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U.S. stock futures lost steam as the North American open neared even as world stocks looked set to put in their best showing in six years. On Bay Street, futures were positive, with oil prices trading up and solid Air Canada and Enbridge both beating analysts' forecasts with their latest results.
Overnight, the MSCI world index of stocks, which tracks indexes in 47 countries, advanced, rising 0.4 per cent following the European open. That index is now looks set for its best weekly showing since late 2011. That's a stark contrast to the previous week when volatility ruled global markets, leading the MSCI index to its worst weekly showing since mid 2015.

Initially, Wall Street looked set to follow suit, but futures took a turn ahead of the open and now suggest a flat to lower start to the day. Still, the Dow Jones Industrial Average looks set for its best week since late 2016, with a 4.2-per-cent rise. The Nasdaq, meanwhile, has notched a 5.6-per-cent gain since Monday, putting it on track for its best weekly showing since late 2011.

"With stocks higher despite a number of elevated inflation data releases throughout the week, there is reason to believe that we are seeing a greater degree of resilience build in global markets," IG's Josh Mahoney said in a morning note.

On Bay Street, Air Canada shares will be in focus after the carrier reported its fourth-quarter results. The Montreal-based carrier posted a net profit of $8-million or 2 cents a share in the latest quarter. That compares with a loss in the year-earlier period of $179-million or 66 cents a share. Operating revenue rose to $3.82-billion. On an adjusted basis, Air Canada posted earnings per share of 22 cents in the quarter, topping analysts' forecasts which called for earnings of 14 cents.

Meanwhile, Enbridge posted earnings of $207-million or 13 cents a share in the fourth quarter, down from $365-million or 39 cents a year earlier. On an adjusted basis, however, Enbridge reported earnings of 61 cents for the quarter, topping analysts' forecasts of 56 cents. Enbridge's U.S. listed shares were up more than 4 per cent in premarket trading.

Outside the corporate world, Statistics Canada said factory sales fell by 0.3 per cent to $55.5-billion in December. Economists had been expecting an increase of about 0.3 per cent. December's fall comes after a revised 3.8-per-cent increase in November. The government agency said the December decline was largely the result of lower sales in the petroleum and coal products industry and the food manufacturing sector. Overall, sales were down in 11 of 21 industries.

Meanwhile, Wall Street gets results from Coca-Cola, Kraft Heinz and Deere.

Overseas, European markets rose on strong earnings. Britain's FTSE 100 was up 0.68 per cent at last check. France's CAC 40 rose 0.69 per cent and Germany's DAX advanced 0.54 per cent. The pan-European STOXX 600 was up 0.75 per cent with all key sectors and indexes in the black. Sweden's Saab was among the weaker players on Friday with the defence firm's shares falling more than 8 per cent on disappointing earnings.

In Asia, Japan's Nikkei added 1.19 per cent for the day, pushing the weekly gain to 1.58 per cent. Utilities were among the Nikkei's biggest gainers.

Investors also found some relief in news that the government appointed Bank of Japan Governor Haruhiko Kuroda for another term, suggesting that the central bank's massive stimulus program would remain in place for the immediate future. Markets in China were closed for Lunar New Year.


Commodities

Oil prices were higher early on, drawing support from a weaker U.S. dollar. Brent crude was trading in a day range of US$64.44 to US$64.95 so far. West Texas Intermediate had a range for the day of US$61.32 to US$61.89.

“Oil is getting support from a rebound in global stock markets and a weak dollar, but the upside is limited due to a projection for rising U.S. production,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo told Reuters

“The market is quiet due to a slew of holidays in Asia.”

U.S. dollar denominated commodities frequently get a lift from a weaker dollar on international markets.

Crude prices also got support from a report Thursday that oil producers led by Saudi Arabia and Russia are looking to draft an agreement on a long-term alliance by year's end. OPEC and non-OPEC producers now have an agreement in place to cap production by 1.8 million barrels a day. That pact runs through to the end of 2018.

On Friday afternoon, the markets will also get weekly U.S. rig count figures from energy services firm Baker Hughes, offering glimpse of U.S. production.

In other commodities, gold prices rose to a three-week high on a weaker greenback. Investors were also turning to the precious metal after figures this week suggested rising inflationary pressures in the United States as markets look to hedge against price pressures.

Spot gold and gold futures for April delivery were both higher. Gold now looked set for its best weekly gain in almost two years, ending a two-week run of declines.

Silver prices were also higher.


Currencies and bonds

The Canadian dollar slipped after Statistics Canada said Friday that manufacturing sales fell by 0.3 per cent in December after a big jump the month before. Economists had been expecting an increase of about 0.3 per cent. The loonie, which had been on a downward trajectory through the early part of the morning, added to the losses after the release of the report. The day range on the Canadian dollar now stands at 79.82 US cents to 80.31 US cents. The loonie was near the low end of that spread at last check.

"Results were mixed across subsectors," CIBC World Markets chief economist Avery Shenfled said in a note. "Overall, nothing to change our view that Q4 GDP will be below 2 per cent, or more than a half point shy of the Bank of Canada forecast."

In world currencies, the U.S. dollar slid to its lowest level in more than three years against a group of world currencies in early trading. The U.S. dollar index fell to 88.253, the lowest since December 2014 before rallying slightly in the predawn hours. The index is on track to lose around 2 per cent for the week, its biggest weekly decline since early 2016. The dollar's decline came even as U.S. Treasury yields continue to rise.

Chris Turner, head of currency strategy at ING in London, told Reuters that the breakdown of the traditional relationship between U.S. Treasuries and the dollar could be explained by the fact that yields are rising on the back of concerns over the budget deficit and not inflation.

