Equities
U.S. stock futures failed to break into positive territory Friday even a new report showed slightly better-than-forecast job creation and wage gains put in their best showing in nine years. After the release of the report, Wall Street futures remained under water, with global trade fears continuing to weigh and worries over higher interest rates again surfacing. On Bay Street, TSX futures were also negative with a disappointing reading on hiring last month deflating much of the Canadian dollar's early gains. World stocks, meanwhile, looked set for their worst week since March with trade tensions still weighing heavily.
Overnight, Asian shares struggled with losses in U.S. chip stocks and suggestions that a U.S.-Japan trade dispute could be in the offing sideswiping sentiment. European markets gave back early gains with the pan-European STOXX 600 heading to a weekly loss of 2.3 per cent, its worst weekly showing since March.
"Despite the headlines, we will stick with our call for one more [Canadian interest rate] hike this year (in October), assuming a NAFTA deal is reached," CIBC World Markets chief economist Avery Shenfeld said following the release of the Canadian employment figures. "The Canadian dollar will be softer on this news, and short term bond yields a bit lower."
Meanwhile, even as U.S. trade concerns continue with Canada and China, a report in the Wall Street Journal late Thursday suggested U.S. President Donald Trump may already be taking aim at Japan, telling a reporter is reading to make Japan "pay."
On the jobs front, the Canadian economy lost a total of 51,600 jobs last month as part-time hiring fell by 92,000 positions. The jobless rate rose to 6 per cent. In the United States, non-farm payrolls rose by 201,000 positions. Economists had been expecting a gain of about 193,000 jobs. Average hourly earnings in the United States rose by 0.4 per cent last month, pshing the annual increase to 2.9 per cent, the best level since mid-2009.
In corporate news, shares of cannabis producer HEXO Corp. could see some attention after a U.S. investor urged the company to sell itself or merge with another player if it can't achieve a better share price. (Until last week, HEXO was Hydropothecary Corp.) HEXO shares finished Thursday up 20 per cent after a small New York investment firm Riposte Capital published a letter sent to the company's board showing concern over the company's share price.
On Wall Street, Campbell Soup Co. shares were up nearly 2 per cent hedge fund Third Point said it had nominated a slate of directors to replace the company's entire board. Third Point cited the outcome of Campbell Soup's recent strategic review as evidence that the current board is unable to address the company's issues.
Shares of social media stocks also lost ground for the third day in a row on worries over increased regulation in the United States. Facebook dropped 0.76 percent, Snapchat-parent Snap Inc fell 0.10 per cent and Twitter declined 0.68 per cent.
Overseas, European markets turned negative in morning trading as trade fears continue to affect sentiment. Britain's FTSE 100 was down 0.55 per cent. Germany's DAX lost 0.32 per cent and France's CAC 40 slid 0.11 per cent.
In Asia, the Nikkei ended down 0.8 per cent, hit by Mr. Trump's comments on trade with Japan. Hong Kong's Hang Seng saw slight afternoon gains fade to finish off 0.01 per cent. The Shanghai Composite Index managed to end up 0.40 per cent.
Commodities
Oil prices were little changed ahead of the North American open with a decline in U.S. crude inventories offset by a rise in refined petroleum products. Brent crude hovered around break even at last check with a day range of US$76.21 to US$76.83. West Texas Intermediate was also mostly flat and had a range of US$67.63 to US$68.08.
"According to the Energy Information Administration’s report yesterday, U.S commercial crude oil inventories fell by 4.3M barrels to 401.49M barrels in the week to Aug. 31, the lowest since February 2015," OANDA analyst Dean Popplewell said.
"Despite that, crude prices have been limited by a rise in refined product stocks and a relatively weak U.S driving season. Also not helping is the ongoing EM [emerging market] weakness. Investors can expect potential new U.S import tariffs on Chinese goods to continue to weigh on oil market sentiment."
According to Thursday's EIA report, gasoline stocks rose by 1.8 million barrels, while distillate stockpiles, which include diesel and heating oil, climbed by 3.1 million barrels, the EIA said.
In other commodities, gold prices were steadied as the U.S. dollar slipped against a basket of world currencies and lost ground against the yen. Spot gold edged up 0.1 per cent to US$1,201.04 as of 1020 GMT, after it hit a near one-week high on Thursday at US$1,206.98, and was headed for a third straight session of gains. U.S. gold futures rose 0.2 per cent to US$1,206.70 an ounce.
“The stronger yen versus the dollar is leading to some buying in gold ... The recent low of around $1,160 in August is really the bottom in gold for now,” Yuichi Ikemizu, Tokyo branch manager, ICBC Standard Bank, told Reuters.
