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Equities
Canada’s main stock index rose at open on Friday led higher by health care and tech stocks.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 69.53 points, or 0.43 per cent, at 16,234.14.
Health care stocks rose 1 per cent with Aphria up 7.2 per cent, Canntrust up 3.6 per cent and Cronos up 2.8 per cent.
Tech stocks gained 1 per cent with Shopify up 1.7 per cent and Constellation Software up 1.2 per cent.
Despite a rise in oil prices, the energy sector slid 0.3 per cent with Prairiesky off 1.4 per cent and Encana off 0.9 per cent.
U.S. stocks rose at the open on Friday, a day after a sharp sell off, as sentiment was buoyed by comments from President Donald Trump predicting a swift end to the protracted trade dispute with China.
The Dow Jones Industrial Average rose 60.60 points, or 0.24 per cent, at the open to 25,551.07. The S&P 500 opened higher by 10.17 points, or 0.36 per cent, at 2,832.41. The Nasdaq Composite gained 47.28 points, or 0.62 per cent, to 7,675.57 at the opening bell.
Trump said on Thursday that Huawei could be included in the U.S.-China trade deal. However, no high-level talks have been scheduled since the last round of negotiations in Washington two weeks ago.
Trump will meet his Chinese counterpart Xi Jinping at the G20 meeting next month in Japan.
Earlier this week, while Washington temporarily relaxed its ban on Huawei, there were reports that it was planning a similar ban on another Chinese firm, making investors worry that such moves would have a lasting effect on the global technology supply chain.
“I don’t see enormous amounts of positive news out there although there is optimism about the trade discussions,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
Industrial bellwethers Boeing Co, Caterpillar Inc and 3M Co rose in early trading.
Boeing shares rose 2.5 per cent after Reuters reported the Federal Aviation Administration expects to approve Boeing’s 737 MAX jet to return to service as soon as late June.
“We’ve had a turbulent week. Investors are stepping back at these levels, assessing opportunities entering the long weekend,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
“The trade talks are not going as smoothly as one would have liked, but there is going to be some short covering as well.”
Markets shrugged off data that showed new orders for U.S.-made capital goods fell more than expected in April, further evidence that manufacturing and broader economy were losing steam.
The daily exchanges between the United States and China have kept investors on edge, putting the S&P 500 index on track to post its biggest monthly decline since the December sell-off.
Following a sell-off on Thursday, the S&P 500 is now 4.7 per cent off its all-time high hit on May 1.
Among other stocks, Foot Locker Inc dropped 17.3 per cent after the footwear retailer missed quarterly profit and same-store sales estimates.
Autodesk Inc fell 5 per cent after the software maker reported quarterly earnings below expectations.
Total System Services Inc jumped 11 per cewnt after Bloomberg reported Global Payments Inc has held preliminary tie-up talks with the payment solutions provider. Global Payments’ shares rose 5.5 per cent.
U.S. equity markets will be shut on Monday on account of Memorial Day.
Overseas, Britain’s FTSE gained 0.9 per cent as Prime Minister Theresa May announced her resignation date, June 7, in a widely expected move which nevertheless raises the prospect of a successor likely to seek a more hardline Brexit divorce deal.
Germany’s DAX rose 0.8 per cent and France’s CAC rose 0.9 per cent.
Asian indexes were torn between fears of a more protracted U.S.-China trade war and hopes the world’s two largest economies would reach a deal soon. China mainland blue chips and Hong Kong stocks climbed around 0.3 per cent while Japan’s Nikkei fell 0.2 per cent.
Commodities
Brent crude rose towards US$69 a barrel on Friday after two sessions of losses, but remained on track for its biggest weekly drop this year due to rising inventories and concerns of an economic slowdown.
U.S. crude inventories rose to hit the highest since July 2017, suggesting ample supplies in the world’s top consumer. Meanwhile, worries that the U.S.-China trade is developing into a more entrenched dispute have also hit prices.
“Clearly, bargain hunters are back in town,” Naeem Aslam, chief market analyst at TF Global Markets, said of the bounce. “However, it is still set to record the worst week of the year and this is due to the increase in trade war tensions between the U.S. and China.”
Brent crude, the global benchmark, rose 85 cents to US$68.61 a barrel. It was still set for a decline of more than 5 per cent this week. U.S. West Texas Intermediate crude added 75 cents at US$58.66.
Some analysts expect gains to be short-lived.
“Without a resolution to the ongoing trade dispute quickly, which now looks very unlikely, oil could struggle to push higher,” Jasper Lawler, Head of Research at futures brokerage London Capital Group, said.
Even so, supply cuts - both voluntary and those resulting from U.S. sanctions, kept a floor under prices.
Gold eased on Friday as stock markets regained momentum, with a weaker dollar and renewed hopes of a rate cut by the U.S. Federal Reserve keeping bullion on track for a weekly gain.