“This year’s rise in Treasury yields has been driven more by the term premium - that’s a risk premium investors require for holding long-term debt,” Turner said. “International investors are requiring a concession in the dollar to hold U.S. assets because of the fiscal risk.”

At last check, the yield on the U.S. 10-year note was lower at 2.89 per cent. The yield on the 30-year note was lower at 3.142 per cent.

 


Stocks set to see action

Air Canada’s fourth-quarter revenue and adjusted earnings came in ahead of analyst estimates, as the Montreal-based airline posted record-high annual revenue for 2017. Its adjusted net income was $61-million, or 22 cents per share for the quarter — ahead of analyst estimates of 14 cents per share, according to Thomson Reuters data. The airline’s operating revenue was $3.82-billion in the fourth quarter, up from $3.43-billion a year earlier and above the estimate of $3.745-billion. Net income was $8-million or 2 cents per share for the three months ended Dec. 31, which was an improvement over a 2016 fourth-quarter loss of $179-million but lower than expected.

Coca-Cola Co. reported a 20-per-cent fall in quarterly revenue on Friday as it continues to sell off its bottling operations, and recorded a US$3.6-billion charge related to the new U.S. tax laws. The Fanta and Diet Coke maker reported a net loss of US$2.75-billion, or 65 US cents per share, in the fourth quarter ended Dec. 31, mainly due to the charge. A year earlier, the company had posted a profit of US$550-million, or 13 US cents per share. Net operating revenue fell to US$7.51-billion from US$9.41-billion a year earlier, mainly due to the refranchising of its bottling operations, but beat analysts’ estimate of US$7.36-billion, according to Thomson Reuters I/B/E/S.

Air France-KLM is studying with its U.S. partner Delta Air Lines ways of keeping Alitalia inside the Skyteam alliance - but without Air France-KLM being a buyer, Chief Executive Jean-Marc Janaillac said on Friday. However, the Franco-Dutch airline group is not directly involved in the sale process and has not had access to Alitalia data, he told a news conference.

Qualcomm Inc is open to discussing a buyout offer from Broadcom Ltd that “reflects the true value” of the chipmaker and better addresses concerns about regulatory hurdles to a deal, the company said on Friday. Qualcomm and Broadcom executives met for the first time on Feb. 14 to discuss the existing acquisition offer. Qualcomm’s board maintained its view that Broadcom’s existing $121 billion proposal materially undervalues the company and has an unacceptably high level of risk, and is not in the best interests of its stockholders.

U.S. farm equipment maker Deere & Co on Friday reported a 23-per-cent jump in first-quarter revenues as its key markets improved, but recorded a net loss after a charge related to U.S. tax reform legislation. Revenue rose to US$6.91-billion in the quarter ending Jan. 28 from US$5.63-billion last year. Total equipment sales rose 27 per cent to US$5.97-billion. Deere shares were up more than 1 per cent in premarket trading.

Food group Danone said on Friday it would accelerate sales growth this year and deliver a further rise in profits as it seeks to respond to pressure from investors. Danone, the world’s largest yoghurt maker, reported overall 2017 earnings that slightly beat expectations, with solid demand for baby food and waters in China more than offsetting weak dairy sales. Shares in the company rose around 1 per cent, outperforming France’s main share index.

Swedish defence firm Saab posted fourth-quarter operating earnings below analysts forecasts on Friday and proposed a smaller dividend hike than expected. Quarterly operating earnings at the maker of the Gripen fighter jet fell to 882 million Swedish crowns from 960 million in the year-ago quarter, lagging the the 1.1 billion crowns seen in a Reuters poll of analysts. The company said profitability had been hit by a change in product mix within business area Dynamics, which makes products such as combat weapons, missile systems, torpedoes and unmanned underwater vehicles.

Walmart Inc. is in talks to purchase a stake of more than 40 per cent in Indian e-commerce firm Flipkart, a direct challenge to Amazon.com Inc in Asia’s third-largest economy, two sources familiar with the matter told Reuters on Friday. In what would be one of its biggest overseas deals, the U.S. retailer is looking at buying new and existing shares in Flipkart and due diligence is likely to begin as early as next week, the sources said. They declined to be named as the talks were private. Terms under discussion were not immediately available, but Flipkart would be valued at more than the $12-billion figure given when Japan’s SoftBank Group Corp’s Vision Fund took roughly a fifth of the firm last year for $2.5-billion, they added.

More reading: Friday's small-cap stocks to watch
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Economic News

Statscan said factory sales fell by 0.3 per cent to $55.5-billion in December. Economists had been expecting a rise of about 0.3 per cent. December's fall comes after a revised 3.8-per-cent increase the month before. The government agency said the December decline was largely the result of lower sales in the petroleum and coal products industry and the food manufacturing sector. Overall, sales were down in 11 of 21 industries.

Statscan also said Canadian investors acquired a record $22-billion of foreign securities in December, mainly foreign shares. Meanwhile, foreign investors reduced their holdings of Canadian securities by $2-billion, led by a divestment in Canadian bonds, the agency said.

U.S. import prices rose more than expected in January as the cost of imported petroleum and a range of other goods increased, which could boost inflation in the coming months. The Labor Department said on Friday that import prices jumped 1.0 per cent last month after an upwardly revised 0.2-per-cent rise in December. Economists polled by Reuters had forecast import prices increasing 0.6 percent in January after a previously reported 0.1-per-cent gain in December.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for February. Consensus is 95.5, down from 95.7 in January.


With files from Reuters and The Canadian Press