Equities
Indexes on both sides of the border bounced higher at Friday’s opening bell even as traders remained wary of the course of rate hikes in coming months.
At open, the Toronto Stock Exchange’s S&P/TSX composite index rose 49.78 points, or 0.25 per cent, to 19,934.36. The index, down 1 per cent, was set to end the week lower.
In the U.S., the Dow Jones Industrial Average rose 60.3 points, or 0.18 per cent, at the open to 33,606.59. The S&P 500 rose 19.8 points, or 0.50 per cent, at the open to 3,966.39, while the Nasdaq Composite rose 112.0 points, or 1.01 per cent, to 11,257.007 at the opening bell.
Markets continue to seek hints about the course of future rates hikes and when the Fed will pivot away from more aggressive increases. Investors took heart after last week’s tamer inflation reading but the rally lost steam after a series of Fed officials suggested Thursday that the battle with inflation isn’t over.
St. Louis Fed President James Bullard said the central bank needs to keep raising rates given that its tightening so far “had only limited effects on observed inflation.”
“Equity markets are back in the green on Friday after a choppy week in which the recovery rally has stalled,” OANDA senior analyst Craig Erlam said.
“Efforts by Fed policymakers to manage market expectations have cooled the sense of immense relief that has delivered a strong rebound over the last month....The Fed is clearly concerned that ‘dovish pivot’ speculation could be undermining its tightening efforts which could explain why it’s being so steadfast in its hawkish message.”
Early Friday, Boston Fed president Susan Collins said the central bank has more rate increases ahead.
“Restoring price stability remains the current imperative and it is clear that there is more work to do,” Ms. Collins said in a speech text to open a conference on the labor market at her bank. “I expect this will require additional increases in the federal funds rate, followed by a period of holding rates at a sufficiently restrictive level for some time,” she said.
In Canada, The Globe’s Niall McGee reports Rio Tinto PLC says it will no longer offer preferential treatment to one set of minority shareholders in its proposed takeover of Turquoise Hill Resources Ltd., and will instead offer all minority shareholders the same deal terms.
Last week, Turquoise Hill said it was indefinitely postponing the shareholder vote on the proposed $4.2-billion takeover of the company by Rio Tinto as Quebec’s top securities regulator, the Autorité des marchés financier (AMF), studies whether a backdoor deal Rio cut with dissident shareholders is legal.
Overseas, the pan-European STOXX 600 was up 1.08 per cent in afternoon trading. Britain’s FTSE 100 gained 0.50 per cent. Germany’s DAX and France’s CAC 40 advanced 0.97 per cent and 0.93 per cent, respectively.
In Asia, Japan’s Nikkei closed down 0.11 per cent. Hong Kong’s Hang Seng fell 0.29 per cent, giving up early gains.
Commodities
Crude prices were on track for a second weekly decline amid continued demand concerns fuelled by worry over future interest rate hikes and rising COVID-19 cases in China.
The day range on Brent was US$89.42 to US$90.63 in the premarket period. The range on West Texas Intermediate was US$81.57 to US$82.64.
Brent was still on track for a weekly loss of about 6 per cent heading into Friday’s session while WTI was set for a decline of about 8 per cent.
“On the demand side, there are concerns about an economic slowdown,” AviTrade chief market analyst Naeem Aslam said.
“By that, we mean that the U.K. confirmed its economy is in a recession, and Chinese economic data has yet to paint the best or most optimistic picture this week. These factors have kept the oil prices in check, and the path of the least resistance seems skewed to the downside.”
Sentiment continues to be tempered by headlines indicating rising COVID-19 counts in China, one of the world’s top consumers of oil. As well, hawkish comments from Fed officials has suggested the U.S. central bank isn’t done with its battle against inflation, boosting recession fears.
In other commodities, gold prices steadied in early going but still looked set for a weekly decline.
Spot gold rose 0.3 per cent to US$1,765.27 per ounce early Friday morning, set for a weekly decline of about 0.2 per cent. U.S. gold futures were up 0.3 per cent to US$1,767.40.
Currencies
The Canadian dollar was little changes while its U.S. counterpart took a breather in early trading but still looked set for an advance on the week.
The day range on the loonie is 74.91 US cents to 75.19 US cents.
Canadian investors get industrial and raw material prices for October from Statistics Canada before the start of trading.
On world markets, the U.S. dollar index was essentially flat at 106.75 early Friday morning but was up about 0.4 per cent for the week so far, according to figures from Reuters. The index fell 4 per cent last week amid market reaction to a tamer-than-expected reading on U.S. inflation.
The euro rose 0.1 per cent against the U.S. dollar to US$1.0356, while the pound gained 0.3 per cent to trade at US$1.1908.
The Australian dollar, often seen as a proxy for risk sentiment, rose 0.3 per cent to US$0.6708, hovering around its highest for two months, while the New Zealand dollar headed for its fifth weekly gain, rising 0.6 per cent to US$0.6168, Reuters reported. New Zealand’s central bank delivers its latest rate decision next week and is expected to hike borrowing costs by as much as 75 basis points.
In bonds, the yield on the U.S. 10-year note was higher at 3.801 per cent.
More company news
Gap Inc beat Wall Street estimates for quarterly sales and profit on Thursday, helped by steady demand for its formal clothing and dresses from affluent consumers despite a surge in inflation, sending its shares up in premarket trading. Affluent consumers have been preferring more formal clothing, dresses, woven tops and pants, shelving casual wear like t-shirts and shorts as they return to travel, work and social occasions after two years of pandemic-induced restrictions.G ap’s Banana Republic, an affordable luxury brand, posted an 8% rise in sales, while its Old Navy brand that has been struggling with out-of-fashion clothes reported a 2% increase. -Reuters
Economic news
(8:30 a.m. ET) Canadian industrial product and raw materials price indexes for October.
(8:30 a.m. ET) Canada’s international securities transactions for September.
(8:30 a.m. ET) Canada’s household and mortgage credit for September.
(10 a.m. ET) U.S. quarterly services survey for Q3.
(10 a.m. ET) U.S. existing home sales for October.
(10 a.m. ET) U.S. leading indicator for October.
With Reuters and The Canadian Press
Terry Weber