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Equities
North American markets continued to fall early Friday after the previous session’s deep rout with employment numbers on both sides of the border doing little to ease investors’ jitters.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 38.84 points, or 0.19 per cent, at 20,657.33.
In the U.S., the Dow Jones Industrial Average fell 224.09 points, or 0.68 per cent, at the open to 32,773.88.
The S&P 500 opened lower by 18.70 points, or 0.45 per cent, at 4,128.17, while the Nasdaq Composite dropped 70.86 points, or 0.58 per cent, to 12,246.83 at the opening bell.
“The Federal Reserve magic didn’t last long, and the U.S. stocks recorded the worst day of the year yesterday, after posting the biggest gains of the year the day before, under the pretext that the Fed wouldn’t raise the rates by 75 basis points,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.
“Investors realized that the Fed announced the biggest rate hike in more than 20 years, and said that there will be more 50-basis-point hikes in the coming meetings.”
On Friday, attention shifts to the employment markets on both sides of the border.
In the U.S., the American economy generated 428,000 new positions, better than the 380,000 jobs markets had been expecting.
In this country, Statistics Canada says the economy added 15,300 new jobs in April after February and March’s combined gain of 409,000 positions. The April increase was short of analysts’ forecasts. April’s gains were in part-time employment while full-time hiring fell. The jobless rate edged down 0.1 per cent to 5.2 per cent.
“Overall, the slightly weaker than expected employment report today doesn’t change the overall picture of a much stronger labour market than at the start of the year, and as such shouldn’t deter the Bank of Canada from delivering another 50-basis-point hike at its next meeting.” CIBC senior economist Andrew Grantham said.
On the corporate side, Canadian investors continue to see earnings rolling in, with results from Telus and Enbridge.
Ahead of the open, Enbridge reported higher-first quarter profit on a rise in shipment volumes amid a surge in oil and gas demand. The Calgary-based company’s adjusted earnings rose to $1.7-billion, or 84 cents per share, in the three months to March 31, from $1.63-billion, or 81 cents per share, a year earlier.
Meanwhile, Telus had $4.26-billion in revenue for the three-month period ended March 31, up 5.8 per cent from a year ago when it had $4.02-billion in revenue. The company’s profit totalled $404-million for the quarter, up 21.3 per cent from $333-million in profits during the same quarter last year. The telecom’s earnings amounted to 28 cents per share, up from 25 cents per share a year ago.
Overseas, the pan-European STOXX 600 fell 2.39 per cent in afternoon trading. Britain’s FTSE 100 was off 1.76 per cent. Germany’s DAX and France’s CAC 40 fell 1.96 per cent and 2.17 per cent, respectively.
In Asia, Japan’s Nikkei gained 0.69 per cent as traders returned to work after being off much of the week. Hong Kong’s Hang Seng dropped 3.81 per cent in the wake of Wall Street’s Thursday selloff.
Commodities
Crude prices gained in early going despite uncertainty in the broader markets about global economic growth with supply concerns continuing to underpin sentiment.
The day range on Brent is US$109.87 to US$112.91. The range on West Texas Intermediate is US$107.24 to US$110.23.
Both benchmarks are on track for a second week of gains after the EU outlined a proposal to gradually phase out Russian crude.
OANDA senior analyst Jeffrey Halley noted that this week’s OPEC+ decision to continue with modest output increases had little effect on the markets. Similarly, he said, news that the U.S. will launch tenders to restock 60 million barrels of oil back into its strategic petroleum reserves had no impact on prices
“That leaves oil at the mercy of the Ukraine/Russia conflict and the EU oil ban supporting the downside, while China slowdown fears, with some OPEC members noting much-reduced demand from the mainland, acting as a cap on upside price moves,” he said.
“I still believe markets are under-pricing Ukraine/Russia risks, but that story will have to wait for another day it seems.”
In other commodities, gold prices looked set for a third weekly decline as expectations of aggressive action by the Federal Reserve continues to drive the U.S. dollar and bond yields.
Spot gold fell 0.2 per cent to US$1,873.75 per ounce early Friday morning, while U.S. gold futures were steady at US$1,875.60.
Currencies
The Canadian dollar was relatively steady in early going, trading near 78 US cents, while its U.S. counterpart held near 20-year highs against a group of currencies.
The day range on the loonie is 77.71 US cents to 78.04 US cents. The loonie pulled back slightly after the release of the latest jobs numbers, which showed hiring in the Canadian economy fell short of economists’ forecasts in April.
“While metals prices are softer, crude oil prices remain elevated,” Shaun Osborne, chief FX strategist with Scotiabank, said. “Stock market swings are keeping the VIX elevated, however, which does not appear to be figuring too much in early CAD price action but which might limit the CAD’s ability to take advantage of firmer energy prices.”
On world markets, the U.S. dollar index gained as much as 0.5 per cent in early European trading hours to hit a fresh 20-year high of 104.07 before losing ground in choppy trading, according to figures from Reuters. As of early Friday morning, the index was up 0.3 per cent on the week after posting gains for the four preceding weeks.
The euro lost as much as 0.5 per cent against the U.S. dollar in early European trading hours, before steadying. It was last up 0.2 per cent at US$1.05555.
Britain’s pound was flat after earlier falling below US$1.23 for the first time in nearly two years in the wake of the Bank of England’s warning that the economy faced the double risk of a recession and rising inflation.
More company news
Under Armour Inc forecast full-year profit below Wall Street estimates, as pandemic-led supply chain disruptions force the sportswear maker to spend more on everything from shipping to labor. The company projected an adjusted profit between 63 cents and 68 cents per share for fiscal year 2023, compared with analysts’ average estimate of 83 cents per share, according to Refinitiv IBES data.
Economic news
(8:30 a.m. ET) Canadian employment for April.
(8:30 a.m. ET) U.S. nonfarm payrolls for April.
(10 a.m. ET) Canada’s Ivey PMI for April.
(3 p.m. ET) U.S. consumer credit for March.
With Reuters and The Canadian Press
Terry Weber