Equities
Canada’s main stock index rose at Friday’s opening bell with energy shares benefitting from improve crude prices. On Wall Street, key indexes were also positive in early trading, setting the Dow up for a tenth consecutive day of gains.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 49.72 points, or 0.24 per cent, at 20,486.59. The index was up roughly 1 per cent for the week heading into Friday’s session.
In the U.S., the Dow Jones Industrial Average rose 49.14 points, or 0.14 per cent, at the open to 35,274.32.
The S&P 500 opened higher by 15.29 points, or 0.34 per cent, at 4,550.16, while the Nasdaq Composite gained 84.87 points, or 0.60 per cent, to 14,148.18 at the opening bell.
“Investors are likely waiting on further evidence of soft landing dynamics to come into play – resilient growth met with a further softening in wage and price inflation that would indicate the economy is coming into better balance and would then further tip the scales to the view that this time is different and pushing market participants further out the risk curve,” Stephen Innes, managing partner with SPI Asset Management, said.
Markets are now looking ahead to central bank meetings next week. The Federal Reserve makes its next policy decision on Wednesday and its expected to raise rates again by a quarter percentage point. Many economists, however, expect the central bank to signal that it will move to the sidelines after that increase. The European Central Bank and the Bank of England are also scheduled to meet and are both expected to again raise borrowing costs.
On Friday, Statistics Canada reported that retail sales in this country rose by a weaker-than-expected 0.2 per cent in May. An early estimate on sales for the month had suggested a gain of 0.5 per cent. April’s increase was revised down to 1 per cent from 1.1 per cent. Statscan says sales rose in five of nine subsectors in May, led by autos.
“Today’s data suggest that Canadian consumer spending wasn’t particularly strong, even before the Bank of Canada resumed its rate hike cycle in June,” CIBC senior economist Andrew Grantham said.
“The advance estimate for June was also on the soft side, with nominal sales expected to be flat on the month which could translate into a slight decline in volume terms.”
On the labour front, The Globe’s Brent Jang reports this morning that the union caucus that rejected a tentative labour agreement for B.C. port workers has scheduled a new vote on Friday to determine the fate of the package. About 7,400 members of the International Longshore & Warehouse Union Canada (ILWU) halted their 13-day strike on July 13, and then held a 24-hour walkout earlier this week. The new vote on Friday will decide “whether the tentative agreement will be sent to the membership for ratification,” according to union officials.
On Wall Street, American Express reported a profit of US$2.89 per share in the quarter, beating analysts’ average expectation of US$2.81 per share, according to IBES data from Refinitiv. The company also kept its profit forecast for the year unchanged. Shares were down more than 4 per cent shortly after the start of trading.
Overseas, the pan-European STOXX 600 was down 0.04 per cent just before midday. Germany’s DAX slid 0.54 per cent. France’s CAC 40 gained 0.18 per cent and Britain’s FTSE 100 was up 0.13 per cent.
In Asia, Japan’s Nikkei finished down 0.57 per cent. Hong Kong’s Hang Seng gained 0.78 per cent.
Commodities
Crude prices advanced as hopes of economic stimulus in China helped offset growth concerns in one of the world’s top oil consumers.
The day range on Brent was US$79.65 to US$80.52 in the early premarket period. The range on West Texas Intermediate was US$75.69 to US$76.53. Both benchmarks were little changed for the week heading into Friday’s session after posting three consecutive weeks of gains.
“Brent crude looks like it wants to find a home below the US$80 level and that might support a broadening formation until next Wednesday’s EIA report and FOMC meeting,” OANDA senior analyst Ed Moya said in a recent note.
This week, crude prices came under pressure after gross domestic product numbers out of China disappointed the markets and raised concerns about the health of that country’s recovery.
However, markets have drawn some solace from expectations that Beijing will step in to bolster economic growth. On Friday, Chinese authorities unveiled plans to help boost sales of automobiles and electronics to shore up its sluggish economy, Reuters reported.
In other commodities, gold prices looked set for a third straight week of gains.
Spot gold fell 0.1 per cent to US$1,967.14 per ounce by early Friday morning, but was set for a 0.6-per-cent increase for the week.
“Gold is looking a little heavy here as prices approach key support that has been in place for most of the month of July,” Mr. Moya said.
“A drop below the $1960 level could trigger some momentum selling towards $1940.”
Currencies
The Canadian dollar was steady in early trading while its U.S. counterpart edged up against a group of world currencies.
The day range on the loonie was 75.85 US cents to 76.03 US cents early Friday morning. The dollar was up 0.36 per cent against the U.S. dollar over the past five days.
“The CAD is little changed on the session and is a relative outperformer versus its major currency peers as a result,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The CAD tone remains shackled to the broader trend in the USD, it would seem.”
On world markets, the U.S. dollar index - which tracks the greenback against six major peers - was last up 0.3 per cent on Friday morning at 101.040. The index was on track for a 1.1 per cent weekly gain, its biggest rise in two months, according to figures from Reuters.
The euro was mostly flat against the greenback at US$1.11285, after dropping 0.6 per cent on Thursday.
In bonds, the yield on the U.S. 10-year note was lower at 3.849 per cent.
More company news
Britain’s competition regulator on Friday said auto parts provider LKQ Corp’s $2.8-billion deal to buy Quebec’s Uni-Select Inc may be referred to a deeper investigation unless the companies offer acceptable undertakings to address related concerns. -Reuters
The U.S. Federal Trade Commission official on Thursday withdrew the agency’s case before an in-house judge that sought to block Microsoft’s $69 billion acquisition of game-maker Activision. The agency has been pursuing a two-pronged attack against the proposed transaction. One was in district court, which refused last week to slap a preliminary injunction on the proposed transaction. An appeals court also turned down a request for the deal to be paused. The second was before an FTC administrative law judge, where the deal was set to go to trial on Aug. 2. It was this attack that the agency put on hold on Thursday, in an order made by FTC Secretary April Tabor. -Reuters
Economic news
Japan CPI for June
France retail sales for June, plus UK consumer confidence and retail sales
(830 am ET) Canada retail sales for May.
With Reuters and The Canadian Press
Terry Weber