Equities
U.S. stock futures turned lower early Friday as world markets steadied after North Korea said it was still willing to sit for talks with the United States “at any time.” The measured comments calmed nervous markets with MSCI’s gauge of world stocks trading unchanged after three days of losses. That index, however, still appeared set for its second straight week of losses. On Bay Street, futures were modestly positive - signalling a firmer start after three sessions of losses - even as oil prices continued to fall.
“Stock markets are in positive territory this morning as Kim Jong-Un, the North Korean leader, has stated he is willing to meet U.S. president Donald Trump,” David Madden, analyst with CMC Markets, said in an early note.
“The announcement from the North Korean premier has lightened the political mood, and this has buoyed investor sentiment.”
A statement Friday by North Korea’s vice foreign minister Kim Kye Gwan said that the country is “willing to give the U.S. time and opportunities” to reconsider talks that had been set for June 12 in Singapore. Mr. Trump announced on Thursday that the United States would be pulling out of the meeting, citing North Korea’s “tremendous anger and open hostility.”
On Bay Street, earnings are due Friday from flight simulator maker CAE.
Energy shares could also be back in the spotlight as oil prices continued to pull back amid speculation that OPEC would raise production after 17 months of supply caps. Reuters reported Friday that energy ministers of Saudi Arabia, Russia and the United Arab Emirates are discussing an output increase of 1 million barrels a day.
South of the border, Foot Locker shares wee up more than 14 per cent after the retailer handily topped analysts’ profit forecasts. The retailer reported profit in the latest quarter of US$165-million or $1.38 a share compared with US$180-million or $1.36 a year earlier. The most recent quarter included a US$12-million charge related to pension litigation. Excluding that charge, earnings per share in the latest quarter were US$1.45, well ahead of the US$1.25 analysts had been expecting. Foot Locker shares
Overseas, the pan-European STOXX 600 was up about half a percentage point in early trading with most sectors in positive territory. The index, however, looked like it was heading for its first weekly decline since March as uncertainty crept in after a coalition of populist parties took power in Italy. Britain’s FTSE was up 0.23 per cent. Germany’s DAX added 1.04 per cent and France’s CAC 40 gain 0.69 per cent.
In Asia, markets ended mostly weaker. Japan’s Nikkei bucked the trend, erasing early declines to finish the week’s final session up 0.06 per cent. Airline stocks moved higher, helped by decline oil prices. Hong Kong’s Hang Seng rose 0.56 per cent. The Shanghai Composite Index was off 0.40 per cent.
U.S. financial markets will be closed Monday for Memorial Day.
Commodities
Crude prices fell early on amid reports that OPEC is weighing the possibility of raising output for the first time since 2016. Both Brent and West Texas Intermediate were both approaching declines of 2 per cent ahead of the North American open. Brent crude was lower and had a day range so far US$76.84 to US$78.88. West Texas Intermediate had a range so far for the day of US$69.17 to US$70.80.
Reuters reported Friday that Russian Energy Minister Alexander Novak and Saudi Arabia’s Khalid al-Falih met in St. Petersburg to review the terms of the global oil supply pact that has been in place for 17 months. The ministers, along with their counterpart from the United Arab Emirates, discussed an output increase of about 1 million barrels per day, the news agency said.
OPEC and non-OPEC producers introduced production caps in 2017 to curb the market overhang. The Saudi minister said any increases would likely be gradual to avoid market shocks.
Later Friday, markets also get the weekly Baker Hughes report on U.S. rigs in production. Rising U.S. production has tempered price gains with U.S. output climbing by a quarter over the past two years. The U.S. now ranks behind Russia in terms of world producers.
In other commodities, gold prices steadied after Mr. Trump announced he wouldn’t meet with North Korean leader Kim Jong Un next month. Spot gold was flat at US$1,304.84 at last check. Bullion, however, was on track to end the week up 1 per cent, its best weekly showing since March. Gold futures for June delivery were also mostly unchanged.
“This is pretty typical for these kinds of geopolitical jitters. Very short-term sharp reaction, then a lack of follow through, given that this basically does not have any implication for the global economy or financial markets,” Julius Baer analyst Carsten Menke told Reuters.
Silver prices were up slightly.
Currencies and bonds
The Canadian dollar was lower early Friday as weaker oil prices and lingering trade concerns weigh. The day range on the loonie so far is 77.39 US cents to 77.66 US cents.
There were no major economic reports due Friday, leaving the loonie at the mercy of the broader currency markets.
The U.S. dollar index was higher at 93.799 just before 7 a.m. ET. The index has been rising in recent weeks on expectations that rate spreads between the United States and other major economies would widen. However, the greenback lost some momentum earlier this week after the minutes of the latest Federal Reserve meeting suggested a slightly more dovish approach on interest rates after an expected hike next month.
In bonds, the yield on the U.S. 10-year bond was lower at 2.94 per cent after a government report showed durable goods orders fell 1.7 per cent in April. The yield on the 30-year note was also lower at 3.097 per cent.
Stocks set to see action
Daimler faces a recall order for more than 600,000 diesel-engine vehicles including C-Class and G-Class models because of suspected emissions manipulation, German magazine Der Spiegel reported on Friday. Germany’s KBA vehicle authority is probing concrete suspicions that the affected cars were fitted with illicit defeat devices designed to manipulate emissions levels, the magazine said.
Amazon says a string of “unlikely” events resulted in a Portland, Oregon, family’s Amazon Echo recording a conversation and sending it to an acquaintance. In a statement Thursday, Amazon confirmed that the private conversation had been inadvertently recorded and sent. The company said the device interpreted a word in the background conversation as “Alexa” — a command that makes it wake up — and then it interpreted the conversation as a “send message” request. “At which point, Alexa said out loud ‘To whom?“’ the statement said. “At which point, the background conversation was interpreted as a name in the customers contact list.
Kinder Morgan’s Trans Mountain pipeline expansion has cleared a legal hurdle after the B.C. Supreme Court dismissed a pair of challenges that sought to overturn the project’s provincial environmental certificate, the Globe’s Justine Hunter reports.
After nearly five days of deliberations, a U.S. jury on Thursday said Samsung Electronics Co Ltd should pay US$539-million to Apple Inc for copying patented smartphone features, according to court documents, bringing a years-long feud between the technology companies into its final stages. The world’s top smartphone rivals have been in court over patents since 2011, when Apple filed a lawsuit alleging Samsung’s smartphones and tablets copied its products.
Gap Inc. shares were down 8 per cent in premarket trading after the retailer reported quarterly same-store sales below market forecasts. The company said sales at Gap-branded stores open at least a year fell 4 per cent. Analysts had expected a drop closer to 0.4 per cent. The company’s Old Navy unit reported a lower-than-expected increase in same-store sales of 3 per cent.
More reading:
Friday’s small-cap stocks to watch
Friday’s analyst upgrades and downgrades
Economic news
Overall orders for durable goods fell 1.7 per cent in April as demand for transportation equipment dropped 6.1 per cent following a 2.7-per-cent increase the month before. The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely-watched proxy for business spending plans, rose 1 per cent last month.
(9:20 a.m. ET) U.S. Fed Chair Jerome Powell participates in a panel discussion “Financial Stability and Central Bank Transparency” in Stockholm.
(10 a.m. ET) U.S. consumer sentiment for May are revealed. Consensus is a reading of 98.8, unchanged from the previous month.
With Reuters and The Canadian Press
Terry Weber