Equities
Canada’s main stock index tracked Wall Street lower at Friday’s opening bell, with commodities stocks helping put a floor under losses. On Wall Street, key indexes fell in early trading as bank earnings raised concerns about the economic outlook.
At 09:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 49.96 points, or 0.25 per cent, at 20,161.24.
In the U.S., the Dow Jones Industrial Average fell by 257.18 points, or 0.75 per cent, at the open to 33932.79.
The S&P 500 opened lower by 22.57 points, or 0.57 per cent, at 3,960.60, while the Nasdaq Composite dropped 94.74 points, or 0.86 per cent, to 10,906.37 at the opening bell.
On Friday, traders were closely watching U.S. bank earnings with JPMorgan, Citigroup, Wells Fargo and Bank of America all reporting results.
“The fourth quarter earnings season may bring investors back down to earth with a bang,” OANDA senior analyst Craig Erlam said.
“The start of the year has been fantastic but the rest of it will still be very challenging.”
Heading into earnings season, S&P 500 companies are expected to see earnings in the fourth quarter decline by 4.1 per cent according to FactSet.
Bank of America said it earned 85 U.S. cents per share in the most recent quarter. Analysts, on average, had estimated a profit of 77 U.S. cents per share, according to Refinitiv IBES data. The stock was off 0.46 per cent shortly after the open. JPMorgan Chase & Co., meanwhile, posted profit for the three months ended Dec. 31 of US$11-billion, or US$3.57 per share, compared with US$10.4-billion, or US$3.33 per share a year earlier. However, the bank also said it was setting aside US$1.4-billion in provisions for credit losses in anticipation of a mild recession. JPMorgan shares slid 1.4 per cent in morning trading.
In this country, Cogeco Inc. reported its latest earnings after Thursday’s close, posting a 6-per-cent increase in revenue to $789.7-million. First-quarter earnings per share came in at $2.67, up more than 10 per cent from a year earlier.
The Globe’s James Bradshaw reports this morning that Bank of Montreal’s asset management arm is launching a new fund with Toronto-based tech financier Georgian Partners that aims to give a broader array of investors a gateway to invest in privately held technology companies. The new BMO-branded fund will allow accredited investors – often those with high incomes or more than $1-million of available assets – to invest in Georgian’s portfolio of more-established North American tech companies.
Also on Friday, the Economic Club of Canada hosts its annual breakfast, with chief economists from around the country sharing their forecasts for the year.
Overseas, the pan-European STOXX 600 was up 0.11 per cent by midday. Britain’s FTSE 100 gained 0.24 per cent. Germany’s DAX slid 0.03 per cent while France’s CAC 40 edged up 0.11 per cent.
In Asia, Japan’s Nikkei fell 1.25 per cent. Hong Kong’s Hang Seng added 1.04 per cent.
Commodities
Crude prices were higher in early trading and on track for a solid weekly advance as optimism over China’s reopening continues to underpin sentiment.
The day range on Brent was US$83.50 to US$84.45 in the early premarket period. The range on West Texas Intermediate was US$77.97 to US$78.83.
Both bench marks are up more than 6 per cent the week so far.
“Oil has been rallying on China’s reopening momentum and now that they stopped reporting COVID tally data, traders are focusing on satellite images,” OANDA senior analyst Ed Moya said.
“China could face a difficult surge over the Lunar New Year holiday period, but for now energy traders are locked into the potential upside risks to demand.”
On Friday, Reuters reported that signs of improving demand in the Chinese economy are appearing, with analysts citing recent crude purchases and a pick-up in road traffic as positive signs.
Meanwhile, gold prices were headed for their fourth consecutive week of gains, helped by a softer U.S. dollar.
Spot gold was steady at US$1,895.82 per ounce by early Friday. Prices gained 1.6 per cent so far this week.
U.S. gold futures held their ground at US$1,899.20.
“Gold has been steadily climbing since November, but it could be running out of momentum right now,” Mr. Moya said.
“The [U.S.] dollar might be poised for a short-term rebound that could weigh gold down. Gold needs to have a daily close above the US$1,900 level to pave the way for another move higher.”
Currencies
The Canadian dollar fell in morning trading while its U.S. counterpart was flat against a group of currencies.
The day range on the loonie was 74.42 US cents to 75.07 US cents in the predawn period.
