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Canada’s main stock index opened higher on Friday as energy shares got a boost from crude prices, which rose on hopes that the United States and China could resolve their ongoing trade dispute.
The Toronto Stock Exchange’s S&P/TSX composite index was up 20.52 points, or 0.13 per cent, at 16,021.38.
Energy stocks rose 1.2 per cent. Enerplus rose 7.5 per cent, Enerflex gained 4.6 per cent, and Crescent Point rose 3.1 per cent.
Oil hit a new 2019 high on U.S.-China trade talk hopes. International Brent crude futures scaled a new 2019 high of US$67.73 a barrel, up 66 cents from Thursday’s close but slid to US$67.40 in later trading.
U.S. West Texas Intermediate (WTI) crude futures were up 47 cents at US$57.43 per barrel, after hitting a new 2019 high of US$57.81 earlier on Friday.
Further gains were tempered by U.S. crude oil production hitting a record 12 million barrels per day (bpd) and a surge in exports from the country.
Materials stocks rose 0.3 per cent. Shares in New York-listed Newmont Mining Corp rose 2.5 per cent after a report that Barrick Gold Corp. was considering a hostile bid for the company for about $19 billion. Barrick stock fell 2.6 per cent.
Financial stocks fell 0.1 per cent as Royal Bank of Canada kicked off the bank earnings season and raised its dividend as it reported quarterly net income of $3.17-billion, up from $3.01-billion a year ago, matching market expectations as market volatility during the period weighed on its earnings. It hiked its quarterly payment to common shareholders by 4 cents to $1.02 per share. RBC stock fell 0.1 per cent.
Technology shares rose 1 per cent and consumer staples added 0.8 per cent.
On Wall Street, U.S. stocks opened slightly higher on Friday on hopes of a trade deal between the United States and China, but a 26-per-cent plunge in Kraft Heinz Co hit the consumer staples sector.
The Dow Jones Industrial Average rose 55.64 points, or 0.22 per cent, at the open to 25,906.27. The S&P 500 opened higher by 5.79 points, or 0.21 per cent, at 2,780.67. The Nasdaq Composite gained 21.93 points, or 0.29 per cent, to 7,481.63 at the opening bell.
Top trade negotiators from the two countries haggled over the details of a set of agreements aimed at ending their trade war, just one week before a Washington-imposed deadline for a deal expires and triggers higher U.S. tariffs.
President Donald Trump and Chinese Vice Premier Liu He are expected to meet at the Oval Office later in the day.
The benchmark S&P 500 index’s recent run of gains was halted on Thursday after a batch of grim economic data, including a surprise fall in new orders for key U.S.-made capital goods. However, the index is still at more than two-month highs.
“The market has shifted from economic worries encountered yesterday to the possibility of a breakthrough in the trade talks,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“We’re recovering from yesterday’s sell-off and the main focus is trade.”
Shares of trade-sensitive companies such as Boeing Co rose 0.8 per cent and Caterpillar Inc 0.1 per cent.
Crude prices also rose on hopes that Washington and Beijing may soon end their trade dispute. Oil majors Exxon Mobil Corp and Chevron Corp were up 0.5 per cent each.
Kraft Heinz Co shares tumbled 26.7 per cent after the company posted a quarterly loss, disclosed an SEC probe and wrote down the value of its iconic Kraft and Oscar Mayer brands.
Shares of rivals General Mills, Conagra Brands and Kellogg Co also fell sharply.
Intel Corp was up 2 per cent after Morgan Stanley lifted its rating to “overweight,” citing the chipmaker’s appointment of a new CEO.
Commodities
Oil prices rose on Friday, supported by OPEC’s ongoing supply cuts and hopes that Washington and Beijing may soon end their trade dispute.
International Brent crude futures hit a new 2019 high of US$67.60 a barrel, up 53 cents from Thursday’s close.
Further gains were tempered by U.S. crude oil production hitting a record 12 million barrels per day (bpd) and a surge in exports from the country.
U.S. West Texas Intermediate (WTI) crude oil futures were up 51 cents at US$57.48 per barrel but still shy of this week’s US$57.55 per barrel 2019 high.
Gold held steady on Friday, on course for its second straight weekly gain, with weak economic data from the United States compounding worries about a global slowdown while investors await concrete signals on U.S.-China trade talks.
Spot gold was little changed at US$1,322.06 per ounce. The metal was headed for a second straight weekly increase, up almost 0.1 per cent this week, having scaled a 10-month peak at US$1,346.73 on Wednesday.
U.S. gold futures were up 0.1 per cent at US$1,329.1 per ounce.
