Before the Bell: Wall Street futures waver on latest U.S. inflation data - The Globe and Mail

Equities

Wall Street futures wavered early Thursday after new U.S. inflation figures matched market forecasts. Major European markets were higher. TSX futures also saw gains.

In the early premarket period, futures linked to the key U.S. indexes held near break even and were bouncing around that level shortly after the release of the latest U.S. economic figures. A day earlier, the S&P and Nasdaq both added more than 1 per cent while the Dow closed Wednesday’s session up more than 200 points. The S&P/TSX Composite Index finished yesterday’s session 0.63-per-cent higher. Canada’s main stock index is now up more than 4 per cent from its December low.

U.S. government figures released Thursday morning showed the annual rate of inflation in the U.S. eased to 6.5 per cent in December, down from 7.1 per cent in November and in line with economists expectations.

On a monthly basis, U.S. consumer prices fell 0.1 per cent in December.

Markets have been eagerly anticipating the reporting, hoping for clarity on the Federal Reserve’s next interest rate move.

“By any metric, this number is much better than the previous reading and inflation is moving in the right direction, which should keep some pressure off the Fed,” AvaTrade chief market analyst Naeem Aslam said. “This is really important to keep in mind. Now what matters the most is the noise coming from the Fed members, as that will drive the price action.”

Thursday's analyst upgrades and downgrades

At this point, markets have priced in a 25 basis-point interest rate hike from the Federal Reserve at its February policy meeting rather than a 50-point increase.

Canada’s December inflation report is due next week.

On the corporate side, Vancouver-based retailer Aritzia posted record quarterly revenue in the most recent three-month period. The company posted net revenue of $624.6-million for the quarter ending Nov. 27 was an increase of 38 per cent from a year earlier. Net income rose nearly 9 per cent to $70.7-million or 61 cents in the period. The company also says it expects fourth-quarter revenue to rise by between 31 per cent 35 per cent. The results were released after Wednesday’s closing bell.

As well, Algonquin Power and Utilities Corp. was set to hold an investor call today to provide an update on efforts the company is taking to support its long-term energy transition strategy. In a release, Algonquin said it intends to refocus its portfolio by targeting about $1-billion in additional asset sales. Algonquin also said it will now pay a quarterly dividend of 10.85 cents per share, down from 18.08 cents per share.

“Over the Company’s history, we have built a solid foundation supported by the scale of our asset portfolio,” CEO Arun Banskota said in the release. “However, we have reached an inflection point and, as markets continue to evolve, we must address the challenges facing the business.”

Elsewhere, The Globe’s Steven Chase reports Arbitration under the USMCA has ruled in favour of Canada and Mexico in a dispute with the United States over regional content rules for automobiles – a ruling that comes as a relief to one of this country’s largest and most critical manufacturing sectors. The dispute panel’s decision gives companies more incentive to make auto parts for North American vehicles in Canada and Mexico by upholding regional content rules agreed to in the renegotiation of the NAFTA deal.

Overseas, the pan-European STOXX was up 0.69 per cent by midday. Britain’s FTSE 100 rose 0.76 per cent. Germany’s DAX and France’s CAC 40 added 0.73 per cent and 0.93 per cent, respectively.

In Asia, Japan’s Nikkei ended largely flat. Hong Kong’s Hang Seng added 0.36 per cent.

Commodities

Crude prices gained in early trading with China’s reopening continuing to underpin sentiment, despite some concern over a potential spike in cases during the Lunar New Year holiday.

The day range on Brent was US$82.37 to US$83.51 in the early premarket period. The range on West Texas Intermediate was US$77.10 to US$78.21. Both benchmarks added about 3 per cent on Wednesday on optimism over the health of the global economy.

“A softer landing for the U.S. [economy], and perhaps elsewhere, combined with a strong economic rebound in China following the current COVID wave could make for a much better year than feared and stimulate extra crude demand,” OANDA’s Craig Erlam said.

