What every Canadian investor needs to know today - The Globe and Mail

Equities

Canada’s main stock index edged higher at Tuesday’s opening bell, helped by gains in tech shares. On Wall Street, key indexes were also positive in morning trading ahead of tomorrow’s Federal Reserve interest rate decision.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 33.52 points, or 0.16 per cent, at 20,605.63.

The Dow Jones Industrial Average rose 86.47 points, or 0.26 per cent, at the open to 33,803.56.

The S&P 500 opened higher by 3.08 points, or 0.08 per cent, at 4,020.85, while the Nasdaq Composite gained 4.76 points, or 0.04 per cent, to 11,398.58 at the opening bell.

On Tuesday, U.S. markets got quarterly earnings from McDonald’s, General Motors, Caterpillar and Pfizer. Snap reports after the close.

GM shares jumped more than 9 per cent in early trading in New York after the auto maker posted adjusted earnings per share of US2.12 in the fourth quarter, topping analysts’ forecasts of US$1.69. Quarterly revenue came in at US$43.11-billion, also beating market expectations.

In Canada, Imperial Oil reported this morning while Canadian Pacific Railway posts results after the close of trading.

Calgary-based Imperial Oil reported higher fourth-quarter profit helped by higher prices and tighter supply. Imperial reported net income of $1.7-billion, or $2.86 per share, for the three months ended Dec. 31, up from $813-million or $1.18 per share, a year earlier.

On the economic side, Canadian investors got a reading on November gross domestic product from Statistics Canada before the start of trading. Statscan says the economy grew by 0.1 per cent in the quarter, in line with market forecasts. A preliminary estimate from the agency also suggests real gross domestic product grew by an annualized rate of 1.6 per cent in the fourth quarter, above the Bank of Canada’s forecast of 1.3 per cent.

“This report isn’t likely to cause the BoC to have any second thoughts regarding its recent pause,” TD senior economist James Orlando said. “The economy hasn’t yet absorbed the impact of past rate hikes. Though we are seeing the beginning of this, there is more to come, with GDP and employment growth set to stall in the coming months.”

Elsewhere, The Globe’s Niall McGee reports this morning that Lithium Americas Corp. has landed a US$650-million financing and supply agreement with General Motors that paves the way for the Canadian lithium development company to build the Thacker Pass lithium mine in Nevada. The equity financing is contingent on Vancouver-based Lithium Americas winning legal approval to build the mine.

Overseas, the pan-European STOXX 600 was down 0.68 per cent by midday. Britain’s FTSE 100 slid 0.73 per cent. Germany’s DAX and France’s CAC 40 were off 0.46 per cent and 0.37 per cent, respectively. New figures released Tuesday showed GDP in the euro zone expanded by 0.1 per cent in the fourth quarter. Markets had been expecting a contraction of 0.1 per cent.

In Asia, Japan’s Nikkei closed down 0.39 per cent. Hong Kong’s Hang Seng lost 1.03 per cent.

Commodities

Crude prices were weaker as markets remain cautious ahead of Wednesday’s Fed rate decision and traders weigh oil outflows from Russia.

The day range on Brent was US$85.73 to US$85.25 in the early premarket period. The range on West Texas Intermediate was US$76.63 to US$78.14.

“Oil prices remain soggy despite Asia’s unquenching thirst for all things oil,” Stephen Innes, managing partner with SPI Asset Management, said in a note.

“The problem for the oil bull is that thirst is getting satiated by discount Russian barrels.”

Reuters reports that Russia’s oil loadings from its Ust-Luga port are expected to rise at the beginning of February, despite western sanctions imposed over its invasion of Ukraine.

As well, traders remain wary of the midweek policy announcement from the Federal Reserve and a rate decision Thursday by the European Central Bank. Concerns remain that rising rates will temper economic growth and weigh on global demand.

However, the International Monetary Fund (IMF) has raised its 2023 global growth outlook slightly due to “surprisingly resilient” demand in the United States and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions, according to Reuters.

Gold prices hit a one-week low as the U.S. dollar firmed ahead of tomorrow’s Fed decision.

Spot gold was down 0.8 per cent at US$1,906.51 per ounce by early Tuesday morning, its lowest level since Jan. 19. Still, gold is up more than 4 per cent on the month and remains headed for its third consecutive monthly increase.