Spot silver prices were also higher while platinum prices were lower. London copper prices were down 1 per cent as the market faced a second week of losses on trade concerns.
Currencies and bonds
The Canadian dollar lost some of its early gains after a reading on August hiring failed to live up to expectations. The loonie slipped below 76 US cents following the Statscan report, which showed a net loss for the month of 51,600 positions. However, the dollar was also off lows seen in the wake of the report as details showed losses were entirely part-time positions, with full-time hiring rising. The day range on the loonie so far is 75.88 US cents to 76.27 US cents.
Earlier in the morning, the Canadian dollar had been trading comfortably above 76 US cents, bolstered by comments in a Thursday speech by Bank of Canada senior deputy Governor Carolyn Wilkins.
Speaking in Saskatchewan, Ms. Wilkins said the Canadian economy is on "solid footing" and can deal with higher borrowing costs, hinting that the central bank will continue on its path toward higher borrowing costs. (The bank left rates unchanged earlier this week but the market is widely expecting an increase in the October policy announcement.)
"BoC Deputy Governor Wilkins speech last night mostly mirrored the BoC statement, but [the Canadian dollar] latched onto comments that the Bank considered 'dropping the gradual approach' to rate hikes and accelerating the pace of hiking, but concluded this was not appropriate," RBC chief currency strategist Adam Cole said.
The loonie, he added, also get the latest reading on employment early Friday, although the numbers may be clouded by high volatility in recent months.
In other currencies, the U.S. dollar eased against the yen and moved within a fairly tight range against a basket of world currencies.
In bonds, the yield on the U.S. 10-year note pushed to its highest since early August following the employment report, hitting 2.926 per cent.
In Europe, Italy’s borrowing costs fell to one-month lows on Friday, setting the bond market up for its best week since June thanks to an easing of concerns about possible fiscal largesse from the new anti-establishment government, according to Reuters. Short-dated Italian bond yields have fallen some 60 basis points this week after reassuring comments from senior members of the government suggested that Rome will respect European Union rules on fiscal discipline.
Stocks set to see action
Canada’s Tahoe Resources Inc said on Friday that operations have restarted at its La Arena gold mine in Peru, ending an eight-day suspension, after protesters agreed to formal talks with the company. Tahoe said it now expects annual production from the mine to be near the low end of its forecast 160,000 to 185,000 ounces of gold, due to the suspension coupled with a labor strike in the second quarter.
Chinese conglomerate HNA plans to sell its 7.6-per-cent stake in German lender Deutsche Bank over the next 18 months, The Wall Street Journal (WSJ) reported on Friday. The stake is worth around US$1.8-billion at current market prices. The WSJ, citing people familiar with the matter, said HNA intended to unload the vast majority of overseas investments it has made in recent years.
Hydro One Ltd. says former CIBC executive Tom Woods has been named permanent chairman of its board of directors. Woods has been serving in the job on an interim basis since Aug. 14. The board of directors at the utility as well as its chief executive resigned earlier this year amid pressure from Ontario’s Progressive Conservative government.
Tesla Inc Chief Accounting Officer Dave Morton resigned on Tuesday, citing discomfort with the level of public attention in the company and pace of work just a month after he joined the electric car maker. “I want to be clear that I believe strongly in Tesla, its mission, and its future prospects, and I have no disagreements with Tesla’s leadership or its financial reporting,” the company quoted Morton as saying in a filing.
Johnson & Johnson said it would work with the Indian government to compensate patients who had suffered from hip implants that were recalled by the U.S. healthcare firm eight years ago after data showed high failure rates. This follows last week’s recommendation from a government panel that J&J pay at least 2 million rupees ($27,812) to each patient for the faulty ASR hip implant. The federal government has asked states to help patients get relief soon.
Canada’s Lundin Mining Corp said on Thursday it does not plan to revise its hostile bid for fellow base-metal miner Nevsun Resources Ltd after it was trumped by a $1.86-billion offer from China’s Zijin Mining Group Co Ltd.
British healthcare company BTG Plc has acquired U.S. medical device maker Novate Medical, adding to its portfolio a vascular device for managing blood clots.
More reading:
Friday's small-cap stocks to watch
Economic news
The Canadian economy lost 51,600 jobs last month, all part-time positions, Statistics Canada said. Economists had been expecting a rise in employment. The jobless rate rose 0.2 percentage points to 6 per cent. Statscan said part-time hiring fell by 92,000 positions, while full-time employment rose. (Story)
The U.S. economy added 201,000 new jobs last month, ahead of the 193,000 economists had been forecasting. (Story)
With Reuters and The Canadian Press
Terry Weber