“Of course, this case very much focuses on the promising scenarios but they are also increasingly looking like the more plausible ones as well.”

China is in the process of reopening its economy after a lengthy period of strict COVID-19 controls. However, the World Health Organization has cautioned that the coming holiday period could drive an increase in cases.

The Lunar New Year holiday, which officially starts on Jan. 21, comes after China last month abandoned a strict anti-virus regime of mass lockdowns that prompted widespread frustration and boiled over into historic protests, Reuters reported on Thursday.

In other commodities, gold prices advanced, helped by a softer U.S. dollar.

Spot gold was up 0.4 per cent at US$1,884.61 per ounce by early Thursday morning, after hitting its highest since early May at US$1,886.59 on Wednesday.

U.S. gold futures gained 0.5 per cent to US$1,887.80.

Currencies

The Canadian dollar traded in a fairly narrow band while its U.S. counterpart while the U.S. dollar was steady ahead of the latest U.S. inflation figures.

The day range on the loonie was 74.35 US cents to 74.54 US cents in the predawn period.

There were no major Canadian economic releases due on Thursday.

On world markets, the U.S. dollar index was up 0.1 per cent to 103.25, not far off its seven-month low of 102.93 hit earlier in the week, according to figures from Reuters.

Britain’s pound slid 0.1 per cent to US$1.2140, while the euro was 0.1-per-cent lower at US$1.0747, after rising to a seven-month peak of $1.07765 in the previous session.

The Australian dollar slipped 0.2 per cent to US$0.6893, while the New Zealand dollar fell 0.3 per cent to US$0.6344.

In bonds, the yield on the U.S. 10-year note was lower at 3.546 per cent ahead of the North American open.

More company news

Organigram Holdings Inc. reported a profit in its latest quarter compared with a loss a year earlier as its revenue and margins improved. The cannabis company says it earned net income of $5.3-million for the quarter ended Nov. 30 compared with a loss of $1.3-million in the same quarter a year earlier. Net revenue for what was the first quarter of the company’s 2023 financial year totalled $43.3-million, up from $30.4-million a year earlier. -The Canadian Press

Interfor Corp. says it will reduce lumber production by at least eight per cent of capacity in the first quarter as market uncertainty affects demand. The Burnaby, B.C.-based forestry company says the move amounts to at least 100 million board feet. It says it expects to resume its normal production schedule starting in April but will monitor market conditions and adjust plans accordingly. -The Canadian Press

Electric carmaker Tesla Inc has delayed plans to expand its Shanghai factory, Bloomberg News reported on Thursday, citing people familiar with the matter. Tesla had planned to start work on expanding the plant as part of a strategy to more than double its production capacity in China to meet growing demand for its cars in the country and export markets, Reuters reported in February. -Reuters

Activist investor Trian Fund Management has nominated its billionaire co-founder, Nelson Peltz, to Walt Disney Co’s board, a regulatory filing showed on Thursday. Peltz has criticized the company for overspending on its acquisition of 21st Century Fox, muddling succession planning and said Disney needs to cut costs and turn a profit at its Disney+ streaming service. Over the past year, Disney has endured pressure from Third Point’s Daniel Loeb to refresh its board in the face of uncertainty around profitability of its eaming business and has also seen surprise return of veteran Bob Iger from retirement as chief executive.-Reuters

American Airlines Group Inc on Thursday forecast a higher fourth-quarter profit as the Texas-based carrier benefited from strong demand for travel during the key holiday season. The company expects to report fourth-quarter adjusted earnings per diluted share between $1.12 and $1.17, compared with its prior guidance of $0.50 to $0.70. -Reuters

Economic news

(8:30 a.m. ET) U.S. initial jobless claims for week of Jan. 7.

(8:30 a.m. ET) U.S. CPI for December.

(2 p.m. ET) U.S. budget balance for December.

With Reuters and The Canadian Press

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2023-01-12 10:32:23Z
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