Equities
Canada’s main stock index was treading water early Friday while U.S. indexes continued their Nvidia-fuelled rally, with the S&P 500 touching record levels.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 2.95 points, or 0.01 per cent, at 21,321.03.
In the U.S., the Dow Jones Industrial Average rose 58.86 points, or 0.15 per cent, at the open to 39,127.97.
The S&P 500 opened higher by 13.89 points, or 0.27 per cent, at 5,100.92, while the Nasdaq Composite gained 53.18 points, or 0.33 per cent, to 16,094.80 at the opening bell.
The late-week rally was sparked by a jump in Nvidia stock - shares closed up more than 16 per cent yesterday and were up another 4 per cent in early trading this morning, with the company’s market value hitting US$2-trillion - in the wake of strong fourth-quarter earnings and an impressive forecast.
“Even after the year-to-date surge leading into the fourth-quarter results, Nvidia was still trading at ‘just’ around 33 times earnings,” Stephen Innes, managing partner with SPI Asset Management, said in an early note.
“While not inexpensive, it doesn’t fit the criteria of a proper bubble. If the entire market trades at 33 times earnings, that might signal a bubble. However, it’s essential to clarify that a stock with remarkable growth, such as Nvidia, increasing sales by 265 per cent and profits by nearly 500 per cent, isn’t indicative of a bubble at 33 times earnings. It simply isn’t.”
On Friday, Canadian investors got results from Onex Corp. On Wall Street, markets will get results from Warner Bros Discovery.
Ahead of the opening bell, Onex reported a fourth-quarter profit of US$373-million, down from US$435-million a year earlier. The investment firm and asset manager says the profit amounted to US$4.81 per diluted share for the quarter ended Dec. 31, The Canadian Press reported. The result compared with a profit of US$5.32 per diluted share in the last three months of 2022.
Overseas, the pan-European STOXX 600 was up 0.31 per cent in by afternoon after finishing at a record high in the previous session. Britain’s FTSE 100 slid up 0.09 per cent. France’s CAC 40 gained 0.64 per cent while Germany’s DAX added 0.21 per cent.
In Asia, Hong Kong’s Hang Seng slid 0.10 per cent in choppy trading. Markets in Japan were closed.
Commodities
Crude prices were weaker in early trading and looked set to end a two-week winning streak with uncertainty about the timing of potential rate cuts by the Federal Reserve tempering sentiment.
The day range on Brent was US$82.52 to US$83.48 in the early premarket period. The range on West Texas Intermediate was US$77.40 and US$78.39. Both benchmarks were headed for weekly losses early Friday morning after two consecutive weeks of gains.
Prices came under pressure after Fed Governor U.S. Christopher Waller suggested he wants to see more signs that inflation is under control before backing a rate cut.
“In the absence of a major economic shock, delaying rate cuts by a few months should not have a substantial impact on the real economy in the near term,” Mr. Waller said in remarks in Minneapolis on Thursday. “And, I think I have shown that acting too soon could squander our progress in inflation and risk considerable harm to the economy.”
He also suggested that he would like to see “least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole.”
In other commodities, spot gold was down 0.2 per cent at US$2,020.7 per ounce by early Friday morning, and has gained 0.4 per cent so far in the week. U.S. gold futures edged 0.1-per-cent higher to US$2,031.6 per ounce.
Currencies
The Canadian dollar was mostly steady while its U.S. counterpart looked set for its first weekly drop of 2024 against a group of currencies.
The day range on the loonie was 74.05 US cents to 74.23 US cents in the early premarket period. The Canadian dollar was little changed against the greenback over the past five days.
The U.S. dollar index, which measures the greenback against a group of currencies, was down 0.15 per cent at 103.80. Early Friday, the index was down about 0.28 per cent for the week so far, signalling its first weekly decline since the end of December, according to Reuters.
The euro was down 0.02 per cent at US$1.0823. Britain’s pound was unchanged at US$1.2661.
In bonds, the yield on the U.S. 10-year note was higher at 4.349 per cent ahead of the North American opening bell.
More company news
TransAlta Corp. reported a loss attributable to common shareholders of $84-million compared with a loss of $163-million a year earlier. The power utility says the loss amounted to 27 cents per diluted share for the quarter ended Dec. 31 compared with a loss of 61 cents per diluted share a year earlier. Free cash flow per share for the quarter amounted to 39 cents, down from $1.17 in the fourth quarter of 2022. Revenue totalled $624-million, down from $854-million in the last three months of 2022. -The Canadian Press
Warner Bros Discovery fell short of Wall Street estimates for quarterly revenue on Friday, weighed down by the absence of blockbuster releases due to the lingering impact from the Hollywood strikes and a weak advertising market. The media company, forged by the union of WarnerMedia and Discovery, reported overall fourth-quarter revenue of US$10.28-billion, missing analysts’ average estimate of US$10.35-billion, according to LSEG data. -Reuters
Shares in Jack Dorsey-led Block surged more than 16 per cent in premarket trading Friday after the payments firm forecast adjusted core earnings for the current quarter above Wall Street estimates, betting on continued consumer resilience and its cost-cutting measures. The company expects adjusted core earnings between US$570-million and US$590-million for the three months ended March 31, compared with analysts’ average expectation of US$511.76-million, according to LSEG data. -Reuters
Economic news
Ottawa’s budget balance for December.
With Reuters and The Canadian Press
Terry Weber