Equities
Canada’s main stock index opened higher Friday, recouping some of the previous session’s sharp losses, with commodities-linked stocks offering support. On Wall Street, key indexes also rebounded although uncertainty about interest rates continues to temper sentiment.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 57.26 points, or 0.29 per cent, at 19,848.88. The index was down more than 3 per cent for the week heading into Friday’s session.
In the U.S., the Dow Jones Industrial Average rose 6.66 points, or 0.02%, at the open to 34,077.08. The S&P 500 opened higher by 11.74 points, or 0.27%, at 4,341.74, while the Nasdaq Composite gained 63.19 points, or 0.48%, to 13,287.17 at the opening bell.
“The recent shift in the Federal Reserve’s tone has left its mark on various segments of the capital markets, and even the oil market rally is getting capped despite the markets being short 3 million barrels in Q4,” Stephen Innes, managing partner with SPI Asset Management, said.
“As we approach the end of this week, the market narrative has reverted to the complex dynamics observed in early August.”
This week, the Federal Reserve held interest rates unchanged but signalled the possibility of another increase before the end of the year and suggested borrowing costs will remain higher for longer. A slew of other global central banks also met through the week with the Bank of England opting to move to the sidelines after a lengthy campaign of increases.
On Friday, Canadian investors got a reading on July retail sales. Statistics Canada says sales rose 0.3 per cent to $66.1-billion in July. Economists had been forecasting a gain of 0.4 per cent. However, core sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, were up 1.3 per cent in July. Statscan says early forecasts suggest a decline of 0.4 per cent for sales in August, although figure is subject to revision.
“Overall, seven out of nine subsectors saw sales increase during the month,” CIBC economist Katherine Judge said.
“However, the advance estimate for August showed a 0.3-per-cent decline, which suggests that consumers could be curtailing spending due to the squeeze from higher interest rates.”
On the corporate side, The Globe’s Eric Atkins reports that a Magna International Inc. joint venture in Michigan has laid off 650 employees as the automotive industry braces for widening strikes by the United Auto Workers union in the United States. LM Manufacturing LLC, 49 per cent owned by Magna, supplies seats to Ford Motor Co.’s Bronco factory near Detroit, where workers went on strike last week. UAW members are also on strike at two other U.S. factories, owned by Stellantis NV and General Motors Co., as the union pushes for new collective agreements.
Overseas, the pan-European was down 0.13 per cent by midday. Britain’s FTSE 100 edged up 0.59 per cent. Germany’s DAX and France’s CAC 40 were off 0.10 per cent and 0.44 per cent, respectively.
In Asia, Japan’s Nikkei closed down 0.52 per cent after the Bank of Japan left monetary policy unchanged. Hong Kong’s Hang Seng gained 2.28 per cent, reversing losses seen earlier in the session.
Commodities
Crude prices were positive on supply concerns following news of a Russian ban on fuel exports, but were still on track for a modest weekly decline.
The day range on Brent was US$93.22 to US$93.96 in the early premarket period. The range on West Texas Intermediate was US$89.54 to US$90.41. Both benchmarks are negative for the week to this point after adding more than 10 per cent over the last three weeks on the back of OPEC+ supply curbs.
Prices were underpinned late in the week on news that Russia would temporarily ban exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states to support the domestic market. That helped offset demand worries after the Fed suggested interest rates would remain higher for longer.
“Trading remained choppy amid a tug-of-war between supply fears that were reinforced by a Russian ban on fuel exports and worries over slower demand due to tighter monetary policies in the United States and Europe,” Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd., said, according to a Reuters report.
In other commodities, spot gold was up 0.3 per cent at US$1,925.40 per ounce, by early Friday morning, having posted its biggest daily drop since Sept. 5 on Thursday. U.S. gold futures rose 0.4 per cent to US$1,946.90.
Currencies
The Canadian dollar was positive in early trading while its U.S. counterpart looked set for its tenth weekly advance.
The day range on the loonie was 74.10 US cents to 74.30 US cents ahead of the North American open. The Canadian dollar was up about 0.52 per cent against the U.S. dollar over the last five days.
On world markets, the U.S. dollar index, which tracks the currency against six major peers, rose 0.16 per cent to 105.55 on Friday, according to figures from Reuters. The index was headed to a modest weekly gain, which would make 10 consecutive weeks of advances.
“The CAD rebounded well from yesterday’s intraday low despite broader strength in the USD,” Shaun Osborne, chief FX strategist with Scotiabank, said. “Weak stocks weighed on CAD sentiment to some extent but steady-to-narrower US-Canada spreads are helping anchor the CAD.”
Japan’s yen, meanwhile, dropped as low as 148.42 to the U.S. dollar after the Bank of Japan held steady on monetary policy. The BOJ held interest rates at -0.1 per cent on Friday and said it would continue to support the economy as it looks to temper inflation.
Britain’s pound was down 0.24 per cent at US$1.2266. Sterling hit a six-month low against the greenback on Thursday after the Bank of England surprised markets by holding steady on interest rates.
In bonds, the yield on the U.S. 10-year note was little changed at 4.478 per cent ahead of the North American opening bell.
More company news
Canada’s biggest steelmaker Stelco Holdings is pursuing a bid for U.S. Steel Corp, adding to a growing list of suitors for the iconic American company, Bloomberg News reported on Thursday, citing people familiar with the matter. U.S. Steel’s shares were up more than 1 per cent in premarket trading. Stelco is seeking to purchase the entire company as it looks to increase its portfolio of steelmaking assets and boost its share of the market for supplying metal to the automotive sector, according to the report. The Canadian company is in talks with a potential partner on its bid, Bloomberg News reported. U.S. Steel declined to comment, while Stelco did not immediately respond to a Reuters’ requests for comment. -Reuters
McDonald’s is raising royalty fees for new franchise operators in the United States and Canada for the first time in nearly three decades, according to an internal letter viewed by Reuters on Friday. The burger giant is hiking the fees that franchise owners pay for the brand to 5 per cent from 4 per cent, starting Jan. 1, for any new restaurants they open. The change will not affect existing franchisees who are maintaining their current footprint or who buy a franchised location from another operator. It will also not apply to rebuild existing locations or restaurants transferred between family members. -Reuters
Microsoft’s restructured US$69-billion acquisition of Activision Blizzard “opens the door” to the biggest ever gaming deal being cleared, Britain’s antitrust regulator said on Friday. Microsoft announced the deal in early 2022, but it was blocked in April by Britain’s competition regulator, which was concerned the U.S. tech giant would gain too much control of the nascent cloud gaming market. In August, “Call of Duty” maker Activision agreed to sell its streaming rights to Ubisoft Entertainment in a new attempt to win over the Competition and Markets Authority (CMA). -Reuters
Amazon said on Friday that Prime Video shows and movies will include limited advertisements from early 2024. Amazon said the advertisements will be introduced in the United States, the UK, Germany and Canada in early 2024, followed by France, Italy, Spain, Mexico and Australia later in the year. -Reuters
Economic news
830 am ET: Canadian retail sales for July.
945 am ET: S&P Global PMIs for September.
With Reuters and The Canadian Press
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