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Equities
Canada’s main stock index opened in the red Friday, with energy shares tracking crude prices lower. Wall Street also fell at the opening bell with concerns over spiking coronavirus infections and caution from the Federal Reserve in its latest bank stress tests tempering sentiment.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 44.32 points, or 0.29 per cent, at 15,401.82.
In the U.S., the Dow Jones Industrial Average fell 103.91 points, or 0.40 per cent, at the open to 25,641.69.
The S&P 500 opened lower by 10.56 points, or 0.34%, at 3,073.20. The Nasdaq Composite dropped 21.88 points, or 0.22 per cent, to 9,995.12 at the opening bell.
Wall Street’s losses accelerated after Texas Governor Greg Abbott on Friday ordered the closure of all bars that get 51 percent of their gross receipts from alcohol, except for take-out, and the curbing of other business activity due to surging cases of the novel coronavirus in the state.
“As I said from the start, if the positivity rate rose above 10%, the State of Texas would take further action to mitigate the spread of COVID-19,” Mr. Abbott said in a press release, explaining an executive order. “At this time, it is clear that the rise in cases is largely driven by certain types of activities, including Texans congregating in bars.”
Earlier in the week, Mr. Abbott said that state would pause reopenings as a result of the jump in infections and hospitalizations.
Figures from Johns Hopkins University showed that the United States saw a record number of new coronavirus cases in a single day on Thursday with the number hitting 37,077. That surpassed the previous record of 36,291 reported on April 24.
Meanwhile, the Fed said on Thursday that it will cap big U.S. bank dividend payments and bar share repurchase programs until at least the fourth quarter after finding that financial institutions faced significant capital losses when tested against an economic slump brought on by the COVID-19 pandemic.
“The Fed’s stress test found that several banks could get uncomfortably close to the minimum capital requirements in certain pandemic-connected scenarios,” David Madden, market analyst with CMC Markets U.K., said.
“The central bank said that loan losses at the 34 banks that were tested could wind up being a total of US$700-billion, in extraordinary circumstances. The Fed will allow U.S. banks to continue paying dividends but they will be capped at their current levels, but there is chatter that dividends will be cut.”
On the corporate side, Canadian biotech Fusion Pharmaceuticals is set to start trading on Friday on the Nasdaq after setting its initial public offering price at US$17 a share. That was up from a range of US$14 to US$16 set by the company and its underwriter earlier in the week.
South of the border, shares of sportswear giant Nike Inc. were down more than 5 per cent in morning trading after the company posted a surprise fourth-quarter loss, its first in more than two years, as efforts to curb the spread of the coronavirus shuttered retail outlets around the world.
Nike posted a net loss of US$790-million, or 51 US cents per share, compared with a profit of US$989-million, or 62 US cents per share, a year earlier. Revenue fell 38 per cent to US$6.31 billion in the quarter ended May 31.
Overseas, major European markets held gains into the afternoon. The pan-European STOXX 600 rose 1.08 per cent. Britain’s FTSE 100 gained 1.50 per cent. Germany’s DAX and France’s CAC 40 rose 0.86 per cent and 1.5 per cent, respectively.
In Asia, Japan’s Nikkei closed up 1.13 per cent. Hong Kong’s Hang Seng ended down 0.93 per cent. Markets in China were closed for a public holiday.
Commodities
Crude prices slid into the red Friday morning as concerns over spiking numbers of coronavirus infections offset optimism over signs of firming demand.
The day range on Brent is US$41.04 to US$41.70. The range on West Texas Intermediate is US$38.63 to US$39.31. Both benchmarks were still on track for weekly losses of about 1.7 per cent after figures released earlier in the week showed record U.S. inventories.
“I sense the markets are struggling for a good reason to buy or sell this morning,” AxiCorp chief market strategist Stephen Innes said in an early note.
“So barring a flare-up in headline risk, we could see tight ranges in Asia today as traders go about pre-weekend positions squaring. It feels unlikely that oil traders are going to chase the headline rabbit around the track today.”
Reuters reported Friday that analysts are citing satellite data showing a strong pick-up in traffic in China, Europe and across the United States as pointing to an improvement in fuel demand.
Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year’s levels, data provided to Reuters by location technology company TomTom showed.
Elsewhere, gold prices edged higher as investors sought safer holdings amid the rise in U.S. coronavirus infections. Gold looked set for a third weekly gain.
Spot gold was up 0.1 per cent at US$1,762.79 per ounce. Gold has already risen more than 1 per cent this week after nearing its best level in eight years on Wednesday.
U.S. gold futures rose 0.1 per cent to US$1,772.90.
Currencies
The Canadian dollar drifted slightly lower in early going as world currency markets put in a relatively tame session.
The day range on the loonie is 73.19 US cents to 73.38 US cents.
There were no major Canadian economic releases on Friday’s calendar.
“Markets are exceptionally quiet, all of the majors being within a few points of yesterday’s close,” RBC chief currency Adam Cole said.
“There is very little in the way of scheduled news or events today, which will likely leave markets taking their cues from equities once again.”
On global markets, the U.S. dollar steadied but was still heading for its biggest weekly decline in three weeks amid caution over rising coronavirus infections.
The U.S. dollar index, which weighs the greenback against a basket of currencies, was little changed early Friday at 97.33.
The euro edged up 0.1 per cent higher versus the U.S. dollar and was set for its biggest rise in three weeks.
The New Zealand dollar led currency gainers as encouraging recent data prompted investors to add risk positions despite the surge in infection rates, according to Reuters.
More company news
Corus Entertainment Inc. lost $752.3-million in its latest quarter as it took a one-time impairment charge related its to broadcast licenses and goodwill. The media company, which includes Global Television, says the loss amounted to $3.61 per diluted share for the quarter ended May 31 compared with a profit of $66.4-million or 31 cents per share in the same quarter a year earlier. Revenue totalled nearly $349-million in what was the company’s third quarter, down from $458.4-million a year earlier.
U.S. private equity group Bain Capital said on Friday it has agreed with the administrator of Virgin Australia Holdings Ltd to buy Australia’s second-biggest airline for an undisclosed sum. Bain’s bid was chosen over a rival offer from Cyrus Capital Partners and a recapitalization proposal put forward by Virgin Australia bondholders, administrator Deloitte said.
Amazon has agreed to pay over US$1-billion to buy self-driving startup Zoox Inc, the Information reported. The report did not mention the exact purchase price and added Amazon is unlikely to disclose it when the deal is announced, likely to be on Friday.
H&M, the world’s second-biggest fashion retailer, suffered its first loss in decades in the second quarter and said it would accelerate store closures, although trade has revived as lockdowns ease. H&M, which in April flagged it expected a second quarter loss, said on Friday it had increased price cuts that squeezed margins, and warned of further markdowns.
Enbridge Inc has to halt Line 5 operations and disclose information related to the recent damage caused to a part of the oil pipeline, a Michigan circuit court judge ordered on Thursday. The company has been asked to keep the damaged east leg of the pipeline shut and close the currently operating west leg within 24 hours of receipt of the court’s order, Reuters reports. Both legs would remain closed pending the outcome of a hearing to be held next Tuesday, according to the order.
Economic news
The U.S. Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 8.2 per cent last month after falling 12.6 per cent in April. The April decline was the biggest since the U.S. government started tracking the data in 1959.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index for June.
With Reuters and The Canadian Press