took a hit while Apple saw its first profit miss since 2016 on weak iPhone sales. Amazon, meanwhile, cautioned that profit may slump further as consumers tighten their belts.
Amazon shares were down more than 4 per cent in shortly after the North American open while Alphabet stock slid about 3 per cent. Apple shares steadied in early trading, edging up 0.87 per cent.
In Canada, The Globe’s Rachelle Younglai reports Toronto’s housing market slowdown decelerated in January, with home prices flattening, after months of steady declines. The Home Price Index, which excludes the highest valued properties, was $1,078,900 last month, according to the Toronto Regional Real Estate Board, or TRREB. That was essentially the same as December. Compared with peak pricing in March of last year, the Home Price Index is down 19 per cent.
Overseas, the pan-European STOXX 600 fell 0.06 per cent by midday. Britain’s FTSE 100 edged up 0.41 per cent. Germany’s DAX and France’s CAC 40 were off 0.51 per cent and 0.08 per cent, respectively.
In Asia, Japan’s Nikkei gained 0.39 per cent. Hong Kong’s Hang Seng slumped 1.36 per cent.
Commodities
Crude prices were steady in early trading but both Brent and West Texas Intermediate looked set for weekly declines as the demand picture remains cloudy.
The day range on Brent was US$81.45 to US$82.62 early Friday morning. The range on West Texas Intermediate was US$75.16 to US$76.31.
Both benchmarks are off by more than 5 per cent this week.
“Outside of this week’s realization that much more oil is available on the market than most had assumed, the economic supply and demand variable ultimately upended the China rally cart,” Stephen Innes, managing partner with SPI Asset Management, said.
“Traders entered the year believing that inflation was yesterday’s problem, but growth is still the main worry for 2023,” he noted. “While we expect all significant economic engines to avoid recession this year (except for the U.K.), so higher oil prices in tow, it is essential not to be complacent about the risk of a US recession, given the significant impact on oil prices it would likely entail.”
In other commodities, gold prices rose 0.2 per cent to US$1,915.42 by early Friday morning after losing nearly 2 per cent yesterday. Gold is down about 0.6 per cent for the week so far.
U.S. gold futures eased 0.1 per cent to US$1,929.70.
Currencies
The Canadian dollar was down early Friday amid weaker risk sentiment in broader markets while its U.S. counterpart edged up against a basket of world currencies.
The day range on the loonie was 74.76 US cents to 75.12 US cents in the predawn period.
On world markets, the dollar index, which tracks the currency against major peers, was up 0.1 per cent to 101.89 ahead of the release of the latest U.S. employment figures.
The U.S. dollar picked up against the euro, with the latter down 0.1 per cent to US$1.09 in early European trading, Reuters reported.
Japan’s yen was slightly higher against the greenback at 128.66 per dollar.
In bonds, the yield on the U.S. 10-year note was down at 3.39 per cent in the predawn period.
The major pilots union in North America and the union representing Air Canada pilots have had initial talks about a merger at a time when airlines are under pressure to staff up to meet rebounding travel demand, representatives of the unions told Reuters. The Air Canada Pilots Association (ACPA) represents about 4,500 pilots who fly passengers and cargo for the airline. The Air Line Pilots Association (ALPA), the world’s largest pilots union, represents more than 60,000 pilots in the United States and Canada. -Reuters
Billionaire investor Ryan Cohen is building a large stake in Nordstrom Inc and plans to push the upscale retailer to shake up its board as its performance has lagged behind rivals, people familiar with the matter said on Thursday. Cohen, who built his fortune by co-founding online pet retailer Chewy Inc and cemented it with investments in videogame retailer GameStop and Apple Inc, would like to replace at least one director on Nordstrom’s 10-member board, the people said. -Reuters
Economic news
(8:30 a.m. ET) U.S. non-farm payrolls for January.
(8:30 a.m. ET) U.S. average hourly wages for January.
(10 a.m. ET) U.S. ISM Services PMI for January.
With Reuters and The Canadian Press