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

Equities

Canada’s main stock index was largely treading water at Thursday’s opening bell as markets digest the Bank of Canada’s surprise rate hike. On Wall Street, the S&P 500 and Nasdaq saw slight early gains after new jobless claims figures countered some rate worries.

At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 1.17 points, or 0.01 per cent, at 19,984.86.

In the U.S., the Dow Jones Industrial Average fell 8.04 points, or 0.02 per cent, at the open to 33,656.98. The S&P 500 opened higher by 1.17 points, or 0.03 per cent, at 4,268.69, while the Nasdaq Composite gained 8.37 points, or 0.06 per cent, to 13,113.27 at the opening bell.

OANDA senior analyst Ed Moya said the Bank of Canada’s surprise move to hike interest rates by a quarter percentage point on Wednesday sparked uncertainty in the markets, coming a week before the Fed’s next policy announcement.

“Canada’s central bank is viewed as one of the leaders when it comes to being proactive with monetary policy,” Mr. Moya said.

“They were the first to raise rates in 2022 and then put them on hold earlier this year. The BoC is signaling that more rate hikes could come and that has everyone rethinking that the Fed will be done after the July hike.”

There was no press conference after yesterday’s BoC decision, so traders will be paying particularly close attention to remarks this afternoon from deputy governor Paul Beaudry. Mr. Beaudry will speak before the Greater Victoria Chamber of Commerce at 3:25 p.m. ET.

“Following yesterday’s BoC rate hike and statement, our economists have added another as the BoC’s default position and suggest the onus is on incoming data over the next five weeks precluding a hike at the July meeting.” RBC chief currency strategist Adam Cole said.

“BoC’s Deputy Governor Beaudry has an opportunity to flesh out yesterday’s short statement as he gives an economic progress report late today.”

South of the border, weekly jobless claims came in higher than expected.

Initial claims for state unemployment benefits rose 28,000 to a seasonally adjusted 261,000 for the week ended June 3, the Labor Department said on Thursday morning. Economists polled by Reuters had forecast 235,000 claims for the latest week.

On the corporate side, Canadian investors got results from travel company Transat AT and retailer Roots this morning.

The Globe’s Eric Atkins reports that Transat pared its loss in the latest quarter, helped by strong demand and higher ticket prices Transat AT Inc. lost $29-million, or 76 cents a share, in the three months ending on April 30, compared with a loss of $98-million ($2.60) in the same period of 2022, the Montreal-based airline and tour operator said on Thursday morning.

Overseas, the pan-European STOXX 600 was up 0.07 per cent by midday. Britain’s FTSE 100 slid 0.07 per cent. Germany’s DAX and France’s CAC 40 edged up 0.23 per cent and 0.38 per cent, respectively. Reuters reports this morning that the euro zone economy was in technical recession in the first three months of 2023, after downward revisions of growth in both the first quarter and the final quarter of 2022.

In Asia, Japan’s Nikkei ended down 0.85 per cent. Hong Kong’s Hang Seng advanced 0.25 per cent.

Commodities

Crude prices turned higher even as economic concerns temper sentiment ahead of next week’s Fed rate decision.

The day range on Brent was US$76.61 to US$77.29 in the early premarket period. The range on West Texas Intermediate was US$72.23 to US$72.88.

Markets had been increasingly expecting the Fed to skip a rate hike at next week’s meeting, but uncertainty has surfaced in the wake of the Bank of Canada’s rate increase this week.

“A higher interest rate environment is typically bad news for commodities, given it tends to slow growth, so oil prices fell after the Bank of Canada rate hike triggered a bout of knock-on hawkish risks along the sovereign yield curve, at least for those countries that central banks can and are willing to hike rates,” Stephen Innes, managing partner with SPI Asset Management, said in a note.

A bigger-than-forecast rise in U.S. weekly gasoline inventories in the U.S. Energy Information Agency’s latest report also weighed on sentiment, raising concern about demand. Crude stockpiles, meanwhile, saw a decline of 451,000 barrels last week.

Gold prices, meanwhile, edged higher, drawing support from a softer U.S. dollar.

Spot gold was up 0.3 per cent to US$1,945.49 per ounce by early Thursday morning, after falling 1 per cent in the previous session. U.S. gold futures held steady at US$1,959.90.

Currencies

The Canadian dollar edged up, trading near 75 US cents in the early premarket period, while its U.S. counterpart pulled back but remained not far from three-week highs seen recently.

The day range on the loonie was 74.75 US cents to 75 US cents in the early premarket period. On Wednesday, the Canadian dollar hit a four week high in the wake of the Bank of Canada’s rate decision.

On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was down slight at 104, but held near last week’s high of 104.7, the best level since mid-March.

The Australian dollar was up 0.43 per cent at $0.668, taking its monthly gains to roughly 2.7 per cent, Reuters reported. Britain’s pound was 0.1-per-cent higher at US$1.245.

In bonds, the yield on the U.S. 10-year note was up at 3.797 per cent in the predawn period.

More company news

Roots Corp. reported a first-quarter loss of $8-million compared with a loss of $5.3-million a year earlier, as its sales edged down on lower demand for its popular sweatpants. Roots chief executive Meghan Roach says the results aligned with the company’s internal projections and reflected a challenging economic environment. The retailer says the loss amounted to 19 cents per diluted share for the quarter ended April 30 compared with a loss of 13 cents per diluted share in the same quarter last year. Sales in the quarter totalled $41.5-million, down from $43.1-million a year ago. -The Canadian Press

GameStop sank nearly 19 per cent in early trading Thursday and was set for its worst session in two years after the surprise exit of a CEO handpicked to lead its online expansion fanned concerns about the videogame retailer’s ailing business. Chewy founder Ryan Cohen - popular among “meme stock” traders - stepped up to the executive chairman role on Wednesday, but the company did not name a CEO to succeed former Amazon.com executive Matt Furlong. -Reuters

Economic news

(8:30 a.m. ET) U.S. initial jobless claims for week of June 3.

(10 a.m. ET) U.S. wholesale inventories for April.

(3:10 p.m. ET) Bank of Canada deputy governor Paul Beaudry presents the Economic Progress Report at the Greater Victoria Chamber of Commerce.

With Reuters and The Canadian Press

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2023-06-08 09:26:11Z
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