Equities
Canada’s main stock index gained at Friday’s opening bell alongside positive global sentiment. On Wall Street, key indexes were also up following a better-than-expected reading on U.S. hiring.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 164.34 points, or 0.84 per cent, at 19,836.59. The index had been down more than 1 per cent for the week heading into Friday’s session.
In the U.S., the Dow Jones Industrial Average rose 126.01 points, or 0.38 per cent, at the open to 33,187.58.
The S&P 500 opened higher by 19.99 points, or 0.47 per cent, at 4,241.01, while the Nasdaq Composite gained 89.50 points, or 0.68 per cent, to 13,190.48 at the opening bell.
Traders have a close eye on the U.S. nonfarm payroll numbers for May.
The U.S. Labor Department said early Friday that the U.S. economy created 339,000 new positions last month. That was far more than the 195,000 economists had been forecasting. Figures for April were revised up to show payrolls rising by 294,000 jobs instead of 253,000 as reported earlier. The U.S. jobless rate rose to 3.7 per cent from 3.4 per cent in April. Average hourly earnings rose 0.3 per cent after climbing 0.4 per cent in April. The year-over-year increase in wages slowed to 4.3 per cent after advancing 4.4 per cent in April.
The figures come ahead of the Federal Reserve’s June 14 policy decision. Markets have been increasingly optimistic that the Fed would pause its campaign of rate hikes at the upcoming meeting.
“The acceleration in payrolls, coupled with a recent upturn in job openings, suggests that American businesses are still aggressively hiring, likely to meet resilient consumer demand,” BMO senior economist Sal Guatieri said.
“However, the other areas of softness in this report suggests that the labour market is losing steam. In light of a recent downward revision to unit labour costs data, the Fed will take further comfort from the gradual moderation in wage growth.”
He said there’s likely enough pockets of softness in the report to convince the Fed to move to the sidelines in June, but another strong report coupled with a disappointing inflation reading could set the stage for an increase in July.
The Bank of Canada, meanwhile, makes its next rate announcement on June 7. Canada’s central bank moved to the sidelines earlier this year but a better-than-expected reading on first-quarter GDP earlier this week has prompted some speculation that the bank could again raise interest rates at some point. Canada’s May employment report is due next Friday.
On the corporate side, U.S.-listed shares of Vancouver-based Lululemon spiked more than 15 per cent in early trading after the retailer raised its full-year sales and profit forecasts. Lululemon now expects full-year 2023 revenue between US$9.44-billion and US$9.51-billion, compared with its prior estimate of US$9.30-billion to $9.41-billion. Analysts on average had estimated US$9.37-billion, according to Refinitiv IBES data.
Overseas, the pan-European STOXX 600 the pan-European STOXX 600 was up 0.71 per cent in morning trading. Britain’s FTSE 100 gained 0.65 per cent. Germany’s DAX and France’s CAC 40 advanced 0.77 per cent and 0.90 per cent, respectively.
In Asia, Japan’s Nikkei finished up 1.21 per cent. Hong Kong’s Hang Seng spiked 4.02 per cent led by gains in property and consumer stocks.
Commodities
Crude prices gained in early trading but were still on track for weekly declines with attention turning to next week’s OPEC+ meeting.
The day range on Brent was US$74.18 to US$75.59 in the early premarket period. The range on West Texas Intermediate was US$70 to US$71.39. Both benchmarks were up more than 1 per cent in the early hours of Friday morning but were still on track for the first weekly loss in three weeks.
Traders are now awaiting the June 4 meeting of OPEC and its allies. The group has sent mixed signals about its plans with Saudi Arabia suggesting a cut in output is possible while Russia indicating it is unlikely.
“Oil traders can argue that the Chinese economic rebound has stalled, manufacturing activity around the world is struggling, Germany is in recession and the U.S. may be headed for one,” OANDA senior analyst Craig Erlam said.
“The questions now are will OPEC+ see it that way and could Russia be convinced to cut again? If not, Brent crude may well test those recent lows more forcefully.”
Crude prices drew some support early Friday from the passage of a bill in the U.S. Senate to suspend the debt ceiling, heading off an historic default. Uncertainty over an agreement has kept investors on edge in recent weeks.
In other commodities, gold prices were up and looked set for the best weekly gain since early April as the U.S. dollar eased.
Spot gold was little changed at US$1,977.31 per ounce by early Friday morning. U.S. gold futures steadied at US$1,994.50.
Gold has gained 1.6 per cent so far this week, heading for its best week since the week ended April 7, according to Reuters.
Currencies
The Canadian dollar was higher amid improved broader risk sentiment while its U.S. counterpart was on track for its biggest weekly decline since January on speculation that the Federal Reserve could keep rates unchanged later this month.
The day range on the loonie was 74.23 US. cents to 74.59 US cents in the early premarket period. The Canadian dollar has gained about 1.5 per cent against the greenback over the last five days as of early Friday morning.
“The CAD is currently one of the better performing major currencies this week, recording (so far) a 1.5-per-cent gain on the USD,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Broader USD weakness, firmer stocks and a bounce in crude all played a part in the CAD’s late week gains but investors are also rewarding the CAD for better economic data (GDP) via some marginal, additional compression in short term spreads.”
There were no major Canadian economic releases due Friday.
On world markets, the U.S. dollar index was last down about 0.1 per cent. The index, which weighs the greenback against a selection of world currencies, is off about 0.8 per cent for the week so far, its biggest weekly loss since mid-January, according to figures from Reuters.
The euro was flat at US$1.0769, after hitting its best level in a week on Thursday of US$1.07685 after ECB head Christine Lagarde indicated that central bank would continue to tighten policy.
In bonds, the yield on the U.S. 10-year note was slightly higher at 3.618 per cent early Friday morning.
More company news
Canaccord Genuity Group Inc management-led consortium said on Friday its $1.13-billion take-private offer may not result in a deal as there was “no reasonable chance” its conditions would be met by the expiry date. This comes just a month after the management warned of delays in securing regulatory approvals for the offer, first announced in January. The management has made no final decision on extending the June 13 deadline for the offer, which was opposed by a special committee of independent directors at the Canadian firm in February. -Reuters
General Motors Co and South Korea’s POSCO Future M said on Friday they will invest more to boost production at their chemical battery materials facility in Quebec, taking their estimated total investment in the plant to over $1-billion. The companies said the new investment includes an additional CAM and a precursor facility for local on-site processing of critical minerals. The development comes a few days after the Canada’s federal government and the Quebec province each provided about $150-million for the facility. -Reuters
Suncor Energy Inc. will cut 1,500 jobs by the end of the year, as new CEO Rich Kruger forges ahead with his mandate to reduce costs and improve the company’s lagging financial performance. Employees were given the news Thursday afternoon, in a companywide email from Kruger, Suncor spokeswoman Sneh Seetal said. She confirmed the job reductions are new, and not part of the company’s previously announced plan to reduce the size of its contractor workforce by 20 per cent in an effort to improve safety and performance at its oil sands sites. -The Canadian Press
Economic news
(8:30 a.m. ET) U.S. nonfarm payrolls for May.
With Reuters and The Canadian Press