Canada’s main stock index opened higher on Friday, tracking global equity markets, which bounced back after a sharp selloff this week.
The Toronto Stock Exchange’s S&P/TSX composite index was up 134.77 points, or 0.88 per cent, at 15,451.9.
U.S. stocks opened higher on Friday, as bumper results from the country’s largest banks, including JPMorgan, set an upbeat tone for the earnings season.
The Dow Jones Industrial Average rose 354.80 points, or 1.42 per cent, at the open to 25,407.63. The S&P 500 opened higher by 42.17 points, or 1.55 per cent, at 2,770.54. The Nasdaq Composite gained 178.78 points, or 2.44 per cent, to 7,507.84 at the opening bell.
JPMorgan Chase & Co rose 1.5 per cent in early trading after reporting a better-than-expected quarterly profit as higher interest rates and loan growth helped offset weakness in bond trading revenue.
Citigroup rose 2.8 per cent as its profit also beat estimates on higher bond trading revenue and strength in consumer banking in Mexico. Wells Fargo was up 0.8 per cent despite missing analysts’ estimates.
The bank results launch a quarterly reporting season that will give the clearest picture yet of the impact on profits from President Donald Trump’s trade war with China.
“The focus has now shifted to earnings, which are expected to be strong for this quarter and will offer markets some support,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Earnings at S&P 500 companies are estimated to have risen 21.3 per cent in the third quarter, according to I/B/E/S data from Refinitiv, a slowdown from the previous two quarters.
The earnings season comes with investors fretting over inflation pressures and interest rates, while a surge in Treasury yields to over seven-year highs has made bonds more attractive. That culminated in the sell-off over Wednesday and Thursday.
“Investors should still expect a high level of volatility today, which is just pressure that’s been built up over the last two days,” said Brown.
Shares worldwide were set for their biggest daily gains in nearly a month on Friday as European and Asian markets recovered from a days-long sell-off that left them set for their worst week since February.
After Asian shares rose overnight, European stocks opened higher, with the pan-European STOXX 600 up 0.7 per cent.
Germany’s DAX was up half a percent while Britain’s FTSE 100 gained 0.7 per cent.
The MSCI All-Country World index, which tracks shares in 47 countries, was up half a percent on the day.
“Some traders are cautiously buying back into the market today, but the underlying issues which brought about the sell-off are still relevant,” CMC Markets analyst David Madden said.
The biggest market shakeout since February has been blamed on a series of factors, including worries about the impact of a U.S.-China trade war, a spike in U.S. bond yields this week and caution ahead of earnings season.
Trade figures from China on Friday showed China’s trade surplus with the United States hit a record high in September, providing a likely source of contention with U.S. President Donald Trump over trade policies and the currency.
The data showed solid expansion in China’s overall imports and exports, suggesting little damage from the tit-for-tat tariffs with the United States.
That added to bullish sentiment on Friday, CMC’s Madden said, noting the decision by U.S. Treasury staff to refrain from labeling China a currency manipulator as a positive for stocks.
Shanghai shares bounced 0.9 per cent, recouping earyly-session losses of 1.8 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.06 per cent, the biggest one-day gain for more than two years.
The bounce came after the index fell 3.6 per cent on Thursday to hit a 1-1/2-year low, and it is still on track for a weekly loss of 3.6 per cent.
Japan’s Nikkei average rose half a percent.
So far this week, Chinese and U.S. shares are among the biggest losers, a sign investor worries about the trade war are growing.
MSCI’s U.S. index has shed 5.5 per cent, compared with a 4.9-per-cent fall for MSCI’s gauge of stock performance in 47 countries. China A shares are still down 8.7 per cent.
“We’re still left with the sense that there has been a significant shift that markets now have to take stock of,” Daiwa Capital Markets head of economic research Chris Scicluna said.
Gold, which had risen to a 10-week high on the back of the sell-off, fell half a percent on Friday to $1.217.31 an ounce.
The yield on 10-year U.S. notes edged up in Europe to 3.170 percent, reversing early-session falls on flight-to-quality bids.
It is off its seven-year Tuesday high of 3.261 per cent but a further rise in U.S. borrowing costs might hurt risk sentiment.
Online broker XM investment broker Marios Hadjikyriacos said the pullback in yields was a major comfort factor for investors.
“This can be seen as a self-correcting mechanism, where stocks begin to sell off as bond yields rise, leading investors to shift back to bonds amid the risk-averse environment, hence driving yields back down and calming the stock market,” he said.
Adding to the confusion for investors, Trump launched a second day of criticism of the Federal Reserve on Thursday, calling its interest rate increases a “ridiculous” policy.
While that does not appear to have shaken investor confidence in the Fed’s independence, some investors suspect expectations on future rate hikes could be undermined if Trump’s language becomes more threatening.
The dollar against a basket of major currencies rose 0.1 per cent to 95.093.
The euro was 0.1 per cent lower at $1.1583, after a gain of 0.65 per cent on Thursday.
But the yen eased to 112.24 versus the dollar after hitting a three-week high of 111.83 on Thursday.
The Chinese yuan weakened half a percent, giving up some of the gains it had made the previous day.
Oil rebounded towards $81 a barrel on Friday as an equities rally lent support, though prices pared gains after a closely watched forecaster deemed supply adequate and the outlook for demand weakening.
Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.S. inventories and fading concerns for now about looming U.S. sanctions aimed at cutting Iran’s oil exports.
Global equities were set for their biggest daily gain in nearly a month. Declining equities amid wider risk-off investor sentiment had pressured oil on Thursday.
“A rebound in equity markets would help Brent to rebound from $80,” said Petromatrix analyst Olivier Jakob, adding that a dip below $80 on Thursday did not clearly break that level as a source of technical support.
International benchmark Brent crude rose 65 cents to $80.91 a barrel, having dropped by 3.4 per cent on Thursday. U.S. crude added 79 cents to $71.76..