Stock markets in Canada and the U.S. look set to decline on Friday, with index futures all in negative territory an hour before the opening bell.
Bank stocks are likely to be in the spotlight after J.P. Morgan Chase & Co. reported late Thursday that a single trader racked up losses of $2-billion (U.S.) in a matter of weeks. Shares of the bank tumbled 7 per cent in premarket trading.
But investors' biggest concern today may remain the debt crisis in Europe and the slowdown of China’s expansion.
Overseas, all major markets were down as the European Commission forecast a “mild recession” and a decline in GDP for the euro zone of 0.3 per cent. At the same time, Chinese industrial output in April fell short of expectations.
China’s Hang Seng index declined 1.3 per cent, Japan’s Nikkei lost 0.6 per cent and major European bourses were all down a fraction of a per cent.
Economic malaise in Europe is biting into corporate profits, with several large companies disappointing the Street on Friday. The Spanish telecom giant Telefonica SA posted a 54 per cent decline in profit.
In Greece, politicians have wrangled unsuccessfully all week to try to form a coalition government and it increasingly looks like voters will have to go back to the polls, ensuring weeks of more uncertainty about the country’s future in the euro zone.
The Canadian dollar may see support today following Statistic Canada’s report that the economy added 58,200 jobs in April. Combined with the jump of 82,300 positions in March, Canada has just seen the biggest two-month increase in 30 years. Economists surveyed by Bloomberg had expected growth of only 10,000 jobs.
The sudden increase may spur the Bank of Canada to boost interest rates sooner than expected, which would attract more investors to the loonie.
In contrast, in the U.S. the latest economic data suggested price stability. The Labour Department reported that wholesale prices fell in April for the first time in four months, sliding 0.2 per cent. Cheaper raw material prices usually translate into lower prices for consumers.
The tech sector may get a boost today from remarks by Intel Corp. CEO Paul Otellini said he wasn’t seeing the slowdown in tech in Europe that Cisco Systems’ chief John Chambers alerted investors to earlier in the week.
The chip company Nvidia Corp. is only member of the S&P 500 reporting results today. In Canada, companies posting first quarter numbers include TMX Group Inc., Iamgold Corp. and Power Financial Corp.