“The CAD is holding a minor loss on the session and while it has progressed against the soft USD over the week, it ranks among the weaker performers over the past five days,” Shaun Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian economic released due Friday.
On world markets, the U.S. dollar index - which measures the greenback against six major currencies - was broadly flat at 102.15, after slipping to its lowest since June earlier in the session, according to figures from Reuters.
Elsewhere, the yen jumped against the greenback on speculation that the Bank of Japan could revise its ultra-loose monetary policy. The U.S. dollar at one point, slipped nearly 1 per cent versus the yen on the day to a new seven-month low of 128.11, after a 2.4-per-cent decline on Thursday, Reuters reported.
The euro, meanwhile, slid 0.1 per cent to US$1.08460 after hitting a nine-month high earlier in the session. Britain’s pound slid 0.2 per cent to trade at US$1.22340.
In bonds, the yield on the U.S. 10-year note was up modestly at 3.45 per cent in the early hours on Friday morning.
More company news
Wells Fargo & Co on Friday reported a decline in profit for the fourth quarter as it paid regulatory penalties and stockpiled money to prepare for soured loans against the backdrop of a weaker economy. The fourth-largest U.S. lender reported a profit of US$2.9-billion, or 67 US cents per share, for the quarter ended Dec. 31, compared to US$5.6-billion, or US$1.40 per share. -Reuters
Citigroup Inc reported a fall in fourth-quarter profit on Friday, as the bank hiked provisions to brace for a worsening economy and investment banking revenue declined due to a sharp drop in dealmaking activity. Net profit came in at US$2.5-billion, or US$1.16 per share, for the three months ended Dec. 31, compared with US$3.2-billion, or US$1.46 a share, a year earlier. -Reuters
Corus Entertainment Inc. reported its first-quarter profit fell compared with a year ago as its revenue also moved lower.The television and radio company says it earned $31.4-million in net income attributable to shareh olders or 16 cents per diluted share for the three months ended Nov. 30. The result compared with a profit of $76.2-million or 36 cents per diluted share in the same quarter a year earlier. Revenue totalled $431.2-million, down from $463.9-million a year earlier. -The Canadian Press
Shaw Communications Inc. says revenue for its first quarter ended Nov. 30, 2022 saw revenue decrease by 1.2 per cent year over year. The Calgary-based company says net income for the quarter was down 14.3 per cent, with earnings per share at 34 cents, down from 39 cents a year earlier. Shaw added approximately 13,800 new wireless customers, driving wireless service revenue up by 5.4 per cent to $252-million. Wireline revenue was down 2.7 per cent to $1.03-billion. The company says it received an extension from the Toronto Stock Exchange to hold its annual general meeting as late as April 11 as it waits for news on whether its takeover by Rogers Communications Inc. will go through. -The Canadian Press
Tesla has slashed prices on its electric vehicles in the United States and Europe by as much as 20%, extending a strategy of aggressive discounting after missing Wall Street estimates for 2022 deliveries. The move, which prompted a 4.5% fall in Tesla’s shares in pre-market U.S. trade, came after CEO Elon Musk warned that the prospect of recession and higher interest rates meant it could lower prices to sustain volume growth at the expense of profit. -Reuters
BlackRock Inc posted a drop in fourth-quarter profit on Friday, as a global market rout pressured fee income and assets under management fell in an uncertain economic environment. On an adjusted basis, the world’s largest asset manager earned $1.36-billion, or $8.93 per share, in the three months ended Dec. 31, compared with $1.65-billion, or $10.68 per share, a year earlier. Analysts on average had expected a profit of $8.11 per share, according to IBES data from Refinitiv. -Reuters
A Boeing Co 737 MAX made its first passenger flight in China in nearly four years on Friday, marking a major milestone in the U.S. plane maker’s attempt to rebuild its business in the world’s second-largest aviation market. The China Southern Airlines Co Ltd domestic flight from Guangzhou to Zhengzhou departed at 12:45 p.m. using a MAX plane, according to flight tracking website FlightRadar24. The best-selling Boeing model was grounded in March 2019 after fatal crashes in Indonesia and Ethiopia, but returned to service around the world starting in late 2020 after modifications to the aircraft and pilot training. -Reuters
Economic news
(8:30 a.m. ET) U.S. import prices for December.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for January.
With Reuters and The Canadian Press