Canada’s main stock index opened up Friday with energy and materials stocks higher while a surprisingly weak reading on economic growth fuelled bets the Bank of Canada will leave rates unchanged next week. Wall Street’s key indexes were also positive in early trading with a tame reading on U.S. hiring also tempered concerns about the future course of borrowing costs in that country.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 175.61 points, or 0.87 per cent, at 20,468.23.
In the U.S., the Dow Jones Industrial Average rose 154.33 points, or 0.44 per cent, at the open to 34,876.24.
The S&P 500 opened higher by 22.94 points, or 0.51 per cent, at 4,530.60, while the Nasdaq Composite gained 95.00 points, or 0.68 per cent, to 14,129.96 at the opening bell.
Canadian investors got a reading on June and second-quarter GDP ahead of the start of trading.
Statistics Canada said early Friday that the Canadian economy contracted at an annual rate of 0.2 per cent in the second quarter of the year. The Bank of Canada’s most recent forecast had called for growth of 1.5 per cent while economists had been expecting an advance of 1.2 per cent. The numbers come ahead of next week’s Bank of Canada rate decision. Markets are expecting the central bank to hold steady on rates.
On a monthly basis, GDP contracted by 0.2 per cent in June and is expected to be flat in July, Statscan said.
“The Canadian economy contracted in the second quarter, making a Bank of Canada hike at next week’s meeting very unlikely now,” CIBC economist Katherine Judge said.
In the U.S., meanwhile, the American economy added 187,000 jobs in August. Economists had been forecasting growth of 170,000 positions. The jobless rate rose to 3.8 per cent last month from 3.5 per cent in July.
“Today’s data wasn’t a blowout number, and this means things are more likely to remain on track when it comes to the Fed,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said.
“Basically, the data has confirmed once again that a softening of the job market is very much in play while the overall picture for the labour market is still strong. So, most traders believe that the Fed is more likely to stay on the sidelines, but at the same time, inflation pressure remains intact.”
The Fed’s next rate decision is due later this month.
On the corporate side, shares of Lululemon were up more than 2 per cent in premarket trading after the athletic-wear maker hiked its annual sales forecast for a second time on Thursday and said it sees “no change” in customer behaviour for its products. The Vancouver-based company now expects full-year 2023 revenue between US$9.51-billion and US$9.57-billion, compared with its prior estimate of US$9.44-billion to US$9.51-billion.
Overseas, the pan-European STOXX 600 rose 0.27 per cent. Germany’s DAX added 0.03 per cent while France’s CAC 40 gained 0.15 per cent. Britain’s FTSE 100 was up 0.47 per cent in morning trading.
In Asia, Japan’s Nikkei finished up 0.28 per cent. Markets in Hong Kong were closed.
Crude prices were on track for a weekly gain, snapping a two-week losing streak, as tighter supply underpins prices.
The day range on Brent was US$86.74 to US$87.34 in the early premarket period. The range on West Texas Intermediate was US$83.46 to US$84.15. WTI is up about 5 per cent for the week so far, while Brent has gained about 3 per cent.
“There is mounting speculation that Saudi Arabia intends to extend its unilateral reduction of 1 million barrels per day (bpd) into October,” Stephen Innes, managing partner with SPI Asset Management, said.
“This move is expected to constrain global supply availability further, potentially leading to significant reductions in oil inventories.”
That move would add to cuts by the OPEC+ group. As well, Reuters reports that Russia, the world’s second largest oil exporter, has also agreed with OPEC+ partners to cut oil exports, Deputy Prime Minister Alexander Novak said on Thursday.
Gold prices, meanwhile, looked set for a second consecutive weekly gain amid easing market expectations for further Fed rate hikes this year.
Spot gold rose 0.2 per cent to US$1,943.11 per ounce by early Friday morning and was headed for a more than 1.4-per-cent weekly gain after prices hit one-month highs on Wednesday. U.S. gold futures were up 0.2 per cent at US$1,969.90.
The Canadian dollar was hovering around the 74-US-cent market in early trading while its U.S. counterpart pulled back and was headed to a weekly loss.
The day range on the loonie was 73.93 US cents to 74.13 US cents in the early premarket period. The Canadian dollar fell more than 2 per cent against the greenback in August.
On world markets, the U.S. dollar index, which measures the currency against a basket of currencies, eased 0.12 per cent to 103.61 on Friday, bringing declines this week to 0.53 per cent, according to figures from Reuters. It posted its strongest monthly performance in August in three months, with a gain of 1.7 per cent, the news agency reported.
The euro was little changed at US$1.0858 after falling 0.74 per cent on Thursday.
In bonds, the yield on the U.S. 10-year note was slightly higher at 4.108 per cent in the predawn period.
More company news
The Competition Bureau said on Friday Royal Bank of Canada’s proposed acquisition of HSBC Bank Canada is not likely to substantially hurt competition.
CWB Financial Group reported its third-quarter profit rose compared with a year ago. The Edmonton-based bank says its common shareholders’ net income totalled $83.1-million for the quarter ended July 31, up from $70-million a year earlier. That equated to 86 cents per diluted share for its most recent quarter, an increase from the same period last year when it reported earnings of 73 cents per diluted share. Revenue totalled $283.5-million, up from $264.4-million a year earlier. On an adjusted basis, CWB says it earned 88 cents per share, up from an adjusted profit of 74 cents per share a year ago. -The Canadian Press
Walgreens Boots Alliance said on Friday CEO Rosalind Brewer has stepped down nearly two-and-a-half years since she took the top job at the pharmacy chain operator. The company named Lead Independent Director Ginger Graham as interim chief executive and said it had launched the search for a permanent CEO. Walgreens’ board and Brewer had mutually agreed that she would step down, the company said. -Reuters
(8:30 a.m. ET) Canadian real GDP for Q2.
(8:30 a.m. ET) Canada’s monthly real GDP for June.
(9:30 a.m. ET) Canada’s S&P Global Manufacturing PMI for August.
With Reuters and The Canadian Press