Equities
Canada’s main stock index fell at Friday’s opening bell with commodity-linked stocks under pressure. Key U.S. indexes also started in the red with recession worries continuing to dominate after the Federal Reserve signalled earlier in the week that interest rates will likely stay higher for longer.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 183.02 points, or 0.93 per cent, at 19,417.61.
In the U.S., the Dow Jones Industrial Average fell 35.76 points, or 0.11 per cent, at the open to 33,166.46. The S&P 500 opened lower by 4.84 points, or 0.12 per cent, at 3,890.91, while the Nasdaq Composite dropped 42.89 points, or 0.40 per cent, to 10,767.64 at the opening bell.
The latest declines came after the Federal Reserve raised rates by half a percentage point and signalled that borrowing costs would likely remain higher for longer as it continues its battle against high inflation, dashing hopes of a pivot to a more dovish stance early in the new year. Recent readings on U.S. inflation had fuelled hopes that easing price pressures would encourage the U.S. central bank to pull back on its campaign of aggressive hikes.
“Markets have been ahead of the Fed a number of times this year and the central bank may simply be pushing back as a means of preventing complacency from appearing in the markets, undermining its own tightening efforts,” OANDA senior analyst Craig Erlam said.
“But the case remains that the path back to 2 per cent [inflation] will likely be far less smooth than that to 9.1 per cent and potentially just as disappointing at times. We should probably accept that now.”
The Fed’s latest rate hike was followed later in the wee by similar moves by a slew of global central banks, including the European Central Bank and the Bank of England. A number of Fed officials are due to speak on Friday.
In this country, Statistics Canada says wholesale sales rose 2.1 per cent in October to $83.4-billion. Economists had been expecting an increase of 1.3 per cent. Statscan said the biggest increases were seen in miscellaneous goods, building materials and supplies and personal and household goods.
On the corporate side, The Globe’s Niall McGee reports that Panama has ordered Vancouver-based First Quantum Minerals Ltd.’s Cobre Panama mine to cease commercial operations, after the Central American country clashed with the big Canadian copper miner over a profit-sharing agreement. Panama’s President Laurentino Cortizo made the announcement late Thursday in a televised address. The Globe reported this morning that Panama has been working with an investment bank to shop the mine to third parties. First Quantum shares were down more than 7 per cent in early trading in Toronto.
Overseas, the pan-European STOXX 600 was down 1.05 per cent by afternoon. Britain’s FTSE 100 fell 1.3 per cent. Germany’s DAX lost 0.52 per cent and France’s CAC 40 was off 1.12 per cent.
In Asia, Japan’s Nikkei closed down 1.87 per cent. Hong Kong’s Hang Seng edged up 0.49 per cent.
Commodities
Crude prices were down but still looked set for a gain on the week in the wake of supply disruptions and optimistic demand forecasts.
The day range on Brent was US$79.33 to US$81.78 in the predawn period. The range on West Texas Intermediate was US$74.17 to US$76.57. Both benchmarks were down by more than 2 per cent in the early premarket period following a 2-per-cent decline on Thursday.
“Oil’s recent rally is running out of steam as risk aversion runs wild,” OANDA senior analyst Ed Moya said. “The [U.S.] dollar might be poised to rally here and that should keep some pressure on oil prices.”
Still, crude prices are on track for their biggest weekly gain since October, according to Reuters, in the wake of an outage of the Keystone pipeline and forecasts from agencies, including the International Energy Agency, suggesting solid demand next year. TC Energy has since reported that the pipeline opened on Wednesday at reduced capacity.
In other commodities, gold prices were weaker and looked set for their biggest weekly decline since last month in the wake of moves by global central banks this week.
Spot gold fell 0.1 per cent to US$1,775.50 per ounce early Friday morning. It was down about 1 per cent for the week, having hit a one-week low in the previous session.
U.S. gold futures were up 0.1 per cent at US$1,789.00.
Currencies
The Canadian dollar steadied while its U.S. counterpart held most of the previous session’s gains against a group of world currencies.
The day range on the loonie was 73.12 US cents to 73.62 US cents ahead of the North American open.
“Risk aversion continues to influence CAD moves heavily,’ Shaun Osborne, chief FX strategist with Scotiabank, said in an early note.
Canadian investors get October wholesale trade figures before the start of trading.
On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, was little changed at 104.53, after rallying more than 0.9 per cent on Thursday on expectations that the Fed will keep interest rates higher for longer.
The euro was flat against the U.S. dollar in early European trading at US$1.063, according to Reuters. On Thursday, the currency fell 0.5 per cent after the European Central Bank (ECB) raised interest rates and signalled more to come, raising concerns about the impact on the economy.
The risk-sensitive Australian dollar was 0.11-per-cent lower at US$0.669. It slid 2.38-per-cent in the previous session - its biggest drop since March 2020, Reuters reported. The New Zealand dollar rose 0.17 per cent to US$0.635.
In bonds, the yield on the U.S. 10-year note was higher at 3.495 per cent early Friday morning.
More company news
Rio Tinto Ltd said on Friday it had completed its long drawn-out acquisition of a 49% stake in Turquoise Hill Resources, giving the world’s top iron ore producer a 66% stake in Mongolia’s Oyu Tolgoi, the world’s largest known copper and gold deposit. -Reuters
Starbucks workers around the U.S. are planning a three-day strike starting Friday as part of their effort to unionize the coffee chain’s stores. More than 1,000 baristas at 100 stores are planning to walk out, according to Starbucks Workers United, the labor group organizing the effort. The strike will be the longest in the year-old unionization campaign. This is the second major strike in a month by Starbucks’ U.S. workers. On Nov. 17, workers at 110 Starbucks stores held a one-day walkout. That effort coincided with Starbucks’ annual Red Cup Day, when the company gives reusable cups to customers who order a holiday drink. -The Associated Press
Goldman Sachs Group Inc will lay off up to 4,000 people as the Wall Street bank struggles to meet profitability targets, news platform Semafor reported on Friday, citing people familiar with the matter. Managers across the firm have been asked to identify low performers for what could be a cut of up to 8% to its workforce early next year, the people said, with some cautioning that no final list has been drawn up, according to the report. -Reuters
Economic news
(8:30 a.m. ET) Canadian wholesale trade for October.
(8:30 a.m. ET) Canada’s new housing price index for November.
(8:30 a.m. ET) Canada’s international securities transactions for October.
With Reuters and The Canadian Press