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

Equities

Canada’s main stock index opened down Thursday with lower crude prices weighing on energy shares. On Wall Street, key indexes saw modest early gains with traders looking ahead to midday remarks from Federal Reserve chair Jerome Powell.

At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 23.09 points, or 0.12 per cent, at 19,427.61.

In the U.S., the Dow Jones Industrial Average rose 4.44 points, or 0.01 per cent, at the open to 33,669.52.

The S&P 500 opened higher by 6.76 points, or 0.16 per cent, at 4,321.36, while the Nasdaq Composite gained 40.50 points, or 0.30 per cent, to 13,354.80 at the opening bell.

On Thursday, markets will be closely watching remarks from Mr. Powell, who speaks at the Economic Club of New York around noon. The remarks come ahead of the Fed’s November rate announcement. Economists are expecting the Fed to hold steady and a recent Reuters poll of economists suggests many aren’t expecting the U.S. central bank to cut rates until late next year.

“While he [Powell] probably won’t commit the central bank to a hike at this meeting, he is likely to say that rates are already restrictive given recent moves higher in yields,” Michael Hewson, chief market analyst with CMC Markets U.K., said.

“There will certainly be a commitment to higher for longer.”

Stocks have been pressured this week by rising Treasury yields. On Wednesday, the yield on the U.S. 10-year note hit its highest since since July 2007 and was hovering just below 5 per cent shortly after the opening bell.

On the corporate side, shares of Netflix spiked more than 14 per cent in early trading after the streaming giant topped profit forecasts in the latest quarter. The company also added 9 million new subscribers. Analysts had been expecting a gain of about 6 million subscribers. Netflix also said it expects a similar number of additions in the current quarter.

Tesla shares, meanwhile, slid more than 7 per cent early Thursday morning after the company’s revenue, profit and gross margins fell short of Wall Street forecasts in the third quarter.

“Tesla missed both revenue and earnings expectations for Q3 after sales slowed, while the company earned less money by car it sold because it aggressively cut prices to gain market share,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.

“The company announced the first delivery date for its most-awaited Cybertruck, but Elon Must warned investors that Cybertruck won’t print cash for 12 to 18 months after production begins and that the company will remain focused on making affordable cars that people could afford in the environment of rising rates.”

In Canada, The Globe’s Susan Krashinsky Robertson reports grocery retailer Metro Inc. has accused competitor Loblaw Cos. Ltd. and its parent company of misleading law enforcement and the Canadian public, by claiming an “industry-wide” scheme existed to fix bread prices for more than a decade. While Metro has previously denied any knowledge of or involvement in such a scheme, this is the first time it has so explicitly accused George Weston and Loblaw of conspiring to falsely implicate other companies in price-fixing arrangements. Loblaw denied the accusation.

Overseas, the pan-European STOXX 600 fell 0.80 per cent by midday. Britain’s FTSE 100 lost 0.96 per cent. Germany’s DAX and France’s CAC 40 slid 0.23 per cent and 0.64 per cent, respectively.

In Asia, Japan’s Nikkei closed down 1.91 per cent. Hong Kong’s Hang Seng lost 2.46 per cent.

Commodities

Crude prices fell as supply concerns eased after OPEC showed no indication it would act on Iran’s call for an oil embargo on Israel and the U.S. moved ahead with plans to ease energy embargos on Venezuela.

The day range on Brent was US$89.60 to US$91.35 in the early premarket period. The range on West Texas Intermediate was US$86.76 to US$88.42. Both benchmarks were down more than 1 per cent in the early premarket period.

“Geopolitics continue to cast long shadows over the proceedings,” Stephen Innes, managing partner with SPI Asset Management, said.

“The recent increase in tensions in the Middle East is clearly the driving force behind the upward movement in oil and gold prices.”

Prices pulled back on easing supply disruption concerns. Reuters, citing unnamed sources, reported that the group had no plan to act on Iran’s call for an oil embargo on Israel. As well, the news agency also reported that the U.S. issued a six-month license authorizing transactions in Venezuela’s energy sector, an OPEC member, after a deal was reached between the Venezuelan government and the country’s political opposition to ensure fair 2024 elections.

In other commodities, gold held near its best level in more than two months as geopolitical concerns heighten the metal’s safe-haven appeal.

Spot gold was steady at US$1,948.99 per ounce by early Thursday morning after hitting its highest since Aug. 1 on Tuesday. U.S. gold futures eased 0.4 per cent to US$1,960.80.

Currencies

The Canadian dollar was down, hit by lower crude prices and weak risk sentiment in the broader markets, while its U.S. counterpart held steady against a group of world currencies.

The day range on the loonie was 72.78 US cents to 72.95 US cents in the predawn period.

“The CAD remains at the mercy of external developments to a large extent but risk aversion, wider spreads and weaker oil prices today generally justify its softer performance,” Shaun Osborne, chief FX strategist with Scotiabank, said.

On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, was steady at 106.5 early Thursday morning after rising 0.33 per cent on Wednesday.

Britain’s pound was down 0.2 per cent at US$1.2118 while the euro was steady at US$1.05374, according to figures from Reuters.

More company news

Mullen Group Ltd. reported a third-quarter profit of $39.1-million, up from $38.0-million in the same quarter last year as its revenue edged lower. The trucking firm says the profit amounted to 42 cents per diluted share for the quarter ended Sept. 30, up from 39 cents per diluted share a year earlier. Revenue totalled $504.0 million, down from $518.4 million in the same quarter last year. The Canadian Press

Nokia will cut up to 14,000 jobs to reduce costs, it said on Thursday, warning it did not expect a market recovery soon after posting a 20% drop in third-quarter sales on weaker demand for 5G equipment. A slowdown in the United States, home to Verizon and AT&T, and one of the more profitable markets for Nokia and Ericsson had forced them to look for growth in other regions such as India. But now India is also expected to normalize after a stellar 2022. -Reuters

American Airlines reported a quarterly loss on Thursday, as it was hobbled by the impact of rising jet fuel prices and expensive labor contracts. Rising costs as well as signs of softening domestic travel demand have raised worries about the industry’s profitability, sparking a sell-off in airline stocks and prompting analysts to slash their earnings estimates. The company’s net loss was $545-million, or 83 cent per share, for the third quarter ended Sept. 30, compared with a profit of $483-million, or 69 cents per share, a year earlier. The carrier’s total operating revenue marginally rose to $13.48-billion. -Reuters

Economic news

(8:30 a.m. ET) Canadian industrial product and raw materials price indexes for September.

(8:30 a.m. ET) U.S. initial jobless claims for week of Oct. 14.

(8:30 a.m. ET) U.S. Philadelphia Fed Index for October.

(10 a.m. ET) U.S. existing home sales for September.

(10 a.m. ET) U.S. leading indicator for September. Consensus is a decline of 0.4 per cent from August.

(12 p.m. ET) U.S. Fed chair Jerome Powell speaks at the Economic Club of New York.f

With Reuters and The Canadian Press

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2023-10-19 09:36:20Z
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