U.S. stock futures were higher Friday as world markets traded in positive territory but still looked set for their worst weekly losses since March. Crude prices held early gains as investors digested the outcome of a key OPEC meeting earlier in the day. On Bay Street, futures were also up as investors turned their attention to BlackBerry earnings. The loonie fell sharply, slipping below the 75-US-cent mark on below-forecast readings on Canadian inflation and retail sales.
MSCI’s all-country index was up 0.2 per cent overnight but down 1.3 per cent for the week, marking its worst weekly showing in three months.
“Crude markets are top of the agenda today, as the OPEC meeting draws to its conclusion.,” IG market analyst Joshua Mahony said.
Ahead of the start of trading, OEC agreed to a modest increase in oil production from July with leader Saudi Arabia apparently convincing to set aside its objections. OPEC has agreed that members and its allies should increase production by about a million barrels a day. However, Reuters reports that the real increase will be less because smaller countries that under-produced oil will return to full quotas while others will not be allowed to fill the gap.
U.S. futures held their morning gains after the decision with Dow futures up by triple digits. The Dow has closed lower for the past eight sessions, marking its worst losing streak in a year.
On the trade front, India joined China and the EU in retaliating against the Trump administration’s metals tariffs by raising import duties on U.S. almonds by 20 per cent. India is currently the world’s biggest buyer of U.S. almonds.
On Bay Street, BlackBerry earnings are in the spotlight. Reporting before the start of trading, BlackBerry posted revenue of US$213-million, ahead of the US$211-million analysts had been forecasting. Adjusted earnings per share came in at 3 US cents, better than the flat reading the markets were forecasting. BlackBerry’s U.S. listed shares were up about 2 per cent in premarket trading.
On Wall Street, Red Hat shares were down 13 per cent after its revenue forecast for the current quarter and the full year disappointed investors. After the close Thursday, Red Hat said it expects second-quarter revenue between US$822-million and US$830-million, and an adjusted profit of about 81 US cents per share. Analysts on average expect revenue of US$854.9-million and a profit of 89 US cents per share. Red Hat also cut its full-year revenue forecast to between US$3.38-billion and US$3.41-billion
Overseas, European markets moved higher. The pan-European STOXX 600 was up 0.54 per cent with most sectors in the black. The banking sector led the gains on a rebound in Italian bank shares on reports that exiting the currency bloc was not among the top priorities for Italy’s far-right League Party. Britain’s FTSE 100 rose 0.61 per cent in morning trading. Germany’s DAX advanced 0.38 per cent and France’s CAC 40 gained 0.74 per cent.
In Asia, shares finished mixed. Japan’s Nikkei fell 0.78 per cent but finished off the session’s lowest levels. The Shanghai Composite Index ended up 0.49 per cent. Hong Kong’s Hang Seng edged up 0.15 per cent.
Commodities
Oil prices held early gains in the wake of the OPEC decision. Both Brent and WTI were higher ahead of the meeting and remained in positive territory as news of the production increase spread. The day range on Brent so far is US$65.71 to US$67.27 with prices holding near the higher end of that spread. WTI followed a similar course and had a range of US$65.71 to US$67.27.
OPEC members began capping output in 2017 to combat the global market overhang. The move has resulted in a tighter market, drawing sharp criticism from U.S. President Donald Trump. However, Friday’s decision is somewhat complicated by the looming global trade dispute and its potential impact on crude markets.
In other commodities, gold prices edged higher as the U.S. dollar pulled back from its highest level in 11 months. Spot gold rose in early going after touching US$1,260.84 during the previous session. That’s its lowest level since mid-December. Despite Friday’s gains, gold prices were still on track for a weekly decline of about 0.7 per cent.
Silver prices were also positive but similarly looked set for a weekly fall of about 0.6 per cent.
Currencies
The Canadian dollar fell below 75 US cents on a softer-than-expected reading on inflation and a decline in retail sales. Immediately after the reports were released, the loonie dropped to a session low of 74.79 cents. The top end of the range for the day is 75.39 US cents.
The decline came immediately after Statistics Canada reported Canada’s annual rate of inflation in May was 2.2 per cent, well below the 2.6 per cent the markets had been expecting. At the same time, the agency said retail sales fell 1.2 per cent in April. Economists had been expecting a flat reading for the month.
“Today’s bad data make it even more difficult for the Bank of Canada to hike rates in July,” CIBC economist Royce Mendes said.
“But, with the most important numbers yet to come in GDP and employment, there’s still time for the data to turn.”
The loonie’s move comes as the U.S. dollar index, which tracks that currency against six global counterparts, moved lower, slipping to 94.641. During the previous session, the index hit 95.533, its best level since last July.
In bonds, the yield on the U.S. 10-year note was higher at 2.913 per cent. The yield on the 30-year note was also higher at 3.056 per cent.
Stocks set to see action
Airbus issued its strongest warning yet over the impact of Britain’s departure from the European Union, saying a withdrawal without a deal would force it to reconsider its long-term position and put thousands of British jobs at risk. In a memorandum issued late on Thursday, Airbus said current plans for a transition period ending in December 2020 were still too short for the European plane maker to adapt its supply chain and would prevent it from expanding its British supplier base.
Laurentian Bank of Canada has filled two key roles in its executive ranks, promoting a new chief operating officer from within and plucking its new chief risk officer from Canada’s banking regulator. Deborah Rose will be the bank’s COO, overseeing administration, technology and operations, while continuing to serve as chief information officer. Most recently, she was chief executive of Laurentian’s B2B Bank division, executive vice president of intermediary banking and CIO.
French supermarket retailer Casino and beauty products group L’Oreal have teamed up to launch new beauty stores in Paris, in a further sign of retailers’ attempts to win customers in the face of competition from online rivals. The two companies said in a joint statement on Friday that the new stores would cover various beauty products and other offerings such as over-the-counter pharmaceutical products. The first two outlets will open later in June in the 9th and 6th districts of Paris.
General Motors Co is going ahead with its plan to manufacture the new Chevrolet Blazer SUV in Mexico, a spokesman for the auto maker told Reuters. U.S. President Donald Trump has been pressing automakers to build more vehicles in the United States under efforts to renegotiate the North American Free Trade Agreement (NAFTA). “We remain committed to working with the administration on a modernized NAFTA,” GM spokesman Pat Morrissey said, adding the decision was made years ago.
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Economic news
Statistics Canada said the annual rate of inflation in May was 2.2 per cent, lower than the 2.6-per-cent rate the market had been forecasting. On a monthly basis, the consumer price index rose 0.1 per cent.
Retail sales fell 1.2 per cent to $49.5-billion in April. The markets had been expecting a flat reading. April’s decline was mostly the result of lower auto and parts sales, Statscan said.
(9:45 a.m. ET) U.S. PMI Composite Flash for June.
With Reuters and The Canadian Press