“The market is expecting the dollar to weaken. We expect growth in the U.S. to slow,” said Natixis analyst Bernard Dahdah.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart on Friday, rebounding from an earlier three-day low as stocks and oil prices rose and domestic data showed a drop in retail sales that was less than the market expected.
Retail sales fell by 0.1 per cent in December from November to $50.35-billion, due to lower gasoline prices, Statistics Canada said. Analysts had forecast a 0.3-per-cent decrease. In volume terms, retail sales increased 0.2 per cent.
“The slight increase in volumes will see monthly GDP tracking forecasts around the 0.0 per cent mark for December, which isn’t great, but is better than what we had been fearing heading into the week,” Royce Mendes, a senior economist at CIBC Capital Markets, said in a research note.
At 9:12 a.m., the Canadian dollar was trading 0.3 per cent higher at 1.3191 to the greenback, or 75.81 U.S. cents.
“The USD/CAD has held above the 200-day moving average at 1.3154 for the second consecutive day. [Bank of Canada Governor Stephen] Poloz’s speech stuck to the data-dependent mode, with the path to neutral rate levels over time ‘highly uncertain,’ ” said Elsa Lignos, with RBC Europe Ltd.
The U.S. dollar index was little changed versus six major currencies, but was set for its biggest weekly fall in a month. The U.S. unit, which was increasingly sought as a refuge for investors against the backdrop of the U.S.-China trade spat, has been pressured recently on signs of a breakthrough in talks.
As well, Thursday’s U.S. economic data showed an unexpected decline in core capital goods orders, bolstering expectations the Federal Reserve will keep interest rates steady.
Stocks to watch
Canadian construction and engineering firm SNC Lavalin reported a quarterly loss on Friday as it took a $1.2-billion charge related to its oil and gas business. The company also lowered its quarterly dividend by 18.7 cents per share to 10 cents. Net loss attributable to shareholders was $1.6-billion or $9.11 per share in the fourth quarter ended Dec. 31, compared with a profit of $52.4-million or 30 cents per share a year earlier.
Intel Corp. was up 2.9 per cent after Morgan Stanley lifted its rating to “overweight,” citing the chipmaker’s appointment of a new CEO.
Hudson’s Bay Co. said late Thursday is closing all 37 of its Home Outfitters stores in Canada as well as up to 20 of its Saks Off 5th outlets in the United States as the retailer races to revive its sagging fortunes.
Canada’s Magna International Inc. beat analysts’ estimates for quarterly profit on Friday, benefiting from its complete vehicles segment and power and vision unit which contains its electric vehicle investments. Excluding one-time items, Magna earned $1.63 per share, ahead of consensus analyst expectation of $1.59 per share, according to IBES data from Refinitiv. Net income attributable to Magna fell to $456-million, or $1.37 per share, in the fourth quarter ended Dec. 31 from $559-million, or $1.54 per share, a year earlier. The Aurora, Ont.-based company said total sales rose 4.7 per cent to $10.14-billion.
Home Capital Group Inc. says its fourth-quarter profit rose compared with a year ago as its mortgage originations climbed 85 per cent. The alternative mortgage lender says it earned $35.8 million or 46 cents per share for the quarter ended Dec. 31 compared with a profit of $30.6 million or 38 cents per share in the same quarter in 2017. Analysts on average had expected a profit of 43 cents per share for the quarter, according to Thomson Reuters Eikon.
Loblaw Cos. Ltd. has shifted its pricing strategy for its non-food merchandise, dropping promotional discounting and instead keeping prices at a steady rate – which limited the retailer’s fourth-quarter sales gains, which is reported Thursday. Loblaw’s fourth-quarter profit jumped to $221-million or 59 cents a share from $31-million or 8 cents a share a year earlier. Revenue rose to $11.22-billion from $10.99-billion.
Earnings include: AutoNation Inc., Barnes Group Inc., CCL Industries Inc., Chorus Aviation Inc., Cott Corp., Diamond Estates Wines & Spirits Inc., Enerplus Corp., Groupe TVA Inc., Home Capital Group Inc., Magna International Inc., Mason Graphite Inc., KBR Inc., Leap Therapeutics Inc., Learning Tree International Inc., MDC Partners Inc., Pinetree Capital Ltd., Pinnacle West Capital Corp., Royal Bank of Canada, Ruth’s Hospitality Group Inc., Salon Media Group Inc., SNC-Lavalin Group Inc., T-Mobile US Inc., Wayfair Inc.
Economic news
Canada reports retail sales for December. The consensus estimate is for an unchanged reading, or down 0.5 per cent when excluding automobiles.
U.S. releases its Monetary Policy Report.
Ottawa tentatively expected to release its budget balance statistics for December.
With files from Reuters