Equities
Canada’s main stock index edged up at Friday’s opening bell with consumer discretionary stocks higher in the wake of tepid reading on hiring in the Canadian economy. On Wall Street, key indexes also started in positive territory with softer U.S. hiring numbers raising optimism that the Federal Reserve could soon be near the end of its rate-hike campaign.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 28.32 points, or 0.14 per cent, at 20,149.06. The index was down about 2 per cent for the week heading into Friday’s session.
In the U.S., the Dow Jones Industrial Average rose 14.24 points, or 0.04 per cent, at the open to 35,230.13.
The S&P 500 opened higher by 12.07 points, or 0.27 per cent, at 4,513.96, while the Nasdaq Composite gained 66.24 points, or 0.47 per cent, to 14,025.96 at the opening bell.
On Friday, jobs reports in both Canada and the U.S. will be key.
U.S. figures released early Friday morning showed the U.S. economy added 187,000 jobs in July. That was short of the 200,000 gain markets had been expecting. The unemployment rate dipped to 3.5 per cent.
“The downside surprise in the report has made the tug-of-war between the bulls and bears even tougher, as neither of them knows which way the market is going to go,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said in a note.
“In addition, there were also some mixed signals in the data point, which means that the Fed doesn’t really have the confidence to go and increase the interest rate in the way that they would have liked.”
In Canada, Statistics Canada says the economy unexpectedly shed jobs last month. The agency says hiring fell by 6,000 positions in July. The jobless rate edged up to 5.5 per cent. Economists had expected the economy to add about 25,000 jobs for the month.
“Despite the softer job tally, wage growth spiked back up to 5.0 per cent, which was much higher than the 4.1 per cent consensus expectation,” CIBC senior economist Andrew Grantham said.
“As a result, today’s data is unlikely to convince the Bank of Canada that the labour market has loosened enough yet to sustainably achieve its 2-per-cent CPI target, despite the weaker headline jobs count.”
On the corporate side, earnings are due from Magna, Enbridge and Telus ahead of the market open.
The Globe’s Alexandra Posadzki reports this morning that Telus Corp. is shrinking its global headcount by 6,000 people, the company announced Thursday as it reported higher revenue and lower profits during its second quarter. The reductions include 4,000 positions at Telus and 2,000 at its digital customer-experience subsidiary, Telus International, representing roughly 5.5 per cent of its total work force. Telus had 108,500 employees at the end of 2022, including 73,300 at Telus International, according to its most recent annual report.
On Wall Street, shares of Amazon were up more than 9 per cent in morning trading after the retail giant topped sales growth and profit estimates in the latest quarter. Amazon’s second-quarter revenue grew 11 per cent to US$134.4-billion, beating estimates of US$131.5-billion from analysts polled by Refinitiv.
Shares of Apple, meanwhile, were down more than 2 per cent after the company forecast that a sales slump would continue into the current quarter.
Overseas, the pan-European STOXX 600 slid 0.22 per cent by late morning, giving up early gains.
Germany’s DAX fell 0.32 per cent while France’s CAC 40 added 0.12 per cent. Britain’s FTSE 100 was off 0.33 per cent.
In Asia, Japan’s Nikkei finished 0.10-per-cent higher. Hong Kong’s Hang Seng added 0.61 per cent.
Commodities
Crude prices were on track for a sixth week of gains after Saudi Arabia said it would extend production cuts into next month.
The day range on Brent was US$85.06 to US$85.66 in the early premarket period. The range on West Texas Intermediate was US$81.55 to US$82.11. Both benchmarks are higher for the week. Brent has risen 15.4 per cent and WTI by 18.2 per cent during the last six weeks, according to figures from Reuters.
“The Saudis are doing whatever it takes to defend oil prices and that could mean we could be seeing US$90 oil soon,” OANDA senior analyst Ed Moya said.
“The only thing getting in oil’s way is a weakening global outlook as several advanced economies are starting to feel the impact of central bank tightening.”
On Thursday, Saudi Arabia extended a voluntary oil production cut of 1 million barrels per day to the end of September, keeping the door open for another extension. Russia has also elected to reduce its oil exports by 300,000 bpd next month.
OPEC+ members are scheduled to meet Friday.
In other commodities, gold prices were down more than 1 per cent for the week so far.
Spot gold was down 0.1 per cent at $1,932.28 per ounce by early Friday morning and U.S. gold futures were trading 0.1 per cent lower at US$1,967.60.
“Gold should start attracting once we see the bond market selloff cool off,” Mr. Moya said. “The U.S. might have some debt issues over the coming years and that should keep gold supported. While the US economy has been very resilient, the Fed’s work will likely be done after one more rate hike.”
Currencies
The Canadian dollar was modestly lower while its U.S. counterpart traded not far off the four-week highs seen during the previous session.
The day range on the loonie was 74.79 US cents to 74.99 US cents in the early premarket period. The Canadian dollar was down 0.85 per cent over the last five days ahead of Friday’s opening bell.
On world markets, the U.S. dollar index was up 0.03 per cent at 102.58 early Friday morning. On Thursday, the index touched 102.84, the best level since July 7.
Major currencies were all broadly flat on the day against the U.S. dollar with the yen at 142.56 per dollar, the euro at US$1.0952, and the pound at US$1.2710, according to figures from Reuters.
In bonds, the yield on the U.S. 10-year note was lower at 4.182 per cent in the predawn period.
More company news
Magna International raised its full-year profit and sales outlook after its quarterly results beat estimates on strong demand for auto parts as supply chain constraints eased. Demand for parts has remained strong from automakers as they strive to manufacture new models to cater to consumers looking to snap up pickup trucks and family SUVs. Labor concerns, however, have remained a worry for the industry as it navigates higher costs of raw materials and other inflationary headwinds. Magna expects 2023 revenue between US$41.90-billion and US$43.50-billion, compared with its previous forecast of US$40.20-billion to US$41.80-billion. -Reuters
Canadian pipeline operator Enbridge Inc reported a rise in second-quarter profit on Friday as oil prices were lower than the year-ago quarter but still above a level where oil and gas producers can drill profitably. The Calgary, Alberta-based company reported net income of $1.8-billion, or 91 cents per share, for the quarter ended June 30, compared with $450-million, or 22 cents per share, in the same period last year. -Reuters
Barrick Gold Corp aims to restart operations at the Porgera gold mine in Papua New Guinea (PNG) later this year, CEO Mark Bristow said on Friday. The mine was placed on care and maintenance in April 2020 following a dispute over benefit sharing terms between the government, local people and Barrick, as part of renewing the mining lease. Porgera produced nearly 600,000 ounces of gold in 2019. -Reuters
Economic news
OPEC meeting
830 am ET: Canada’s July employment report.
830 am ET: U.S. nonfarm payrolls for July.
10 am ET: Canada Ivey PMI
10 am ET: Global Supply Chain Pressure Index
With Reuters and The Canadian Press