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Equities
Canada’s main stock index started higher Friday with rising crude prices helping lift energy stocks. On Wall Street, markets were firmly in the black with an earnings beat by JPMorgan Chase & Co. and a big deal in the energy sector and a bump in Walt Disney Co. stock bolstering sentiment.
At 9:35 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was up 67.37 points, or 0.41 per cent, at 16,466.84. Six of the index’s 11 major sectors were higher, led by energy stocks, which rose 1.8 per cent.
On Wall Street, the Dow Jones Industrial Average rose 214.74 points, or 0.82 per cent, at the open to 26,357.79. The S&P 500 opened higher by 12.54 points, or 0.43 per cent, at 2,900.86. The Nasdaq Composite gained 36.79 points, or 0.46 per cent, to 7,984.15 at the opening bell.
Market movers: Stocks seeing action on Friday - and why
On world markets, major European markets edged up after a soft start while Asia finished the week mixed despite a report showing a rebound in Chinese exports in March.
Overall, the outlook for U.S. first-quarter earnings isn’t especially strong, with analysts forecasting the first quarterly decline since 2016. Jasper Lawler, head of research at London Capital Group, says forecasts now suggest a year-over-year fall of 4.2 per cent for the quarter. Just a week ago, the drop was seen coming in around 3.9 per cent.
“With an earnings decline on the cards, the big banks, more so than ever, will be used as bellwethers for the rest of the S&P 500,” he said.
On Friday, JPMorgan shares were up more than 3 per cent at the open after the big U.S. bank posted a 5.4-per-cent increase in quarterly profit. The bank said net income rose to US$9.18-billion, or US$2.65 per share, in the first quarter ended March 31, from US$8.71-billion, or US$2.37 per share, a year earlier. Analysts had estimated earnings of US$2.35 per share, according to IBES data from Refinitiv.
Wells Fargo shares gave back early gains with investor concerns about the bank’s interest income offsetting better-than-expected per share profit in the most recent quarter. In the latest quarter, Wells Fargo posted earnings per share of US$1.20, up from 96 US cents a year earlier and beating analysts’ estimates of US$1.09.
Friday's analyst upgrades and downgrades
On Bay Street, The Globe reports that Manulife Financial Corp. is cutting its chief operating officer role as it redraws reporting lines for seven divisions. The report says, as part of the reorganization, COO Linda Mantia plans to leave the insurer this summer. Three other senior officers also plan to leave or retire by the end of the year. Manulife shares gained 1 per cent just after the start of trading in Toronto.
South of the border, Chevron Corp. said it would buy Anadarko Petroleum Corp. for US$33-billion in cash and stock. The officer translates to US$64 a share, representing a 39-per-cent premium on Anadarko’s Thursday closing price. The total enterprise value of the transaction is US$50-billion. Chevron shares were down 4 per cent. Anadarko stock was up more than 33 per cent.
Elsewhere, Netflix Inc. stock was down about 2 per cent after Walt Disney Co. unveiled the pricing and start date for it is own streaming service. Disney says the family-friendly service will cost US$7 a month or US$70 a year and feature classic TV shows and movies. The service - to be called Disney+ - will launch on Nov. 12. Disney shares jumped 10 per cent on the news.
Overseas, major European markets shook off early losses to trade higher with investors drawing some solace from signs of a stabilizing Chinese economy. Britain’s FTSE 100 advanced 0.44 per cent. Germany’s DAX was up 0.53 per cent and France’s CAC 40 gained 0.32 per cent.
In Asia, Japan’s Nikkei edged up 0.7 per cent finish at a four-month high although the index was little changed for the week. The move comes ahead of a 10-day holiday in Japan running from April 27 to May 6, which will mark one of the biggest breaks on record for the country’s stock and bond markets. In China, the Shanghai Composite Index ended just south of break even while Hong Kong’s Hang Seng reversed early losses to finish up 0.24 per cent. Economics were in focus for Asia markets after new figures showed China’s exports rebounded in March although exports fell for a fourth straight month, offering a mixed picture of the economy as the U.S.-China trade talks continue.
Commodities
Brent and West Texas Intermediate prices were higher early on and looked set for solid weekly gains on supply cuts from Libya, Iran and Venezuela. The day range on Brent was US$70.90 to US$71.64 after the benchmark broke through US$70 earlier in the week. The range on WTI is US$63.66 to US$64.52.
Brent looked headed for a weekly gain of about 1.5 per cent. That would mark Brent’s third straight weekly advance. WTI, meanwhile, appeared set for a weekly gain of about 1.7 per cent. That would be its sixth straight weekly advance.
In a recent note, Stephen Innes, head of trading and market strategy for SPI Asset Management, points out that a Reuters report this week suggested OPEC could raise oil output from July if Venezuelan and Iranian supply drops further and prices continue to rally because production cuts with Russ and other allies could over tighten the markets.
“Supporting our view from earlier this week that traders were busy plugging in data to come up with a theoretical price point that may convince both Shale and OPEC producers to increase production,” Mr. Innes said. “Well, at least that’s what we were doing anticipating that OPEC would try to pour some ice water on this sizzling rally knowing full well that President Trump wants to squeeze Iran crude export to zero, but he also wants OPEC to keep the rigs pumping.”
