Canada’s main stock index opened higher Friday, after three sessions of losses, helped by improved commodities prices. On Wall Street, key indexes were also up at the opening bell on optimism over continuing talks over raising the U.S. debt ceiling.
At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 67.52 points, or 0.34 per cent, at 19,841.6. The index was down more than 2 per cent for the week heading into Friday’s session.
In the U.S., the Dow Jones Industrial Average rose 30.85 points, or 0.09 per cent, at the open to 32,795.50.
The S&P 500 opened higher by 4.88 points, or 0.12 per cent, at 4,156.16, while the Nasdaq Composite gained 38.32 points, or 0.30 per cent, to 12,736.42 at the opening bell.
U.S. talks to raise the debt ceiling remain at the forefront for markets. The Associated Press reports that President Joe Biden and House Speaker Kevin McCarthy are narrowing in on a two-year budget deal aiming to curb federal deficits in exchange for lifting the nation’s debt limit. The two sides, the agency said, hope to strike a budget compromise this weekend.
“If investors are not extremely worried about the debt ceiling talks, it’s because they know it’s just an unnecessary political theater and that the debt ceiling will end up being raised, anyway,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.
“But in the extreme event of a political accident, the consequences would be catastrophic. U.S. and global stocks could dive more than 20 per cent and the U.S’ self-induced economic crisis would push the world economy into a deep recession by the end of the year.”
On the economics side, Wall Street got fresh inflation numbers ahead of the start of trading with the release of U.S. personal consumption expenditure (PCE) data, viewed as the Federal Reserve’s preferred inflation gauge. The figures came ahead of next month’s Federal Reserve rate decision.
Reuters reports that the the personal consumption expenditures price index increased 0.4 per cent in April after rising 0.1 per cent in March. In the 12 months through April, the PCE price index increased 4.4 per cent after advancing 4.2 per cent in March. Excluding the volatile food and energy components, the PCE price index climbed 0.4 per cent after rising 0.3 per cent in March. The so-called core PCE price index increased 4.7 per cent on a year-on-year basis in April after gaining 4.6% in March.
In Canada, The Globe’s Andrew Willis and Tim Kiladze report global commodities trader Glencore PLC is in talks to merge its agriculture division, which includes Viterra Ltd., the Canadian grain giant it acquired in 2012, with Bunge Ltd. to create a dominant North American company, according to someone familiar with the transaction.
Overseas, the pan-European STOXX 600 was up 0.24 per cent in morning trading. Germany’s DAX was off 0.04 per cent while France’s CAC 40 gained 0.07 per cent. Britain’s FTSE 100 rose 0.11 per cent.
In Asia, Japan’s Nikkei closed up 0.37 per cent. Hong Kong’s Hang Seng was closed for a public holiday.
Commodities
Crude prices were positive as traders weigh the chances of a move by the OPEC+ group on output at its meeting early next month.
The day range on Brent was US$75.73 to US$76.56 in the early premarket period. The range on West Texas Intermediate was US$71.49 to US$72.23. Both benchmarks lost about US$2 on Thursday.
Markets have been getting conflicting signals about the OPEC+ group’s intentions.
Early in the week, Saudi Arabia’s energy minister warned short traders to watch out, suggesting that output cuts could be coming. However, Russia indicated on Thursday that the group was likely to remain on hold.
“Suspicions of a second consecutive cut came as prices slipped, and remained, below $80 a barrel – the point at which the group announced a surprise cut previously – and Saudi Energy Minister, Prince Abdulaziz bin Salman, warned short speculators to ‘watch out,’” OANDA senior analyst Ed Moya said.
“It would almost be more damaging to make those threats and not follow through and perhaps [Russian Deputy Prime Minister Alexander] Novak is playing a role in the elaborate scheme to punish short-sellers, but the comments suggest there isn’t widespread support for another cut so soon after the last.”
In other commodities, spot gold advanced after the U.S. dollar pulled back from a two-month high.
Spot gold rose 0.5 per cent to US$1,950.39 per ounce by early Friday morning, after touching its lowest since March 22 at US$1,936.59. U.S. gold futures added 0.4 per cent to US$1,950.60.
Gold is down more than 1 per cent for the week so far.
Currencies
The Canadian dollar edged higher while its U.S. counterpart slid against a basket of world currencies.
The day range on the loonie was 73.23 US cents to 73.46 US cents in the early premarket period.
There were no major Canadian economic releases due Friday.
The U.S. dollar index - which tracks the greenback against six major counterparts - was last down 0.2 per cent at 104.06, just off Thursday’s two-month high of 104.31, according to figures from Reuters. The index is up about 0.8 per cent for the week.
The euro was last up 0.1 per cent against the U.S. dollar at US$1.07350, but was not far from its two-month low of US$1.0708 hit in the previous session.
Britain’s pound gained 0.2 per cent to US$1.23470.
In bonds, the yield on the U.S. 10-year note was lower at 3.791 per cent in the predawn period.
More company news
CWB Financial Group raised its quarterly dividend as it reported its second-quarter profit fell compared with a year ago and said it was targeting lower annual loan growth than previously expected. The Edmonton-based bank says it will now pay a quarterly dividend of 33 cents per share, up a penny from 32 cents per share. The increased payment came as CWB says its common shareholders’ net income totalled $70.0-million or 73 cents per diluted share for the quarter ended April 30, down from $74.2-million or 82 cents per diluted share in the same quarter a year earlier. -The Canadian Press
Air Canada briefly grounded its planes Thursday due to a problem with its computer system, delaying nearly half its flights. A “technical issue” with the system the airline uses to communicate with aircraft and monitor their performance prompted a halt to operations, the Montreal-based company said. -The Canadian Press
Gap Inc on reported a surprise profit in the first quarter, and its shares jumped in extended trading as the apparel retailer cited restructuring efforts and easing supply chain costs. U.S. companies are starting to see some relief from sky-high costs of freight and manufacturing after years of supply-chain snags. Gap’s quarterly merchandise margin increased by 610 basis points on an adjusted basis due to lower air freight expenses and improved promotional activity. Reuters
Economic news
(8:30 a.m. ET) U.S. personal spending and income for April.
(8:30 a.m. ET) U.S. Core PCE Price Index for April.
(8:30 a.m. ET) U.S. goods trade deficit for April.
(8:30 a.m. ET) U.S. wholesale and retail inventories for April.
(8:30 a.m. ET) U.S. durable orders for April.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for May.