U.S. gold futures were down 0.9 per cent at $1,922.00.

“Gold’s main kryptonite is if the Fed can’t control inflation and they need to tighten much more than markets are expecting,” OANDA’s Ed Moya said.

“Gold could enter the ‘danger zone’ if we get a couple more hotter-than-expected inflation reports and a robust [U.S. non-farm payrolls] report that suggests wage pressures will be here for a while.”

Currencies

The Canadian dollar was down while its U.S. counterpart advanced against a group of currencies but still looked set for its fourth monthly decline in a row.

The day range on the loonie was 74.30 US cents to 74.76 US cents in the early hours. The loonie pared some early losses after the release of the latest GDP report.

“The CAD gains are hard to come by but are easily conceded still, it seems, even if movement is driven mainly by external factors,” Shaun Osborne, chief FX strategist with Scotiabank, said, noting risk aversion and a strong U.S. dollar are both weighing on the loonie this morning.

On world markets, the U.S. dollar index, which weighs the currency against a group of peers, was up 0.31 per cent at 102.56 early Tuesday morning.

However, the index was down nearly 1 per cent for the month. A January decline would mark the fourth straight down month.

Elsewhere, the euro slid in early trading in Europe and was last down 0.41 per cent at US$1.081, according to figures from Reuters.

Britain’s pound was down 0.29 per cent at US$1.231, but was on track for its fourth monthly increase. The yen gained 0.1% at 130.34 per U.S. dollar and was set for its third monthly gain.

In bonds, the yield on the U.S. 10-year note was lower at 3.531 per cent in the predawn period.

More company news

Caterpillar Inc on Tuesday reported a lower-than-expected quarterly profit as increasing manufacturing costs related to materials and freight pressured the heavy machinery maker’s margins. Adjusted profit for the quarter ended December rose to $3.86 share from $2.69 a year earlier. Analysts on average had expected a profit of $4.02 per share, according to Refinitiv IBES data. -Reuters

Exxon Mobil Corp posted $59-billion in adjusted profit for 2022, the company said on Tuesday, taking home more than $6.7-million per hour last year, and setting not only a company record but a historic high for the Western oil industry. Oil majors are expected to break their own annual records on high prices and soaring demand, pushing their combined take to near $200-billion. The scale has renewed criticism of the oil industry and sparked calls for more countries to levy windfall profit taxes on the companies. Exxon’s results far exceeded the then-record $45.2 billion net profit it reported in 2008, when oil hit $142 per barrel, 30% above last year’s average price. Deep cost cuts during the pandemic helped supercharge last year’s earnings. -Reuters

Volkswagen is looking at setting up a battery cell factory in Ontario, the Handelsblatt business daily reported on Tuesday, adding that the province had offered investments and other incentives. Five entries from this month are listed in a lobby register of the province for Volkswagen, including one that mentions Chief Executive Oliver Blume by name, the report said, citing the documents. -Reuters

Pfizer Inc. forecast 2023 sales of its COVID-19 products of $21.5-billion that fell short of Wall Street expectations, hit by lower demand in international markets and slower uptake of booster vaccines. The U.S. drugmaker said it expects sales of $13.5-billion from the vaccine for 2023, below Refinitiv estimates of $14.39-billion, and projected $8-billion in sales of its antiviral pill, Paxlovid, short of $10.33-billion the Street expects. -Reuters

McDonald’s Corp beat Wall Street estimates for quarterly comparable sales on Tuesday, boosted by higher menu prices, increased restaurant traffic and gains in most major markets. The burger chain’s global same-store sales increased 12.6% in the fourth quarter ended Dec. 31, compared with estimates for an 8.6% rise, according to IBES data from Refinitiv. Sales in the UK, Germany and France rose despite fears of a recession in Europe. -Reuters

Economic news

(8:30 a.m. ET) Canada’s monthly real GDP for November.

(8:30 a.m. ET) U.S. employment cost index for Q4.

(9 a.m. ET) S&P CoreLogic Case-Shiller Home Price Index (20 city) for November.

(9 a.m. ET) U.S. FHFA House Price Index.

(9:45 a.m. ET) U.S. Chicago PMI for January.

(10 a.m. ET) U.S. Conference Board Consumer Confidence for January.

Also: U.S. Fed meeting begins.

With Reuters and The Canadian Press

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2023-01-31 10:36:16Z
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