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Canada’s main stock index fell to a 10-week low early Friday with energy stocks under pressure while interest rate and economic concerns rattled global markets. On Wall Street, key U.S. markets were also down and looked headed for a losing week.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 307.76 points, or 1.62 per cent, at 18,694.92.

In the U.S., the Dow Jones Industrial Average fell 121.03 points, or 0.40 per cent, at the open to 29,955.65. The S&P 500 opened lower by 30.85 points, or 0.82 per cent, at 3,727.14, while the Nasdaq Composite dropped 114.11 points, or 1.03 per cent, to 10,952.69 at the opening bell.

“The prospect of much more [monetary policy] tightening and a recession weighs on sentiment,” OANDA senior analyst Craig Erlam said.

“The last 48 hours have seen central banks around the world aggressively tightening as they continue their fight against high inflation.

The Federal Reserve hiked rates by three-quarters of a percentage point this week, as expected, but also struck a more hawkish stand on future moves. Other global central banks, including the Bank of England, followed suit through the week, also raising key policy rates.

In this country, investors got a fresh reading on Canadian retail sales.

Statistics Canada says sales fell 2.5 per cent to $61.3-billion in July. That’s the first decline reported in seven months. Sales were down in nine of 11 subsectors, representing more than 94 per cent of retail trade, the agency said. The decline was driven by lower sales at gasoline stations and clothing and accessories stores. In volume terms, retail sales were down 2 per cent in July. Statscan also said early estimates suggest sales posted growth of 0.4 per cent in August.

Friday's analyst upgrades and downgrades

On Wall Street, shares of retailer Costco were down more than 2 per cent in early trading after the company topped analysts’ estimates in the latest quarter but also reported gross margins were hit by higher freight and labour costs. Excluding one-time items, Costco earned US$4.20 per share, beating estimates of US$4.17 per share. The company’s gross margin on a reported basis came in at 10.18 per cent, compared to 10.92 per cent, a year earlier. The results were released after Thursday’s closing bell.

Overseas, the pan-European STOXX 600 was down 2.09 per cent by afternoon. Britain’s FTSE 100 fell 0.87 per cent. Early Friday, Britain’s finance minister Kwasi Kwarteng delivered a mini-budget with the aim of cutting taxes and energy bills for households and businesses to try to drive economic growth.

Germany’s DAX fell 2.07 per cent. France’s CAC 40 was off 2.04 per cent.

Friday's small-cap stocks to watch

In Asia, Hong Kong’s Hang Seng lost 1.18 per cent. Markets in Japan were closed.

Commodities

Crude prices were on track for weekly losses as recession fears and a strong U.S. dollar continue to weigh on sentiment.

The day range on Brent was US$88.51 to US$90.84 in the early premarket period. The range on West Texas Intermediate was US$81.51 to US$83.92.

Brent is down more than 1 per cent for the week so far. WTI is off more than 2 per cent.

“The threat of a global recession continues to weigh on oil prices, with widespread monetary tightening over the last couple of days fueling fears of a significant hit to growth,” OANDA’s Craig Erlam said in an early note.

“Central banks now appear to accept that a recession is the price to pay for getting a grip on inflation, which could weigh on demand next year.”

Still, he said, markets remain tight and OPEC+ is ready to restrict supply further to shore up prices even as it fails to deliver on quotas it has set for itself so far.

“What’s more, a nuclear deal between the U.S. and Iran looks no closer and Russia’s mobilization could pose a risk to its supply,” Mr. Erlam said.

In other commodities, gold prices slid.

Spot gold was down 0.4 per cent at US$1,664.39 per ounce by early Friday morning and was heading for its second straight weekly decline, down 0.6 per cent. U.S. gold futures fell 0.5 per cent to US$1,672.10.

Currencies

The Canadian dollar was down, dipping below 74 US cents in the early hours, amid weak risk sentiment and falling crude prices.

The day range on the loonie is 73.86 US cents to 74.26 US cents. On Thursday, the loonie hit its lowest level in two years against the U.S. dollar.

“The CAD is weaker but it is holding up relatively well against the USD amid sharper G10/commodity FX losses elsewhere,” Shaun Osborne, chief FX strategist with Scotiabank, said, also noting “it will be the risk backdrop, not domestic fundamentals, that drive the CAD.”

On world markets, the U.S. dollar index rose 0.16 per cent to 111.40, hovering near a two-decade high of 111.81 hit in the previous session, and is on track for a weekly gain of 1.5 per cent, according to figures from Reuters.

The euro fell 0.11 per cent to US$0.9823, close to a 20-year low of $0.9807 hit overnight.

Japan’s yen, meanwhile, was on track for its first weekly gain against the U.S. dollar after officials intervened in the markets this week to shore up Japan’s currency.

The yen was up about 0.1 per cent at 142.22 per U.S. dollar in Asia, after a more than 1 per cent rally in the previous session, Reuters reported.

In bonds, the yield on the U.S. 10-year note was higher at 3.748 per cent in the predawn period.

More company news

Australia’s Link Administration said on Friday a A$2.47-billion (US$1.63-billion) buyout offer from Canada’s Dye & Durham will not proceed, after a local court denied approval for the deal citing failure to meet key conditions. “The court declined to make orders approving the Scheme and dismissed the proceedings,” share registry firm Link said in a statement.

FedEx Corp outlined cost cuts of up to US$2.7-billion from parking planes, suspending some Sunday deliveries and shuttering corporate offices after falling demand hammered first-quarter profits. The company reported that earnings per share fell 21.3 per cent for the quarter ended Aug. 31, in line with the warning it delivered last week. It blamed a rapidly deteriorating global economy, but analysts and investors were skeptical - in large part because revenue increased 5.5 per cent. -Reuters

The National Football League has reached a multiyear deal with Apple Music to sponsor the Super Bowl Halftime Show, beginning with the American football championship game in February 2023, the league said. -Reuters

Economic news

(8:30 a.m. ET) Canadian retail sales for July.

(8:30 a.m. ET) Canadian manufacturing sales for August.

(2 p.m. ET) U.S. Fed chair Jerome Powell delivers opening remarks at a Fed Listens webinar.

With Reuters and The Canadian Press