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Equities
Canada’s main stock index dipped at the open bell Friday on weakness in commodity-related stocks. On Wall Street, key indexes were higher in early trading as investors weigh headlines on the war in Ukraine.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 7.39 points, or 0.06 per cent, at 21,574.31.
In the U.S., the Dow Jones Industrial Average rose 105.65 points, or 0.32 per cent, at the open to 33,279.72.
The S&P 500 opened higher by 19.98 points, or 0.47 per cent, at 4,279.50, while the Nasdaq Composite gained 99.81 points, or 0.76 per cent, to 13,229.77 at the opening bell.
Sentiment took a hit this week after figures showed the annual rate of inflation hit 7.9 per cent in February, a four-decade high. The report comes ahead of next week’s Federal Reserve policy announcement. Economists are expecting the powerful U.S. central bank to begin hiking rates.
“The central banks are increasingly concerned about inflation, and the major ones start giving out signals that they won’t let inflation run too hot, even if it means a slower growth,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
Traders are also keeping a close eye on the Russia-Ukraine war.
The Associated Press reported early Friday that Russia had widened its military offensive in Ukraine on Friday, striking near airports in the west of the country for the first time as troops kept up pressure on the capital, Kyiv. However, sentiment improved after reports that Russian President Vladimir Putin said there were certain “positive shifts” in talks with Ukraine. Putin did not elaborate.
In this country, investors got a much stronger-than-expected reading on hiring in February.
Statistics Canada says the economy generated nearly 337,000 new positions last month with the jobless rate dropped a percentage point to 5.5 per cent.
Statscan also said total hours worked increased 3.6 per cent while the employment rate, or the proportion of the population aged 15 and older who were employed, rose a percentage point to 61.8 per cent. The numbers come a week after the Bank of Canada raised interest rates for the first time since 2018, citing, in part, a strong Canadian economy.
Overseas, the pan-European STOXX 600 was up 2 per cent by midday. Britain’s FTSE 100 gained 1.34 per cent. Germany’s DAX and France’s CAC 40 advanced 3.38 per cent and 2.2 per cent, respectively.
In Asia, Japan’s Nikkei closed down 2.05 per cent. Hong Kong’s Hang Seng lost 1.61 per cent.
Commodities
Crude prices wavered in early going and looked set for a weekly decline as markets struggle to assess the impact of sanctions on Russian oil and the conflict in Ukraine.
The day range on Brent is US$107.13 to US$112.94. The range on West Texas Intermediate is US$104.48 to US$109.79.
Brent was off about 5 per cent so far in a volatile week that saw it touch its highest level in 14 years on Monday. WTI is down more than 6 per cent.
“Both contracts could well move sharply below US$100 a barrel from here on any news perceived as easing supply disruptions,” OANDA senior analyst Jeffrey Halley said.
“Similarly, both contracts could easily be back at US$115.00+ on any negative headlines, it’s just that sort of market.”
In other commodities, gold prices slid but looked headed for a second week of gains after talks this week between Russia and Ukraine failed to yield progress.
Spot gold was down 0.3 per cent to US$1,990.09 per ounce early Friday morning. U.S. gold futures were down 0.4 per cent to US$1,992.50.
“To a large degree it’s going to be a war-driven trade again. But what’s going to cap sentiment in the absence of any war-time escalation is the FOMC, which is going to be a little bit more hawkish than what markets have currently priced in,” Stephen Innes, managing partner at SPI Asset Management, said.
Currencies
The Canadian dollar gained Friday morning after a much stronger-than-expected reading on this country’s employment market.
The day range on the loonie is 78.13 US cents to 78.78 US cents, with the dollar moving toward the top end of that spread after the release of the latest employment numbers.
Statistics Canada said the economy added 337,000 new jobs last month while the unemployment rate fell a full percentage point to 5.5 per cent. The numbers blew past economists’ forecasts, which called for a gain in hiring of about 125,000 new positions in February.
At a headline level, February’s labour market report has been big for markets, with front-end Canadian bond yields rising a further 8 basis points to yield 1.62 yield, while the loonie continued its rally to reverse losses on the week against the [U.S.] dollar as the USDCAD pairing looks to break back below the 1.27 handle,” Jay Zhao-Murray, FX market analyst, Monex Canada Inc., said in a note.
“We continue to expect the Bank of Canada to hike rates by 25 basis points in April and begin quantitative tightening, with today’s data merely increasing our conviction,” he said.
Canadian investors get the February jobs report Friday morning.
On world markets, the U.S. dollar was last up 0.7 per cent to 116.97 yen after touching its highest level since January 2017 ahead of next week’s Fed policy decision.
The dollar rose against a basket of peers by 0.37 per cent to 98.730, according to figures from Reuters.
The euro edged 0.1 per cent lower to US$1.0975 in early trading, after rising as high as US$1.11215 on Thursday in a choppy day.
More company news
CGI Inc. has announced a deal to expand its business in Europe with an agreement to buy Umanis, a French digital services company. The Montreal-based technology and business consulting firm says the transaction values Umanis at about 310 million euros ($436-million). CGI chief executive George Schindler says the combination of CGI and Umanis will deepen the company’s presence and positioning across western and southern Europe. Under the agreement, CGI France has the exclusive right to buy all of the shares held by Mura and Umanis chief executive Olivier Pouligny, representing a 70.6 per cent stake in the company at 17.15 euros per share in a block purchase.
European Union and British antitrust authorities launched parallel investigations on Friday into a 2018 online display advertising deal between Google and Facebook. Alphabet unit Google and Facebook, whose parent company is now called Meta, defended the “Jedi Blue” deal, which the EU said may thwart ad tech rivals and disadvantage publishers in online display advertising. So-called header bidding allows publishers, such as news providers, to offer ad space to multiple ad exchanges and networks simultaneously, potentially generating more ad revenue. The Jedi Blue agreement enables Meta via its Meta Audience Network, to participate in Google’s Open Bidding program, which is a rival to header bidding.
Deutsche Bank said it was not withdrawing completely from Russia, drawing anger from investors and contrasting with Wall Street banks which are severing ties with the country over its invasion of Ukraine. Banks and asset managers have joined many other Western companies in pulling back from Russia following a raft of sanctions on the country. “We are often asked why we are not withdrawing completely from Russia. The answer is that this would go against our values,” Chief Executive Christian Sewing said in a note to Deutsche Bank staff on Thursday. He added that it would not “be the right thing to do in terms of managing those client relationships and helping them to manage their situation”.
Economic news
(8:30 a.m. ET) Canadian employment for February.
(8:30 a.m. ET) Canada’s capacity utilization for Q4.
(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q4.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for March.
With Reuters and The Canadian Press