Spot gold was down 0.1 per cent at US$1,281.62 per ounce, after rising as much as 1.1 per cent to a one-week peak of US$1,287.23 in the previous session. The metal has risen about 0.4 per cent so far this week.
U.S. gold futures for June were down 0.3 per cent at US$1,281.
“Stocks are pointing higher, we have renewed risk appetite coming into oil markets,” said Saxo Bank commodity strategist Ole Hansen.
“Gold is doing more or less what it is supposed to be, finding a bid when the other markets fell, but the bid hasn’t really been strong enough this week to push it to levels which could have attracted renewed buying interest. It’s not out of the woods yet.”
Among other precious metals, silver fell 0.4 per cent to US$14.53 per ounce, while palladium climbed 1.9 per cent to US$1,335.75. Palladium was on track for a 1.8 per cent weekly gain, its first in four weeks.
Platinum rose 1.6 per cent to US$806.25 an ounce, having touched its lowest since Feb. 15 at US$791 in the previous session, putting it on track for its fifth straight weekly loss.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart on Friday, recovering from a six-day low the day before as investors dialed back fears of a protracted trade war between the United States and China.
The price of oil rose after two sessions of losses, but remained on track for its biggest weekly drop this year due to rising inventories and concerns about an economic slowdown. U.S. crude oil futures were up 1.5 per cent at $58.78 a barrel.
At 9:08 a.m., the Canadian dollar was trading 0.2 per cent higher at $1.3450 to the greenback, or 74.35 cents US. The currency, which on Wednesday touched its lowest since May 17 at $1.3505, traded in a range of $1.3446 to $1.3481.
For the week, the loonie was on track to rise 0.1 per cent.
The U.S. dollar edged away from two-year highs on Friday after weak U.S. manufacturing activity data sparked worries that the trade conflict with China may hurt the world’s largest economy and affect the currency’s safe-haven status.
Against a basket of six major currencies, the dollar was down 0.2 per cent at 97.686 in early European trade and 0.7 per cent off a two-year high of 98.371 hit the previous session.
The fall followed overnight data showing manufacturing activity hit its lowest level in almost a decade in May, suggesting a sharp slowdown in U.S. economic growth was under way.
Up to now, the bulk of the pain from the trade war has been felt in Asia, with economies from Singapore to Thailand all posting poor numbers.
“Lot of people for good reasons thought trade wars may be U.S. dollar-positive and other countries cannot retaliate,” said Commerzbank FX strategist Ulrich Leuchtmann.
“But in reality, it’s more difficult. This very disappointing PMI data and other factors like the Huawei story are all creating stress for the U.S. economy and derailing sentiment.”
The pound was up 0.4 per cent against the euro on Friday after 14 days of losses as Prime Minister Theresa May set out a departure date after two years of trying to push through a Brexit divorce deal.
Trading was volatile as concerns rose that she is likely to be succeeded by a Eurosceptic leader, potentially increasing the chances of a ‘no-deal’ Brexit.
Against the dollar, the pound was 0.4 per cent higher at US$1.2713 after her announcement.
In bonds, flight-to-safety plays continued to dominated global markets with the benchmark 10-year U.S. Treasury note yield hitting 2.292 per cent overnight, the lowest level since mid-October 2017. The yield last stood at 2.3220 per cent.
Key parts of the U.S. yield curve were inverted, flashing another warning sign about the health of the world’s biggest economy.
Canada’s 10-year bond yield was up slightly at 1.651 per cent.
Other corporate news
A.P. Moller-Maersk, the world’s largest container shipping company, warned on Friday that trade tensions and an economic slowdown are slowing growth in global freight. Maersk, which is seen as an indicator of global trade patterns, cut its forecast for global growth in container traffic this year due to the trade dispute between the United States and China.
Torstar Corp. says it will close its Hamilton printing and mail room operations this summer and look at selling the property. The newspaper publisher says the printing work done at the facility will be transferred to TC Transcontinental Printing and other Torstar-owned facilities as well as other external printers. The decision will affect approximately 73 full-time and 105 part-time staff. Torstar expects to save approximately $4-million to $6-million annually once the change is fully implemented. It expects to record a roughly $6-million restructuring charge in connection with the closure.
Economic news
Orders to U.S. factories for large manufactured goods fell sharply last month, pulled down by lower demand for commercial aircraft and cars. The Commerce Department said Friday that orders for durable goods — or items meant to last at least three years — fell 2.1 per cent, after rising 1.7 per cent in March. Orders also fell steeply in February. Aircraft orders, typically a volatile category, plummeted 25.1 per cent, after a more modest gain of 7.8 per cent in the previous month. Orders for cars and auto parts fell 3.4 per cent, the biggest drop in nearly a year. And a category that tracks business investment declined 0.9 per cent, the most since December. The data suggest companies are spending less on big-ticket items, likely in part because of the uncertainties raised by the U.S.-China trade war.
With files from Reuters