Canada’s main stock index was little changed at the start of trading on Friday, as weakness in technology and health-care stocks offset commodity-linked gains, but the benchmark index was on course to gain for a third straight week.
At 9:32 a.m. ET (13:32 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 5.17 points, or 0.02%, at 21,207.22.
It would also be the TSX’s 13th straight session gain if it closes higher.
The S&P 500 and the Nasdaq opened lower after chipmaker Intel warned of lower profit margins, while Snap Inc led declines among social media firms after flagging a hit to digital advertising from privacy changes by Apple.
The Dow Jones Industrial Average rose 4.64 points, or 0.01%, at the open to 35,607.72. The S&P 500 opened lower by 3.66 points, or 0.08%, at 4,546.12, while the Nasdaq Composite dropped 57.64 points, or 0.38%, to 15,158.07 at the opening bell.
Intel shares were down about 11% in early trading and Snap 21%.
Oil prices stayed near multi-year highs, erasing some earlier losses in Asian trading hours. Gold prices gained for a fourth consecutive session, propped up by a subdued U.S. dollar.
Supply chain worries, inflationary pressures and labor shortages have been at the center of third-quarter earnings season, with analysts expecting S&P 500 earnings to rise 33.7% year-on-year, according to data from Refinitiv.
Some analysts, however, said such worries will only have a temporary impact on earnings from mega-cap technology and communications companies this reporting season.
In corporate news this morning, the executive power drama continues to play out at Rogers Communications Inc. Its board late Thursday voted to remove Edward Rogers as chairman, amid a tussle between the family members of late founder Ted Rogers over who should lead one of Canada’s biggest telecoms companies. In turn, however, Edward Rogers is now aiming to replace five of the company’s directors. Rogers shares are down 0.6% in early trading.
Canadian retail sales for August rose 2.1%, Statistics Canada reported this morning - slightly ahead of the 2% expected by economists. It marks a recovery from a 0.6% fall the previous month. There was little reaction to the data in markets.
Meanwhile, global shares got a tech boost to help tee up a third straight week of gains on Friday, despite growing inflation concerns, while the dollar dipped and oil prices bounced off their lows.
MSCI’s broadest gauge of global shares was up 0.1%, 1.4% higher on the week and just 0.8% off its all-time high.
Data on Friday showed euro zone inflation expectations are at their highest in years, amid a rash of warnings from companies including Nestle, ABB and Unilever.
Equities
Commodities
Oil prices were up about 1 per cent early Friday, erasing some earlier losses in Asian trading hours, with concerns about tight supply and stockpiles fuelling bullish sentiment.
Prices have been boosted by worries about coal and gas shortages in China, India and Europe, spurring some power generators to switch from gas to fuel oil and diesel.
Winter weather in much of the United States is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration forecast.
“Crude oil’s sharp rise may make it vulnerable to profit taking, however, a substantial correction may not happen unless global energy crisis subsides,” said Ravindra Rao, vice president for commodities at Kotak Securities.
“Global gas and coal prices have eased but concerns persist with tighter market and higher demand winter season around the corner.”
U.S. crude found support this week as investors eyed low crude stocks at the U.S. storage hub in Cushing, Oklahoma.
U.S. Energy Information Administration data on Wednesday showed crude stocks at Cushing fell to 31.2 million barrels, their lowest level since October 2018.
“America’s gasoline demand appears to be experiencing an Indian summer,” PVM analysts said in a note, pointing to the highest implied demand for this time of year since 2007 despite high pump prices.
Currencies and bonds
The Canadian dollar is posting some modest gains against the greenback this morning, rebound from losses on Thursday.
“Price action suggests perhaps a degree of caution and some mild profit-taking setting in on the CAD ahead of next week’s BoC policy decision, with investors lightening up on CAD longs as a result,” Scotiabank forex strategists said in a note this morning. “Firm crude oil, wide spreads, and strong/stronger conviction on expected BoC tightening reflected in OIS [Overnight Index Swap] pricing suggest little or no meaningful change in fundamental supports for the CAD.”
Other corporate news
Corus Entertainment Inc. reported a fourth-quarter profit of $19.9-million, down from $30.3-million in the same quarter last year, as its revenue grew more than 10 per cent. On an adjusted basis, Corus says it earned 10 cents per share for the quarter, down from an adjusted profit of 16 cents per share a year ago. Analysts on average had expected an adjusted profit of nine cents per share, according to to financial markets data firm Refinitiv.
American Express Co on Friday reported a higher profit that topped Wall Street estimates for the fourth straight quarter, underpinning a recovery in spending from consumers emboldened by an easing of COVID-19 restrictions. Net income came in at $1.83 billion, or $2.27 per share, for the quarter ended Sept. 30, up 70% from last year. Analysts were expecting a figure of $1.80 per share, according to IBES data from Refinitiv. The company’s shares were up 2% at $180.78 in premarket trading and were set to open at a record high.
Top oilfield firm Schlumberger NV reported a rise in third-quarter adjusted income on Friday, buoyed by higher demand for its services and equipment, as producers capitalize on a rebound in crude prices. Schlumberger reported net income of $550 million, or 39 cents per share, for the quarter, edging past Wall Street estimates of 36 cents each, according to Refinitiv IBES. Revenues of $5.8 billion fell short of analysts expectations of $5.9 billion, but were up 11% year-over-year. Its shares were down 1.11% in pre-market trading to $33.92
Honeywell International Inc on Friday cut its full-year sales forecast, as global supply chain disruptions cause a shortage of parts and components for the U.S. industrial conglomerate. The company cut its full-year sales estimates to between $34.2 billion and $34.6 billion, compared with its prior forecast of $34.6 billion to $35.2 billion to “reflect the persistent effects of the macro-challenged environment.” Analysts, on average, had expected full-year sales of $35.10 billion, according to Refinitiv IBES estimate.
VF Corp missed Wall Street estimates for quarterly revenue and profit on Friday, as the Vans owner grappled with product delays during the period due to global supply chain disruptions and production shortfalls in Vietnam. The Denver-based company’s shares fell 8.1% to $68.05 in premarket trading.
Mattel Inc jumped 8.2% in the premarket after it raised its 2021 sales forecast on Thursday, saying it would overcome industry-wide shipping disruptions.
Beyond Meat Inc on Friday cut its third-quarter revenue forecast, blaming a drop in demand from grocery stores and lingering effects of the Delta variant of the coronavirus. The faux meat maker said it now expects third-quarter net revenue of about $106 million, compared with its prior forecast of $120 million to $140 million.
Economic news
Canadian retail sales were up 2.1% to $57.2 billion in August. Sales increased in 9 out of 11 subsectors, led by higher sales at food and beverage stores (+4.8%), gasoline stations (+3.8%), and clothing and clothing accessories stores (+3.9%).
Given the rapidly evolving economic situation, Statistics Canada is providing an advance estimate of sales in the manufacturing sector for September. Advance results indicate that manufacturing sales fell 3.2% in September. The decline mostly reflects lower sales in the transportation equipment industry.
(9:45 a.m. ET) U.S. Markit PMIs for October (preliminary).
(11 a.m. ET) U.S. Fed Chair Jerome Powell participates in a panel discussion on post-COVID monetary and financial stability at event hosted by South African Reserve Bank (videoconference)
With files from Reuters
Darcy Keith