Canada’s main stock index slipped early Friday with healthcare and tech stocks weighing but strength in energy shares limiting the losses. On Wall Street, key indexes started modestly lower after a report suggested the Federal Reserve could soon signal an easing in its rate-hike campaign.
At 9:37 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 27.47 points, or 0.15 per cent, at 18,551.82.
In the U.S., the Dow Jones Industrial Average fell 42.4 points, or 0.14 per cent, at the open to 30,291.18. The S&P 500 fell 8.7 points, or 0.24 per cent, at the open to 3,657.1, while the Nasdaq Composite dropped 38.8 points, or 0.37 per cent, to 10,576.037 at the opening bell.
Early Friday, The Wall Street Journal reported that Fed officials are planning another interest-rate increase of 0.75 percentage point at their November meeting but could also begin the debate on how to signal a smaller increase at the December meeting.
Friday's analyst upgrades and downgrades
In this country, investors got a better-than-expected reading on August retail sales.
Statscan says sales for the month rose 0.7 per cent to $61.8-billion. Early forecasts had put the gain closer to 0.4 per cent. The August gains were led by sales at food and beverage stores and motor vehicle dealers. However, the government agency’s estimate for September sales suggest a decline of 0.5 per cent is likely.
The numbers come days before the Bank of Canada makes its next interest rate decision.
“Looking through the monthly noise and the price fluctuations, the volume of retail sales is likely to have ended Q3 very close to where it finished the prior quarter,” CIBC senior economist Andrew Grantham said.
“So while it isn’t necessarily growing, consumer spending on goods has yet to decline noticeably under the weight of high inflationary pressures and rising interest rates.”
On the earnings front, Toronto-based Corus Entertainment Inc. reported a fourth-quarter loss of $367.1 million as it took a one-time, non-cash charge related to its television business. The overall loss for the quarter amounted to $1.82 per diluted share for the quarter ended Aug. 31 compared with a profit of $19.9-million or 10 cents per diluted share in the same quarter a year earlier. Revenue for the quarter totalled $339.6-million, down from $361.3-million in the same quarter last year. Corus stock was down 8 per cent in morning trading in Toronto.
Snap Inc. shares, meanwhile, sank 28 per cent in early trading after the Snapchat owner forecast zero revenue growth in the current quarter. After Thursday’s close, Snap reported its slowest revenue growth as a public company for the latest quarter and forecast no revenue growth in the holiday quarter, while Wall Analysts were expecting a 3.3-per-cent increase, according to Refinitiv data.
Overseas, the pan-European STOXX 600 was down 1.88 per cent. Britain’s FTSE 100 fell 1.09 per cent in afternoon trading as markets now await the outcome of a leadership contest after Prime Minister Liz Truss announced her resignation on Thursday.
Germany’s DAX fell 1.64 per cent. France’s CAC 40 was off 2.02 per cent.
In Asia, Japan’s Nikkei closed down 0.43 per cent. Hong Kong’s Hang Seng lost 0.42 per cent.
Commodities
Crude prices rose as optimism over reports of easing COVID-19 restrictions in China helped offset continued concerns about high interest rates and the potential for a global recession.
The day range on Brent was US$91 to US$93.06 in the early premarket period. The range on West Texas Intermediate was US$83.15 to US$85.19. Both benchmarks were on track for weekly declines heading into Friday’s session.
“It has been a noisy headline week in the oil patch, but price action has been relatively contained,” SPI Asset Management’s Stephen Innes said in a note.
“There is a feeling of not wanting to fight the Fed until November across many assets, keeping risk-taking grounded.”
Markets drew some support this week from a report that China could soon ease the quarantine period for incoming visitors, easing some concerns over the government’s zero-COVID policy. The reports have not been confirmed by China.
In other commodities, gold prices were lower and looked set for a second consecutive weekly loss.
Spot gold shed 0.4 per cent to US$1,620.79 per ounce by early Friday morning. Gold prices have fallen 1.3 per cent this week.
U.S. gold futures fell 0.7 per cent to US$1,624.60
Currencies
The Canadian dollar was down amid weaker crude prices and negative risk sentiment while its U.S. counterpart edged higher against global currencies and bond yields hit a new 14-year high.
The day range on the loonie was 72.30 US cents to 72.67 US cents in the predawn period.
“Markets sentiment is weak again this morning as rising yields continue to pressure equity markets,” Shawn Osborne, chief FX strategist with Scotiabank, said.
Investors get August retail sales figures today but markets are now focused on next week’s Bank of Canada rate decision with economists now expecting either a half or three quarter point rate increase.
On world markets, the U.S. dollar index, which tracks the greenback against six major counterparts, advanced 0.2 per cent to 113.130 while the yield on the U.S. 10-year note pushed to a a more than 14-year top of 4.272 per cent by early Friday, according to figures from Reuters.
Britain’s pound fell 0.8 per cent to a weekly low of US$1.11535 as Britain’s ruling Conservative party scrambles to replace Prime Minister Liz Truss.
The euro, meanwhile, fell 0.2 per cent to US$0.97705, after hitting an overnight high of US$0.98455, Reuters reported.
More company news
B.C.-based Interfor says it will reduce lumber production in the fourth quarter of 2022 due to reduced demand. The forest products company says it’s reducing output by 17 per cent of its quarterly capacity, or about 200 million board feet. It says economic conditions and market uncertainty are leading to reduced demand for lumber. The temporary output cut will be spread across the company’s operating regions and timed around U.S. Thanksgiving and Christmas holiday periods. -The Canadian Press
American Express said on Friday its third-quarter profit had modestly improved as spending on goods, services and travel kept up despite fears of a potential economic slowdown later in the year. The company said it now expects to report full-year profit above its prior forecast of $9.25 to $9.65 per share. “The demand for travel has exceeded our expectations throughout the year,” said Chief Executive Officer Stephen J. Squeri. -Reuters
Economic news
Euro zone consumer confidence
(8:30 a.m. ET) Canadian retail sales for August.
(8:30 a.m. ET) Canadian wholesale trade for September.
With Reuters and The Canadian Press
Terry Weber