Canada’s main stock index started lower Friday with weakness in materials and financial stocks weighing on sentiment. Key U.S. indexes opened mixed with Intel Corp. shares under pressure in the wake of a disappointing forecast and American Express stock on the rise on that company’s outlook.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 31.41 points, or 0.15 per cent, at 20,669.09.
In the U.S., the S&P 500 opened lower by 6.71 points, or 0.17 per cent, at 4,053.72, while the Nasdaq Composite dropped 41.94 points, or 0.36 per cent, to 11,470.47 at the opening bell.
The Dow Jones Industrial Average rose 3.52 points, or 0.01%, at the open to 33,952.93.
“The big concern is what markets aren’t pricing, and while the Bank of Canada earlier this week signalled a pause in its rate hiking cycle, that doesn’t mean the Fed will follow a similar path, even though markets appear to be pricing exactly that sort of outcome,” Michael Hewson, chief market analyst with CMC Markets U.K., said in a note.
“While yesterday’s [U.S.] GDP numbers increasingly appear to support the prospect of a soft landing, the labour market data also suggests that the Fed has the headroom to continue to be much more aggressive.”
Ahead of the opening bell, Wall Street traders will got another reading on price pressures. The personal consumption expenditures (PCE) price index, a preferred measure of inflation for the Federal Reserve, edged up 0.1 per cent last month after a similar gain in November, Reuters reported. In the 12 months through December, the PCE price index increased 5 per cent after advancing 5.5 per cent in November.
Excluding the volatile food and energy components, the PCE price index rose 0.3 per cent after climbing 0.2 per cent in November. The so-called core PCE price index rose 4.4 per cent on a year-on-year basis in December after increasing 4.7 per cent in November.
On the corporate side, shares of Intel Corp. sank more than 7 per cent in early trading after fourth-quarter results missed market forecasts. The company also cautioned first-quarter revenue would be short of analysts’ forecasts and said it expects to see a loss for the period.
The company forecast first-quarter revenue in the range of about US$10.5-billion and US$11.5-billion. Analysts on average were expecting total revenue of US$13.93-billion, according to Refinitiv data.
Companies reporting Friday include American Express and Chevron.
In Canada, France’s TotalEnergies said early Friday it would buy an extra 6.65-per-cent stake in the Fort Hills Energy Limited Partnership and associated sales and logistics agreements from Teck Resources for $312-million. As a result, TotalEnergies will hold a 31.23-per-cent stake in Fort Hills. Teck announced last year that it would sell its 21.3-per-cent stake in Fort Hills to Suncor Energy Inc., the third partner in the project. But, TotalEnergies says it has exercised its option to acquire the additional interest in the project.
Overseas, the pan-European STOXX 600 gave up early gains to trade down 0.09 per cent by midday. Britain’s FTSE 100 was flat. Germany’s DAX and France’s CAC 40 slid 0.17 per cent and 0.27 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.07 per cent. Hong Kong’s Hang Seng added 0.54 per cent.
Crude prices were higher and looked set for a third week of gains in a row, helped by a positive reading on fourth-quarter U.S. GDP and continued optimism over China’s reopening.
The day range on Brent was US$87.55 to US$88.78 in the early premarket period. The range on West Texas Intermediate was US$81.08 to $82.20. Both benchmarks were up more than 1 per cent early Friday morning.
Crude prices drew some support from a report on Thursday showing the U.S. economy grew at an annual rate of 2.9 per cent in the fourth-quarter. That was down from the pace seen in the third quarter but still ahead of the 2.6-per-cent growth economists had been forecasting.
“Another round of U.S. data supported the argument that this economy still could get a soft landing, which is very positive for the short-term crude demand outlook,” OANDA senior analyst Ed Moya said.
“The problem with the long-term growth outlook for the U.S. economy is that it needs a recession in order for inflation to get tamed. Strong data is not necessarily good news for winning the war against inflation and that will weigh on long-term U.S. growth prospects.”
Still, he said, signs of resilience in the U.S. economy and improving news on China’s COVID-19 situation should keep crude prices supported about the US$80 region.
Reuters reported that, in China, critically ill COVID-19 cases are down 72 per cent from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped by 79 per cent from their peak.
In other commodities, spot gold was down 0.2 per cent at US$1,926.09 per ounce early Friday morning, but held a relatively tight range after falling nearly 1 per cent on Thursday.
U.S. gold futures eased 0.1 per cent to US$1,927.30.
The Canadian dollar was slightly higher, trading above 75 US cents, while its U.S. counterpart managed modest gains against a basket of currencies as traders look ahead to next week’s Federal Reserve rate decision.
The day range on the loonie was 74.92 US cents to 75.12 US cents early Friday morning.
“The CAD is looking a little aimless so far today and will likely remain a slave to flow and technicals in the short run,” Shawn Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian economic reports on Friday’s calendar.
On world markets, the U.S. dollar index, which measures it against six major currencies, gained 0.1 per cent to 101.870, as the U.S. dollar moved away from near a nine-month low to the euro and a seven-month low against Britain’s pound, according to Reuters.
The euro was last down 0.1 per cent versus the greenback at US$1.08835 , while the pound was down 0.3 per cent at US$1.23735.
In bonds, the yield on the benchmark U.S. 10-year note was up at 3.537 per cent in the predawn period.
More company news
Chevron Corp. on Friday posted a record US$36.5-billion profit for 2022 that was more than double year-earlier earnings but fell shy of Wall Street estimates, undercut by an asset writedowns and a retreat in oil and gas prices. The second largest U.S. oil producer’s adjusted net profit for 2022 beat by about US$10-billion its previous record set in 2011. But US$1.1-billion in writedowns in its international oil and gas operations in the fourth quarter left earnings short of forecasts for adjusted net profit of US$37.2-billion. -Reuters
American Express Co forecast full-year profit above Wall Street estimate on Friday, as the U.S. credit card company banked on expectations that its largely well-off customers will continue to spend despite broader economic uncertainty. Even as decades-high inflation pressures household budgets, American Express has remained so far insulated from feeling a dent as the company’s affluent customer base refused to dial down on their spending. Shares jumped 10 per cent in morning trading.
Hasbro Inc said it would cut about 15% of its global workforce this year, and projected holiday-quarter results to be well below Wall Street expectations amid weakening demand for its toys and games. Hasbro said the job cuts would start to take effect within the next several weeks, adding that the reductions were “necessary to return our business to a competitive, industry-leading position.” -Reuters
Bed Bath & Beyond Inc said it had received a notice of default on its loan from JPMorgan Chase Bank N.A. The company said in a regulatory filing it does not have sufficient resources to repay the amounts under the credit facilities, adding it will consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code. The home goods retailer said earlier this month it was exploring a range of options to address its plunging sales that included declaring bankruptcy. -Reuters
(8:30 a.m. ET) U.S. personal spending for December.
(8:30 a.m. ET) U.S. Core PCE Price Index for December.
(10 a.m. ET) U.S. pending home sales for December.
(10 a.m. ET) U.S. University of Michigan consumer sentiment for January.
Also: Ottawa’s budget balance for November.
With Reuters and The Canadian Press