Mr. Innes also said he still expects OPEC to come through with a six-month extension of supply curbs at its meeting in June, although he says it’s likely the cartel will “veer more towards price stability rather than higher prices.”
In other commodities, gold prices were steady on a weaker U.S. dollar and should see their first weekly gain in three weeks. Spot gold rose 0.1 per cent to US$1,293.93 per ounce, after touching a one-week low on Thursday. Prices have gained 0.2 per cent so far this week. U.S. gold futures increased by 0.3 per cent to US$1,297 an ounce.
“Even after the United States’ long-drawn-out trade spat with China and threats of a new trade war with the European Union, there is still not much safe-haven buying in gold,” Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers, told Reuters.
“Gold has near-term support at US$1,285 and huge resistance at US$1,350.”
In other metals, silver edged up 0.1 per cent while spot platinum rose 1.3 per cent, heading to its fifth straight weekly gain.
Currencies and bonds
The Canadian dollar was trading near 75-US-cents as crude prices advanced and its U.S. counterpart slipped against a basket of world counterparts. For the loonie, the day’s sole economic event comes later Friday when Bank of Canada Governor Stephen Poloz speaks at the International Monetary Fund meeting in Washington.
However, as RBC chief currency trader Adam Cole notes, the subject matter - should central banks issue digital currency - isn’t likely to be market moving. Bigger market news comes Monday with the release of the central bank’s business outlook survey.
The day range on the loonie so far is 74.70 US cents to 75.11 US cents.
On world markets, the U.S. dollar index - which weighs the greenback against a group of six other currencies - was down 0.4 per cent at 96.828, giving back most of Thursday’s gains. Mr. Cole notes the weaker performance came as the euro pushed back to the top of the week’s range on currency demand resulting from reports that Japan’s Mitsubishi UFJ Financial Group’s plans to buy the aviation financing business of Germany’s DZ Bank. The portfolio is valued at about 5.6 billion euros.
The euro rose 0.6 per cent to US$1.1318, its highest since March 26. The common currency also advanced about 0.8 per cent to 126.69 yen, its strongest since March 20, according to Reuters.
In bonds, the yield on the U.S. 10-year note was modestly higher at 2.544 per cent. The yield on the 30-year note was also higher at 2.963 per cent.
Stocks set to see action
Canopy Growth Corp. will replace Goldcorp Inc. in the S&P/TSX 60 Index ahead of the start of trading on April 18. Goldcorp will be dropped from the S&P/TSX Composite Index in the wake of Newmont Mining Corp.'s deal to buy Goldcorp. Canopy will be the first cannabis company to join the large-cap index. Canopy shares rose more than 4 per cent in early trading in Toronto.
PNC Financial Services Group Inc posted a 2.7-per-cent rise in quarterly profit on Friday as the U.S. regional bank earned more interest income. The bank’s net income attributable to common shareholders rose to US$1.20-billion, or $2.61 per share, in the first quarter ended March 31, from US$1.17-billion, or US$2.43 per share, a year earlier.
Deutsche Bank’s current Chief Executive Christian Sewing and Chairman Paul Achleitner would continue to lead the bank if it merges with Commerzbank, a German magazine reported on Friday. Der Spiegel, citing no sources, reported that Commerzbank’s CEO Martin Zielke would serve as deputy CEO of the combined group in charge of private and corporate banking.
Bayer said on Friday it would comply with a U.S. federal judge’s order to enter mediation with a plaintiff who claims the company failed to warn against an alleged cancer risk from its Roundup weedkiller. Bayer has seen billions wiped off its market value since August, when a first U.S. jury found Bayer liable because Monsanto, acquired by Bayer for US$63-billion last year, had not warned of the alleged risk from Roundup, which is based on active ingredient glyphosate. U.S. District Judge Vince Chhabria, who presided over the first two cases in federal court, said in a filing dated Thursday that Bayer and another plaintiff, Elaine Stevick, were ordered to start confidential mediation, according to Reuters. “The parties should propose a mediator in their case management statement; if they cannot agree, the Court will appoint someone,” the judge ordered, cancelling a previously scheduled May 20 trial date.
Tesla Inc on Friday said it has started taking orders in China for a lower-priced version of its Model 3 car, as it seeks to expand its lineup and boost sales in the world’s biggest EV market. Tesla said in a statement that Chinese customers can now order a standard range Model 3 variant whose starting price of 377,000 yuan ($56,167) will make it the cheapest version of the car in China.
Boeing Co’s chief executive said on Thursday that a software update designed to prevent disasters like two recent fatal crashes involving its 737 Max is working, with about two-thirds of the fast-selling jetliner’s customers having seen the fix in simulator sessions. In his first public speech since an Ethiopian Airlines 737 Max crash that killed all 157 aboard on March 10, Boeing CEO Dennis Muilenburg said additional tests are expected in the coming weeks as the plane maker works to regain the confidence of its customers and the flying public.
More reading:
Friday’s small-cap stocks to watch
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Economic news
The U.S. Labor Department said import prices rose 0.6 per cent last month, boosted by increases in the costs of fuels and industrial supplies. Data for February was revised higher to show import prices rising 1.0 per cent, the largest monthly advance since May 2016.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for April (preliminary). Consensus is 98.0, down from 98.4 in March.
With Reuters and The Canadian Press