Before the Bell: What every Canadian investor needs to know today – The Globe and Mail

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Equities

Wall Street futures were modestly positive early Friday morning as investors look to continue November’s rally. Major European markets were up. TSX futures were higher as big bank earnings continue to roll in.


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In the early premarket period, Dow, S&P and Nasdaq futures were all up. Both the Dow and S&P 500 closed up on Thursday, with the Dow managing its best level of the year. Both are higher for the week heading into Friday’s session. The Nasdaq closed down 0.23 per cent and is modestly lower for the week so far. Canada’s S&P/TSX Composite Index finished yesterday up 0.6 per cent. The index is up 0.67 per cent for the week so far.

“With tech stocks highly responsive to the 10-year yield, yesterday’s Nasdaq underperformance looks likely to reverse as long as yields can maintain the declines seen in early trade today,” Joshua Mahony, chief market analyst with Scope Markets, said.

On Friday, Canadian investors get results from Bank of Montreal and National Bank, capping a week of results from the country’s biggest lenders.

The Globe’s Stefanie Marotta reports that Canadian banks are slashing jobs to curb mounting expenses and taking higher loan loss provisions as they grapple with the threat of an economic slowdown. Royal Bank and CIBC reported higher profit on Thursday, topping analyst forecasts while TD Bank saw profit slip, falling short of expectations. Each bank outlined plans to restructure their operations – measures that include work-force reductions and trimming their real estate footprints – as they look to rein in rising costs ahead of a potential economic slowdown.

On the economic side, Statistics Canada reports November jobs numbers ahead of the start of trading.

“November’s job growth looks to downshift to 20,000, not enough to keep up with labour force growth, pushing the unemployment rate another tick higher to 5.8 per cent,” Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said in a recent note.

“That would put the jobless rate up 0.8 percentage points since April; that extent of deterioration is generally reserved for recessions. All told, past rate hikes are biting, it’s just a question of how weak things get.”

The report follows the latest GDP data, released on Thursday, which showed the Canadian economy contracted at an annual rate of 1.1 per cent in the third quarter. Economists had been forecasting flat to modestly positive growth. However, the economy avoided meeting the definition of a technical recession because growth in the second quarter, originally reported as negative, was revised higher.

The Bank of Canada makes its next interest rate decision on Dec. 6 and is expected to hold rates steady.

In the U.S., Federal Reserve chair Jerome Powell is scheduled to speak later in the day.

Overseas, the pan-European STOXX 600 was up 0.65 per cent. Britain’s FTSE 100 gained 0.77 per cent. Germany’s DAX and France’s CAC 40 added 0.83 per cent and 0.59 per cent, respectively.

In Asia, Japan’s Nikkei slid 0.17 per cent. Hong Kong’s Hang Seng lost 1.25 per cent.

Commodities

Crude prices were weaker, but off overnight lows, as markets continue to weigh a decision by OPEC+ members to extend production curbs.

The day range on Brent was US$80.13 to US$81.15 in the early premarket period. The range on West Texas Intermediate was US$75.36 to US$76.34.

On Thursday, Saudi Arabia, Russia and other members of OPEC+ agreed to voluntary output reduction of 900,000 barrels per day in addition to extending 1.3 million barrels per day in production cuts already in place, Reuters reported. Delegates had earlier discussed as much as 2 million bpd in new output curbs, the news agency said.

“The announcement of the new agreement was immediately overshadowed by Angola breaking ranks and saying it would continue to pump as before, and seeding doubt as to whether other OPEC members would do the same,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

He said positive sentiment from the OPEC+ deal was also tempered by word that the U.S. reported record output of its own of 13.2 million barrels a day and the [International Energy Agency] saying it expected to see the oil market return to surplus next year.

In other commodities, spot gold rose 0.2 per cent to US$2,039.00 per ounce by early Friday morning, up about 2 per cent for the week so far. Gold rose US$60 in November in its second straight monthly gain, according to figures from Reuters.

U.S. gold futures for February delivery rose 0.1 per cent to $2,059.00.

Currencies

The Canadian dollar was higher, trading just below 74 US cents in the early premarket period, while its U.S. counterpart slid against a group of currencies after seeing its weakest month in a year in November.

The day range on the loonie was 73.65 US cents to 73.98 US cents in the early premarket period. The Canadian dollar was up 0.83 per cent against the greenback over the last five days.

On world markets, the U.S. dollar index, which weighs that currency against a basket of world counterparts, was down 0.18 per cent at 103.31 by early Friday morning. The index put in its weakest monthly performance in a year in November as markets start to weigh the prospect of interest rate cuts in the new year.

The euro was up 0.1 per cent at US$1.08990 in early trading, while Britain’s pound advanced 0.3 per cent at US$1.26665.

In bonds, the yield on the U.S. 10-year note was lower at 4.315 per cent ahead of the North American opening bell.

Economic news

(8:30 a.m. ET) Canadian employment for November.

(9:30 a.m. ET) Canada’s S&P Global Manufacturing PMI for November

(10 a.m. ET) U.S. ISM Manufacturing PMI for November

(10 a.m. ET) U.S. construction spending for October

(11 a.m. ET) U.S. Fed chair Jerome Powell joins a fireside chat at Spelman College.

(2 p.m. ET) Mr. Powell and Fed governor Lisa Cook participate in a roundtable discussion on tech innovation and entrepreneurship.

With Reuters and The Canadian Press

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