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Equities
Canada’s main stock index jumped at Friday’s open on strength in energy and tech issues but still looked set for a down week. In the U.S., major U.S. indexes were also positive after a volatile week on continued rate concerns and worries about the state of the global economy.
At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 222.18 points, or 1.13 per cent, at 19,921.23.
In the U.S., the Dow Jones Industrial Average rose 233.56 points, or 0.74 per cent, at the open to 31,963.86.
The S&P 500 opened higher by 33.82 points, or 0.86 per cent, at 3,963.90, while the Nasdaq Composite gained 185.01 points, or 1.63 per cent, to 11,555.98 at the opening bell.
“It’s been an expensive few weeks in markets if you have been on the wrong side of the tape, and given the last 24 hours have seen an insane amount of volatility; even the bears, in a bear market, need to take a break,” Stephen Innes, managing partner with SPI Asset Management, said.
Late Thursday, U.S. Federal Reserve chair Jerome Powell cautioned that there was no guarantee of a soft landing in the economy and suggested the central bank will push ahead with 50 basis point interest rate hikes at its meetings in June and July.
“If things come in better than we expect, then we’re prepared to do less. If they come in worse than when we expect, then we’re prepared to do more,” Mr. Powell said in an interview with NPR’s Marketplace after winning Senate confirmation for a second term as central bank chief earlier in the day.
Markets have been concerned that the Fed may resort to stepping up rate hikes to three-quarters of a percentage point, if necessary, to help curb inflation.
In this country, the Globe’s Mark Rendell reports that Bank of Canada deputy governor Toni Gravelle said Thursday that this country’s central bank needs to keep raising interest rates to tackle runaway inflation – although how high rates go will depend on how the housing market responds to rising borrowing costs. Mr. Gravelle said the central bank’s policy rate, which has been at 1 per cent since April, is still “too stimulative.” Bank officials have said they intend to get the benchmark rate into a “neutral” range – which neither stimulates the economy nor holds it back – of between 2 per cent and 3 per cent relatively quickly.
On the corporate side, Canadian earnings continue to roll in with results from Cineplex and Onex.
Cineplex reported a narrower first-quarter loss of $42.2-million although revenue surged as moviegoers returned to theatres. Cineplex says the loss amounted to 67 cents per share for the quarter ended March 31 compared with a loss of $89.7-million or $1.42 per diluted share a year earlier. Revenue totalled $228.7-million, up from $41.4-million in the first three months of 2021. Shares jumped 7 per cent shortly after the start of trading in Toronto.
Meanwhile, pot company Aurora Cannabis Inc. reported several impairment charges and a more than $1-billion net loss in its most recent quarter as it announced plans to close several facilities and cope with pricing pressures. The third-quarter loss the Edmonton-based cannabis business reported was up from a more than $160-million loss in the same quarter last year and was coupled with $741.7 million in goodwill impairment charges and $176.1-million in impairment related to property, plants and equipment. Shares gained about 4 per cent in early trading on the TSX.
On Wall Street, shares of Twitter sank more than 10 per cent in early trading after Elon Musk said on Friday his US$44-billion acquisition of Twitter Inc was temporarily on hold, citing pending details on spam and fake accounts. “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” he said in a tweet.
Overseas, the pan-European STOXX 600 rose 1.52 per cent by midday. Britain’s FTSE 100 added 1.67 per cent. Germany’s DAX and France’s CAC 40 gained 1.54 per cent and 1.75 per cent, respectively.
In Asia, Japan’s Nikkei gained 2.64 per cent. Hong Kong’s Hang Seng added 2.68 per cent.
Commodities
Crude prices were higher but still looked set for a weekly decline as concerns over the direction of the global economy spark worries about how well demand will hold up.
The day range on Brent is US$107.79 to US$109.79. The range on West Texas Intermediate is US$106.29 to US$108.13.
Heading into the trading day in North America, Brent was down about 3 per cent on the week while WTI was off about 2 per cent. A weekly decline would be the first in three.
“[Fed chair Jerome] Powell’s soothing comments around 0.50-per-cent rate hikes stabilized sentiment in New York, but it is likely that the Russian natural gas sanctions on some European importers were the reason that oil rebounded,” OANDA senior analyst Jeffrey Halley said.
“With European natural gas prices soaring, it is inevitable that some spillover into oil will occur. If anything, it should support the downside in prices for now, even if recession fears in China and Europe et al slow gains to the upside.”
Markets have been caught between supply concerns amid Russia’s invasion of Ukraine and demand worries linked to COVID-19 shutdowns in China and a fragile global economy as central banks raise interest rates to combat inflation.
In other commodities, gold prices looked headed for their fourth consecutive week of declines.
Spot gold was up 0.1 per cent at US$1,823.40 per ounce by early Friday morning in choppy trade. Earlier in the session, it hit its lowest since Feb. 7. U.S. gold futures were flat at US$1,824.60.
“The fall through support by gold at US$1,835.00, and the sell-off in other precious metals overnight, leave gold vulnerable to deeper losses and a potential test of support at $1,780.00 an ounce,” Mr. Halley said.
Currencies
The Canadian dollar was up in early going, helped by firmer risk sentiment in broader markets, while its U.S. counterpart pulled back against a group of world currencies but still remained near recent highs.
The day range on the Canadian dollar is 76.61 US cents to 76.97 US cents.
“Some stability in markets overnight, but risk sentiment remains high-strung,” Alvin Tan, Asia FX strategist with RBC, said.
“Fed Chair [Jerome] Powell confirmed in an interview [Thursday] that the Fed was on track to raise rates by 50 basis points in each of the next two meetings. While Powell indicated that the Fed could do more if required, the subtext of the message is that a 75 basis points hike is unlikely.”
There were no major Canadian economic releases on Friday’s calendar.
On world markets, the dollar index fell 0.2 per cent to 104.54 but remained close to its two-decade high.
On Thursday, the euro dropped to as weak as US$1.0354, its lowest since early 2017, before recovering to US$1.0413 in early Friday trading, according to figures from Reuters. The euro is down 1.3 per cent against the greenback this week.
Britain’s pound rose marginally to US$1.2217.
In bonds, the yield on the U.S. 10-year note was up at 2.908 per cent in the predawn period.
Economic news
(8:30 a.m. ET) U.S. import and export price indexes for April.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for April.
With Reuters and The Canadian Press