Equities
Canada’s main stock index opened slightly higher Friday helped by industrial stocks. On Wall Street, key indexes were muted in early trading after a new reading on the Federal Reserve’s preferred measure of inflation largely matched forecasts.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 14.71 points, or 0.07 per cent, at 21,116.25.
In the U.S., the Dow Jones Industrial Average fell 42.45 points, or 0.11 per cent, at the open to 38,006.68. The S&P 500 opened lower by 5.25 points, or 0.11 per cent, at 4,888.91, while the Nasdaq Composite dropped 35.64 points, or 0.23 per cent, to 15,474.85 at the opening bell.
Early Friday, the U.S. Commerce Department reported that the personal consumption expenditure index rose by 0.2 per cent on a monthly basis in December. That was inline with analysts expectations. The index was up 2.6 per cent annually. The core PCE, a preferred measure of inflation for the Federal Reserve, was up 0.2 per cent month-over-month. That also matched market forecasts. On an annual basis, it rose by 2.9 per cent. Markets were expecting the annual figure to come in around 3 per cent.
“With inflation heading in the right direction, but still above target, and consumer spending displaying noteworthy resiliency, the central bank has even less urgency for a rate cut and one is unlikely to occur before mid-year,” TD economist Shernette McLeod said in a note.
The Fed’s next interest rate decision is due Jan. 31. Markets are expecting the central bank to hold rates steady. Bets that it would begin cutting rates as early as March have been fading in recent weeks.
On the corporate side, shares of Intel were down more than 11 per cent in early trading after the company forecast first-quarter revenue below market expectations amid uncertain demand for chips used in the traditional server and personal computer markets. The chipmaker expects adjusted first-quarter revenue in the range of US$12.2-billion-US$13.2 billion, compared with analysts’ average estimate of US$14.50-billion, according to LSEG data. Intel forecast first-quarter profit of 13 US cents a share, excluding one-time items. Analysts expected 33 US cents a share, Reuters reported.
In Canada, The Globe’s Tim Kiladze reports a debt refinancing designed to provide BlackBerry Ltd. with some financial flexibility ultimately sent the company’s shares tumbling to their lowest level in 21 years, complicating the new chief executive’s plans to win back investors.
Overseas, the pan-European STOXX 600 was up 1.18 per cent by afternoon. Britain’s FTSE 10 rose 1.56 per cent. Germany’s DAX added 0.25 per cent while France’s CAC 40 jumped 2.29 per cent.
In Asia, Japan’s Nikkei fell 1.34 per cent. Hong Kong’s Hang Seng lost 1.6 per cent.
Commodities
Crude prices were modestly lower but still on track for a second weekly advance in the wake of a better than expected reading on U.S. GDP and continued optimism over stimulus efforts aimed at underpinning China’s economy.
The day range on Brent was US$81.81 to US$82.46 in the early premarket period. The range on West Texas Intermediate was US$76.57 to US$77.30. Both benchmarks were up more than 4 per cent for the week heading into Friday’s session.
New figures released this week showed the U.S. economy grew at an annual rate of 3.3. per cent in the fourth quarter of the year, far better than the 2-per-cent economists had been forecasting. At the same time, China’s central bank has announced cuts to reserves aimed at supporting economic growth.
“This week’s price action is significant, potentially signalling that the oil price bottom is either within sight or imminent,” Stephen Innes, managing partner with SPI Asset Management, said.
“Suppose this perception gains momentum, especially in anticipation of Fed rate cuts amid easing inflation even with above-trend growth. In that case, more investors may re-enter the futures market, further supporting oil prices.”
In other commodities, gold prices were headed for a second weekly decline.
Spot gold was flat at US$2,020.20 per ounce by early Friday morning. U.S. gold futures were little changed at US$2,020.20. Both are down more than 0.4 per cent so far this week, according to figures from Reuters.
Currencies
The Canadian dollar was higher in early trading while its U.S. counterpart was relatively steady against a group of world currencies.
The day range on the loonie was 74.13 US cents to 74.33 US cents in the early premarket period. The Canadian dollar has lost about 1.6 per cent against the greenback for the year to date.
“The Canadian dollar is nudging a little higher so far on the session but the grounds for gains appear a little flimsy on the face of it, with commodities and stocks trading more mixed than anything,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, was down 0.12 per cent at 103.45.
The euro was up 0.06 per cent at US$1.0855. Britain’s pound rose 0.12 per cent to US$1.2724.
In bonds, the yield on the U.S. 10-year note was lower at 4.11 per cent.
More company news
American Express forecast a better-than-expected profit for 2024 on hopes that its affluent customers will be resilient with their spending amid elevated interest rates, sending the company’s shares up nearly 3% before the bell on Friday. The New York-based company also reported record revenue for 2023, a year which many analysts feared could bring in a recession and crimp customer spending. AmEx, helped by its affluent customer base, has been able to navigate a tricky financial landscape more smoothly compared to some of its peers.
Economic news
830 am ET: U.S. personal spending and income for December.
830 am ET: U.S. core PCE price index for December.
10 am ET: U.S. pending home sales.
With Reuters and The Canadian Press
Terry Weber