Equities
Key indexes in both Canada and the United States saw a muted start Friday after higher-than-expected wholesale inflation data again fuelled uncertainty about the timing of rate cuts.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 13.61 points, or 0.06 per cent, at 21,236.3.
The Dow Jones Industrial Average fell 21.41 points, or 0.06 per cent, at the open to 38,751.71. The S&P 500 opened higher by 1.40 points, or 0.03 per cent, at 5,031.13, while the Nasdaq Composite gained 4.26 points, or 0.03 per cent, to 15,910.43 at the opening bell.
Ahead of the North American opening bell, new figures showed the U.S. producer price index rose by 0.3 per cent on a monthly basis in January after falling a revised 0.1 per cent in December. Analysts had been forecasting a 0.1-per-cent increase for January. In the 12 months through January, the PPI increased 0.9 per cent after climbing 1 per cent in December.
Earlier in the week, the U.S. consumer price index showed moderating headline inflation but the decline was less than markets had expected. The annual rate of inflation in the U.S. economy in January fell back to 3.1 per cent, although many economists had expected a number below 3 per cent.
“This PPI print further highlights that getting inflation back to the Fed’s 2-per-cent target isn’t just a walk in the park; it’s the last mile that’s the toughest,” Ken Tjonasam, portfolio strategist at Global X, said.
“For Chair [Jerome] Powell and the Fed, this means recalibrating their lens on the economic landscape. The narrative of easing into a rate cut has just hit a snag.”
In Canada, investors got results from Air Canada. TC Energy is also scheduled to report earnings this morning.
Air Canada posted a smaller adjusted loss on Friday, helped by strong demand for international travel. The carrier’s fourth-quarter adjusted loss narrowed to $44-million, or $0.12 per share, from $217-million, or $0.61 per share, a year earlier, Reuters reported.
Overseas, the pan-European STOXX 600 was up 0.64 per cent by afternoon. Britain’s FTSE 100 added 1.45 per cent. Germany’s DAX and France’s CAC 40 gained 0.53 per cent and 0.47 per cent, respectively.
In Asia, Japan’s Nikkei ended up 0.86 per cent, trading not far from record highs. Hong Kong’s Hang Seng jumped 2.48 per cent.
Commodities
Crude prices were lower in early trading with production-and-demand uncertainty weighing on sentiment.
The day range on Brent was US$81.96 to US$82.88 in the early premarket period. The range on West Texas Intermediate was US$77.24 to US$78.24. Both benchmarks added more than 1 per cent on Thursday.
“OPEC’s monthly report showed this week that not all OPEC members are delivering the promised production cuts,” Swissquote senior analyst Ipek Ozkardeskaya said.
“In a separate report, the [International Energy Agency] said that the global oil market may be in surplus this year because supplies outside OPEC are expected to increase by 1.6 million barrels a day.”
As well, the IEA said it now expects global demand to rise by just 1.2 million barrels a day this year, slower than last year’s increase.
“It’s understandable why oil prices are so volatile, there’s tremendous uncertainty around the Middle East, the economy, and interest rates which is generating these large moves,” OANDA senior analyst Craig Erlam said.
“There has been more of an upside bias of late but broadly speaking the price remains at reasonable levels that won’t be a concern from an inflationary standpoint.”
In other commodities, gold was on track for a second consecutive weekly decline after disappointing U.S. inflation numbers caused analysts to rethink the timing of potential rate cuts.
Spot gold was little changed at US$2,003.30 per ounce by early Friday morning. Gold was down about 1 per cent for the week so far. U.S. gold futures were also steady at US$2,015.70 an ounce.
Currencies
The Canadian dollar was down slightly while its U.S. counterpart edged higher against a group of world currencies and appeared headed for another weekly gain.
The day range on the loonie was 74.13 US cents to 74.30 US cents in the early premarket period. The Canadian dollar was down about 0.18 per cent for the week so far.
The U.S. dollar index, which weighs the greenback against a group of world currencies, was up 0.07 per cent at 104.36. The index, which saw declines over the two previous sessions, is up modestly for the week so far and headed for a fifth consecutive weekly advance.
The euro was down 0.06 per cent at US$1.0766. Britain’s pound slid 0.11 per cent to US$1.2585.
In bonds, the yield on the U.S. 10-year note was higher at 4.265 per cent ahead of the North American opening bell.
More company news
Pipeline operator TC Energy beat fourth-quarter profit estimates on Friday, helped by high demand for liquefied natural gas. The company posted an adjusted profit of $1.35 per share for the quarter ended Dec. 31, compared with analysts’ average estimate of $1.11 per share, according to LSEG data. -Reuters
Canadian insurer Fairfax Financial Holdings beat estimates for fourth-quarter profit, helped by higher gains from investments. Firming bets that central banks will cut rates this year are fueling a stock market rally, which has driven strong gains on investments for companies with substantial exposure to equities. Fairfax’s equity exposure drove net gains from investments to $2.13-billion in the fourth quarter, up from $1.09-billion last year. The results were released after Thursday’s close. -Reuters
Nike will cut about 2% of its total workforce, or more than 1,600 jobs, the sportswear giant said late on Thursday to lower expenses as demand for its shoes and sneakers comes under pressure. Higher rental and interest rates have led customers to cut back spending on high-priced goods, resulting in sportswear companies such as Nike and Adidas warning that retailers are lowering their orders through wholesale channels. -Reuters
Economic news
(8:30 a.m. ET) Canada’s wholesale trade for December.
(8:30 a.m. ET) Canada’s international securities transactions for December.
(8:30 a.m. ET) U.S. PPI for January.
(8:30 a.m. ET) U.S. housing starts for January.
(8:30 a.m. ET) U.S. building permits for January.
With Reuters and The Canadian Press
Terry Weber