Equities
Canada’s main stock index opened up Friday with a soft reading on the Canadian economy returning focus to the path ahead for interest rates. On Wall Street, key indexes also started higher after a reading on inflationary pressures came in below forecasts.
At 9:37 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 31.04 points, or 0.16%, at 19,621.78. Heading into Friday’s session, the index was down nearly 3 per cent for the third quarter.
In the U.S., the Dow Jones Industrial Average rose 216.27 points, or 0.64%, at the open to 33,882.61.
The S&P 500 opened higher by 28.48 points, or 0.66%, at 4,328.18, while the Nasdaq Composite gained 136.43 points, or 1.03%, to 13,337.71 at the opening bell. All three indexes were poised to close out the latest quarter with sharp losses.
“A potential dip in U.S. growth in the fourth quarter could create a more balanced global growth environment, reducing the shine on U.S. outperformance and possibly leading to a Federal Reserve that remains on hold,” Stephen Innes, managing partner with SPI Asset Management, said.
“This scenario might reverse some of the recent increases in U.S. rates. While this assessment may place significant importance on what could be a temporary, weak patch in U.S. growth, the market position is considerably defensive, making even minor shifts in the macroeconomic landscape relevant for investors as they navigate the remainder of the year.”
In Canada, the country’s economy came into focus this morning, with a fresh reading on GDP at the start of the third quarter.
Statistics Canada says GDP growth was flat for the month. Markets had been looking for modest growth of 0.1 per cent. An early estimate from Statistics Canada suggests GDP likely grew by 0.1 per cent in August.
The report comes ahead of the Bank of Canada’s Oct. 25 rate decision. Earlier numbers showed the country’s economy contracted at an annual rate of 0.2 per cent in the second quarter of the year, below market and Bank of Canada forecasts.
“Even though the GDP data were on the soft side, with supply disruptions related to wildfires and the port strike driving a large part of the recent swings, rather than necessarily strength/weakness in domestic demand,” CIBC senior economist Andrew Grantham said. “We suspect that upcoming employment and CPI data will be more important for the Bank of Canada heading into October’s rate decision.”
In the U.S., the personal consumption expenditures price index, a preferred measure of inflation for the Federal Reserve, rose 0.4 per cent in August after climbing 0.2 per cent in July. In the 12 months through August, the PCE price index advanced 3.5 per cent after climbing 3.4% in July.
Excluding the volatile food and energy components, the PCE price index gained 0.1 per cent, after increasing 0.2 per cent in the prior month. The core PCE price index increased 3.9 per cent on a year-on-year basis in August after rising 4.3 per cent in July.
In the U.S., meanwhile, markets will get the August personal consumption expenditures price index, which offers the Federal Reserve’s preferred measure of inflation. Expect the core PCE index to rise of 0.2 per cent from July and up 3.9 per cent year-over-year.
On the corporate side, BlackBerry Ltd. reported a loss of US$42-million or 7 US cents a share in the second quarter, compared to a loss of US$54 million in the same period last year. BlackBerry says revenue for the second quarter was US$132-million, compared with US$168-million in the prior year’s quarter. The earnings were released after Thursday’s closing bell. Shares fell roughly 4 per cent just after the opening bell in Toronto.
Vancouver-based retailer Aritzia reported a loss of $6-million or 5 cents a share in the latest quarter, compared with net income $46-million or 40 cents a year earlier. Revenue in the quarter rose to $534.2-million, up from $525.5-million a year ago. Shares jumped more than 11 per cent in early trading in Toronto.
On Wall Street, shares of Nike Inc. were up about 8 per cent in early trading after that company topped estimates for first-quarter profit as higher prices helped offset a hit from waning demand. The company maintained its annual forecasts and said it expected second-quarter revenue to be up slightly, Reuters reported. Analysts had expected a 2.1-per-cent rise to $13.59 billion, according to LSEG data.
Overseas, the pan-European STOXX 600 was up 1.02 per cent by midday. Britain’s FTSE 100 gained 0.62 per cent while Germany’s DAX added 0.90 per cent. France’s CAC 40 was up 0.97 per cent. New figures released Friday morning showed euro zone inflation fell to 4.3 per cent in September, the lowest level since October 2021.
In Asia, Japan’s Nikkei finished down 0.05 per cent. Hong Kong’s Hang Seng jumped 2.51 per cent.
Commodities
Crude prices were fairly steady in early trading and looked set for a weekly gain as traders await the next move from the OPEC+ group.
The day range on Brent was US$94.90 to US$95.43 in the early premarket period. The range on West Texas Intermediate was US$91.52 to US$9212. Both benchmarks gained about 2 per cent so far this week and are up sharply for the most recent quarter.
“Oil prices are increasingly hitting the headlines, with Brent crude coming within five dollars of triple figures which will naturally bring back bad memories of last year’s price surge,” OANDA senior analyst Craig Erlam said.
“It is worth noting that, while oil could top $100, this is very different from 2022 and is largely being driven by OPEC+ tipping the market into deficit which is unlikely to be the long-term plan.”
A ministerial panel of the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is due to meet on Oct. 4.
Production curbs from OPEC+ members Saudi Arabia and Russia have helped drive the recent jump in prices. However, markets are now looking for signals that Saudi Arabia could be weighing unwinding some of the cuts.
“There may be some early signs that the oil rally is running on fumes as we get closer to $100, perhaps a sign that traders view it as a major psychological hurdle,” Mr. Erlam said in a note.
“That’s what it proved to be in October and November last year, the last time Brent traded around these levels.”
In other commodities, spot gold rose 0.4 per cent to US$1,872.79 per ounce by early Friday morning, but was set to decline 3.5 per cent in September - its worst month in seven, according to figures from Reuters. Prices are down more than 2 per cent in the latest quarter.
U.S. gold futures gained 0.6 per cent to US$1,889.50.
Currencies
The Canadian dollar was higher while its U.S. counterpart continued to pull back from recent 10-month highs, but remained on track for its best quarter of the year.
The day range on the loonie was 74 US cents to 74.45 US cents in the early premarket period. The Canadian dollar was up 0.33 per cent over the past five days and more than 1 per cent higher over the past month. Over the past three months, the loonie is down 1.4 per cent.
On world markets, the U.S. dollar index, which weighs the greenback against a group of world currencies, fell 0.4 per cent to 105.75, but was on track to end the quarter up 2.8 per cent, along with an 11th straight weekly rally - its longest in nine years, according to Reuters.
The euro rose for a second day, advancing 0.4 per cent at US$1.0608, pulling further away from this week’s multi-month low of US$1.0488.
Britain’s pound rose 0.2 per cent to US$1.2236, after hitting its lowest since since March 17 this week.
In bonds, the yield on the U.S. 10-year note was lower at 4.547 per cent in the predawn period.
More company news
United Auto Workers union President Shawn Fain is expected to launch walkouts at more Detroit Three auto factories Friday, barring last-minute progress in bargaining that has moved slowly since last week. UAW members, Wall Street investors, industry executives and the White House are watching to see whether Fain shuts down powertrain factories or plants that assemble the pickup trucks and large SUVs that Ford, General Motors and Stellantis rely on for most of their North American and global profits. Fain will make a video address on Friday at 10 a.m. ET. -Reuters
Economic news
(8:30 a.m. ET) Canada’s monthly real GDP for July.
(8:30 a.m. ET) U.S. personal spending and income for August.
(8:30 a.m. ET) U.S. core PCE Price Index for August.
(9:45 a.m. ET) U.S. Chicago PMI for September.
(10 a.m. ET) U.S. University of Michigan consumer sentiment index for September.
With Reuters and The Canadian Press