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Equities
Canada’s main stock index opened higher Friday helped by steadier global sentiment and gains in tech and health-care stocks. Wall Street’s key indexes also bounced in early trading after a volatile week stoked by inflation concerns.
At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 136.64 points, or 0.68 per cent, at 20,318.56. The index is up about 1 per cent so far this week and looks set to end a seven-week losing streak.
The Dow Jones Industrial Average rose 173.81 points, or 0.56 per cent, at the open to 31,426.94.
The S&P 500 opened higher by 26.97 points, or 0.69 per cent, at 3,927.76, while the Nasdaq Composite gained 154.18 points, or 1.35 per cent, to 11,542.67 at the opening bell.
Markets continue to remain wary of rising price pressures and the threat of recession sparked by higher interest rates as central banks look to head off spiking inflation.
“Equity markets are back in positive territory on Friday but I’m struggling to get too excited by the moves we see going into the weekend,” OANDA senior analyst Craig Erlam said.
“The rebound may partly reflect the scale of the declines we’ve seen in the previous couple of sessions, while the cut to the five-year loan prime rate in China may also be giving global markets a bit of a lift. But ultimately, very little has changed and I expect that will continue to hold these markets back.”
Stock market valuations are looking average again. Is this the bottom?
Global sentiment got a lift early Friday after China cut its benchmark reference rate for mortgages by 15 basis points to 4.45 per cent in a bid to bolster the economy. Economists had been expecting a more modest reductions.
“Global risk sentiment is ending the week on a tentatively positive note,” Stephen Innes, managing partner with SPI Asset Management, said.
“A 15-basis-point cut to 4.45 per cent in the 5-year loan prime rate (LPR) – a mortgage benchmark - was more significant than the 5-basis-point reduction consensus expected, reflecting efforts to support the housing market,” he said in a note.
In this country, federal ministers announced Thursday that Canada will ban Huawei and ZTE from Canada’s 5G networks, stating that a national intelligence review concluded that the two Chinese companies pose potential security risks. Until this week, Canada was the only member of the Five Eyes intelligence-sharing alliance – which also includes Australia, Britain, New Zealand and the United States – that had not yet banned or restricted the use of Huawei 5G mobile equipment, the Globe’s Bill Curry and Alexandra Posadzki report.
Overseas, the pan-European STOXX 600 rose 1.40 per cent by afternoon. Britain’s FTSE 100 gained 1.65 per cent. Germany’s DAX and France’s CAC 40 were up 1.67 per cent and 1.24 per cent, respectively.
In Asia, Japan’s Nikkei closed up 1.27 per cent. Hong Kong’s Hang Seng added 2.96 per cent.
Commodities
Crude prices steadied in early going as traders sought to balance economic concerns with tight supply.
The day range on Brent is US$110.52 to US$112.36. The range on West Texas Intermediate is US$110.85 to US$112.
“We were bound to see some form of demand destruction if households continued to be squeezed from every angle and it seems we may be seeing that expectation weigh a little as we move into the end of the week,” OANDA senior analyst Craig Erlam said in a recent note.
“Still, I expect Brent and WTI will remain very high for the foreseeable future, boosted by the inability of OPEC+ to deliver on its targets and the Chinese reopening,” he said.
Crude had drawn support this week on news that Shanghai plans to loosen some COVID-19 restrictions. At the same time, the EU is continuing efforts to remove Russian fossil fuels from the market.
In other commodities, gold prices rose on a pullback in the U.S. dollar from recent two-decade highs.
Spot gold was up 0.2 per cent at US$1,844.48 per ounce, after rising as much as 1.9 per cent in the previous session. U.S. gold futures were nearly flat at $1,840.80. Gold prices looked set for their first weekly gain since last month.
Currencies
The Canadian dollar gained as its U.S. counterpart pulled back from recent highs and looked to be heading for its worst week since February against a group of global currencies.
The day range on the loonie is 77.91 US cents to 78.27 US cents.
“The CAD has taken a bit of a battering over the past few weeks as risk appetite has driven losses and we are not certain that the volatility in stocks has ended,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.
“However, the CAD’s ability to detach itself to some extent from weaker stocks over the past few days suggests some further, modest gains may be on the cards.”
On world markets, the U.S. dollar index, which weighs the greenback against a group of peers, was flat on the day at 102.92. Last Friday, it had soared to the highest since January 2003 at 105.01, according to figures from Reuters.
The index looks set for a weekly decline of more than 1 per cent. The index has gained in all but two of the last 15 weeks, according to Reuters.
The euro was on track for a weekly gain of 1.5 per cent. It was last down 0.1 per cent on the day at US$1.05755.
Britain’s pound was set for its biggest weekly gain since December 2020, and was flat on the day at US$1.24805.
In bonds, the yield on the U.S. 10-year note edged up slightly to 2.866 per cent in the predawn period.
More company news
Deere & Co raised its 2022 profit forecast on as gaps in grain supplies triggered by Russia’s invasion of Ukraine drive global crop price higher, but the heavy equipment maker’s stock fell after its quarterly revenue missed analysts’ forecasts. The Moline, Illinois-based firm forecast fiscal 2022 net income, including special items, of US$7-billion to US$7.4-billion, from a prior estimate of US$6.7-billion to US$7.1-billion.
Economic news
(8:30 a.m. ET) Canada’s household and mortgage credit for March.
(10 a.m. ET) U.S. quarterly services survey for Q1.
With Reuters and The Canadian Press