Equities
Canada’s main stock index dipped at Friday’s open with energy and materials stocks under pressure. On Wall Street, the S&P 500 and Dow also started in the red as investors took a breather after a solid week.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 42.43 points, or 0.2 per cent, at 20,736.37. The index was up more than 2 per cent for the week, heading into Friday’s session.
The Dow Jones Industrial Average fell 53.85 points, or 0.14%, at the open to 37,194.50.
In the U.S., the S&P 500 opened lower by 5.32 points, or 0.11%, at 4,714.23, while the Nasdaq Composite gained 35.90 points, or 0.24%, to 14,797.46 at the opening bell.
Markets got a boost this week after the Federal Reserve left interest rates unchanged but also signalled the possibility of rate cuts in the new year. However, both the European Central Bank and the Bank of England, in subsequent policy announcements, also left rates unchanged but suggested borrowing costs will remain longer for higher. Early Friday, New York Federal Reserve President John Williams also pushed back on rate-cut speculation during an appearance on CNBC, suggesting that the central bank isn’t “really talking about rate cuts right now.”
“The contrast between the resilient US economy adopting a dovish stance and faltering European economies holding on to a hawkish position gives the impression that something is amiss,” Swissquote senior analyst Ipek Ozkardeskaya said.
Later Friday, Bank of Canada Governor Tiff Macklem will give an end-of-year speech to the Canadian Club Toronto. Mr. Macklem’s remarks will be released by the bank at 12:25 p.m. ET. Early this month, the Bank of Canada kept borrowing costs unchanged but maintained that it could again raise rates if necessary to combat inflation.
“After the Fed this week, markets have really gone ahead to price in early (a full BoC rate cut by April) and substantial (125 basis points by year end) easing in 2024,” BMO Economics senior economist Robert Kavcic said.
“Fed Chair [Jerome] Powell didn’t exactly take the opportunity to talk the market back in his press conference, so we’ll be watching to see if Governor Macklem steps up to do so. At minimum, look for the latest statement that the bank ‘remains prepared to raise the policy rate further if needed’ to be repeated.”
Overseas, the pan-European STOXX 600 was up 0.07 per cent by midday. Britain’s FTSE 100 slid 0.73 per cent. Germany’s DAX dipped 0.04 per cent while France’s CAC 40 added 0.42 per cent.
In Asia, Japan’s Nikkei finished up 0.87 per cent. Hong Kong’s Hang Seng jumped 2.38 per cent.
Commodities
Crude prices were choppy but looked set for their first weekly gain in two months on the back of optimism over potential U.S. rate cuts in the new year.
The day range on Brent was US$76.45 to US$77.14 in the early premarket period. The range on West Texas Intermediate was US$71.47 to US$72.10. Both benchmarks were modestly positive for the week by early Friday morning.
Prices were supported this week by the Fed’s dovish tilt as well as weakness in the U.S. dollar and an new forecast from the International Energy Agency suggesting higher demand in 2024.
“The weakness in the U.S. dollar, along with an expectation that we could see multiple rate cuts next year has helped to give oil prices a lift in expectation that any boost from lower rates will offer an economic stimulus to growth prospects next year,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
In other commodities, spot gold rose 0.1 per cent to US$2,037.59 per ounce by early Friday morning and was up 1.7 per cent for the week so far.
U.S. gold futures gained 0.4 per cent to US$2,052.10.
Currencies
The Canadian dollar was higher while its U.S. counterpart looked set for its biggest weekly decline in five months.
The day range on the loonie was 74.52 US cents to 74.78 US cents in the early premarket period. By early Friday morning, the Canadian dollar was up 1.55 per cent over the last five days against the greenback.
The U.S. dollar index, which weighs the greenback against a group of currencies, was fairly steady at 102.06. The index was on track for a weekly decline of nearly 2 per cent, its biggest since July, according to figures from Reuters.
The euro was down 0.30 per cent at US$1.0961. Britain’s pound was up 0.18 per cent at US$1.2790.
In bonds, the yield on the U.S. 10-year note was lower at 3.911 per cent in the predawn period.
More company news
Costco Wholesale surpassed market expectations for quarterly sales, as more customers turning to its stores for cheaper groceries and essentials offset slowing demand for discretionary items. The results were released after Thursday’s close. Costco has increased its sales and market share thanks to its strategy of maintaining low prices on basic essentials and gas as well as a devoted membership base that benefits from incentives including testing of free samples and a yearly 2% reward on qualified purchases at its warehouses. -Reuters
The Globe’s Nicolas Van Praet reports two of Gildan Activewear Inc.’s largest shareholders are demanding the Canadian clothing maker reinstate its founder and chief executive officer Glenn Chamandy, saying the company botched its CEO succession. Los Angeles-based hedge fund Browning West and Toronto-based investment management firm Turtle Creek Asset Management have written letters to Gildan’s board urging the company to immediately reappoint Mr. Chamandy. Browning holds a roughly 4-per-cent stake in Gildan while Turtle Creek has a roughly 3.3-per-cent position, according to a regulatory filing last September.
Economic news
(8:15 a.m. ET) Canadian housing starts for November.
(8:30 a.m. ET) Canadian wholesale trade for October.
(8:30 a.m. ET) Canada’s international securities transactions for October.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for December.
(9:15 a.m. ET) U.S. industrial production for November.
(12:25 ET) Bank of Canada Governor Tiff Macklem speaks at the Canadian Club in Toronto.
With Reuters and The Canadian Press
Terry Weber