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Equities

Canada’s main stock index opened up Friday alongside higher commodities prices. On Wall Street, key indexes also added to the previous session’s sharp gains in early going as a tamer reading on U.S. inflation stoked optimism that the Federal Reserve may pullback on aggressive rate hikes.

At 9:38 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index rose 107.16 points, or 0.54 per cent to 20,097.52.

The Dow Jones Industrial Average rose 82.38 points, or 0.24%, at the open to 33,797.75. The S&P 500 opened higher by 7.35 points, or 0.19%, at 3,963.72, while the Nasdaq Composite gained 10.60 points, or 0.10%, to 11,124.75 at the opening bell.

Market sentiment got a lift late this week after new figures showed the annual rate of inflation in the United States eased to 7.7 per cent in October. Markets had been looking for a number closer to 7.9 per cent. The tamer showing sparked speculation that the Fed could soon pullback on aggressive rate hikes.

“Inflation has been very slow to come down, but this report gives up hope that this deceleration with pricing pressures might bring back hopes of a soft landing,” OANDA senior analyst Ed Moya said.

“The headline reading came in lower-than-expected, but most traders were focused with the month-over-month decline with core prices. If this downward trajectory for inflation holds, then you can make a strong case that the bottom is in place for U.S. equities.”

Global sentiment was further bolstered by news of easing of some COVID-19 restrictions in China. The new rules include reducing quarantine times for close contacts and travellers from abroad. China will also stop trying to identify secondary contacts. The easing of rules comes even as case numbers in China surge to their highest since April, with Beijing and the central city of Zhengzhou seeing record tallies, according to a Reuters report.

In this country, Bank of Canada Governor Tiff Macklem said Thursday that unemployment needs to rise in order to slow down inflation, although he is not expecting joblessness to increase as sharply as it did in previous recessions. The Globe’s Mark Rendell reports that, in a speech in Toronto, Mr. Macklem said Canada’s labour market is overheating, with businesses struggling to find workers and unemployment near a record low. This is feeding through into inflation, as companies bid up wages to compete for employees.

On the corporate side, Canadian investors get earnings from Onex and energy company Emera.

Ahead of the opening bell, Emera reported a third-quarter profit of $167-million or 63 cents a share compared with a loss of $70-million or 27 cents in the same quarter last year. Operating revenue totalled nearly $1.84-billion. On an adjusted basis, Emera says it earned 76 cents per share in its latest quarter, up from an adjusted profit of 68 cents per share in the third quarter of 2021.

Overseas, the pan-European STOXX 600 rose 0.12 per cent by midday. The FTSE 100 slid 0.41 per cent after new data showed Britain’s economy shrank by 0.2 per cent in the third quarter. Germany’s DAX and France’s CAC 40 gained 0.36 per cent and 0.42 per cent, respectively.

In Asia, Japan’s Nikkei closed up 2.98 per cent. Hong Kong’s Hang Seng jumped 7.74 per cent.

Commodities

Crude prices gained in early going on news of easing COVID-19 restrictions in China, although oil still looked set for a decline for the week.

The day range on Brent was US$93.69 to US$96.40 in the predawn period. The range on West Texas Intermediate was US$86.18 to US$89.18. Both benchmarks were up roughly 3 per cent in early going but still looked set for a weekly decline of about 1 per cent.

Sentiment was helped by news that China would ease some COVID-19 restrictions, including reducing quarantine periods for close contacts and incoming travellers. Traders have been concerns that the country’s strict control measures could hamper demand in one of the world’s top oil consumers.

“As investors are growing more sensitive to the reopening news than the lockdowns, hope springs eternal that there is finally some room for fine-tuning COVID control,” Stephen Innes, managing partner with SPI Asset Management, said.

In other commodities, gold prices were on track for their best week in two years, helped by hopes of a Fed pivot away for aggressive policy moves.

Spot gold was up 0.4 per cent at US$1,762.19 per ounce by early Friday morning, after rallying more than 2 per cent on Thursday. Prices are up about 5 per cent for the week.

U.S. gold futures gained 0.7 per cent to US$1,765.40.

“Yesterday’s weaker than expected CPI number has shifted the narrative when it comes to yields, along with the notable shift we’ve seen from recent Fed speakers,” Michael Hewson, chief market analyst at CMC Markets UK, said.

Currencies

The Canadian dollar edged higher, trading above 75 US cents in early going, on improved global risk sentiment and rising crude prices while it’s U.S. counterpart extended recent losses in the wake of the latest U.S. inflation numbers.

The day range on the loonie was 74.84 US cents to 75.28 US cents.

There were no major Canadian economic releases due Friday.

On world markets, the U.S. dollar again flagged after seeing its biggest one-day drop during the previous session since late 2015 as expectations shift for future Fed rate hikes.

Early Friday, the U.S. dollar index, which weighs the currency against a group of world counterparts, was down nearly 0.5 per cent, according to figures from Reuters. The dollar index has risen about 12 per cent so far this year.

Elsewhere, Britain’s pound rose 0.1 per cent against the U.S. dollar to US$1.1718, having staged its largest one-day rally the day before since 2017, Reuters reported.

The euro extended the previous day’s 2-per-cent rise, gaining 0.3 per cent to US$1.0245, trading around its highest since August.

More company news

The Globe’s James Bradshaw reports Onex Corp. founder Gerry Schwartz is handing over control of the alternative asset manager, which announced a plan on Friday to name Bobby Le Blanc as chief executive officer after the company’s next annual meeting. Mr. Le Blanc is taking over after 23 years at Onex, having served as president since 2020. He joined Onex in 1999 from Berkshire Hathaway Inc.

Hydro One Ltd. reported a third-quarter profit of $307-million, up from $300-million in the same quarter last year. The power utility says the profit amounted to 51 cents per diluted share for the quarter ended Sept. 30. The result compared with a profit of 50 cents per diluted share in the third quarter of 2021. Revenue for the quarter totalled $2.03 billion, up from $1.91 billion in the same quarter last year. -The Canadian Press

Economic news

Remembrance Day in Canada (stock markets open, bond markets closed)

U.S. Veterans Day (stock markets open, bond markets closed)

Germany CPI

(10 a.m. ET) U.S. University of Michigan consumer sentiment for November (preliminary reading)

With Reuters and The Canadian Press

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