Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index opened lower Thursday morning with weaker crude prices weighing on energy stocks. Wall Street, meanwhile, saw a mixed start with the Nasdaq gaining, helped by a rise in shares of electric vehicle maker Tesla in the wake of the company’s latest results.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 66.69 points, or 0.35 per cent, at 18,953.98.
In the U.S., the Dow Jones Industrial Average fell 48.35 points, or 0.15 per cent, at the open to 31,826.49.
The S&P 500 opened lower by 4.43 points, or 0.11 per cent, at 3,955.47, while the Nasdaq Composite gained 16.50 points, or 0.14 per cent, to 11,914.15 at the opening bell.
“The overall lack of fireworks on earnings means boring is beautiful,” Stephen Innes, managing partner with SPI Asset Management, said.
“And while supply chain and inflation conversations are improving, a significant consumer-driven earnings headwind remains.”
Shares of Tesla Inc. were up about 5 per cent just after the opening bell after the company reported a smaller-than-expected drop in quarterly profit, beating market forecasts. The company posted an adjusted profit of US$2.27 per share for the second quarter ended June versus analysts’ consensus estimates of US$1.81.
“As Netflix, the Tesla results were worse than the previous quarter,” Swissquote analyst Ipek Ozkardeskaya said.
“The company announced the first sequential decline in profit since the end of 2020, but revealed that it nailed the highest vehicle production in its history despite the shutdown of the Shanghai mega factory due to the COVID restrictions and maintained its annual production growth target unchanged at 50 per cent.”
Elsewhere, United Airlines saw its stock drop about 7 per cent in premarket action after the U.S. airline reported its first quarterly profit since the onset of the pandemic but also fell short of market forecasts. The company reported adjusted profit of US$1.43 per share in the most recent quarter. Analysts had been looking for adjusted earnings per share of US$1.95, according to Refinitiv.
U.S. companies reporting on Thursday include American Airlines and AT&T.
In Canada, The Globe’s Andrew Willis and Alexandra Posadzki report Rogers Communications has a new chief technology officer, veteran telecom executive Ron McKenzie, in a wake of a nationwide outage earlier this month that resulted in the company promising change and investment to ensure network reliability. Canada’s largest cell phone company handed responsibility for the systems that support 12 million customers to Mr. McKenzie after a 19-hour shutdown of wireless in internet services on July 8 outraged customers.
Overseas, the pan-European STOXX 600 was down 0.02 per cent by midday. The ECB raised its deposit rate by 50 basis zero. It was the first increase by the central bank in 11 years.
Britain’s FTSE 100 fell 0.41 per cent. Germany’s DAX lost 0.54 per cent while France’s CAC 40 edged up 0.24 per cent.
In Asia, Japan’s Nikkei finished up 0.44 per cent. Hong Kong’s Hang Seng lost 1.51 per cent.
Commodities
Crude prices slid for a second session after a rising in U.S. gasoline stockpiles fuelled demand concerns.
The day range on Brent is US$102.70 to US$106.78. The range on West Texas Intermediate is US$95.57 to US$99.99.
Figures this week from the U.S. Energy Information Administration showed U.S. gasoline inventories rose 3.5 million barrels last week, more than analysts had been forecasting.
“Oil is trading off intersession highs on the back of the weekly EIA report showing back-to-back higher gasoline inventories and typically read as an indicator of lower consumer demand,” SPI Asset Management’s Stephen Innes said.
“And even more within the context of a seasonal counter-trend. Gasoline demand usually is quite strong during the U.S. mid-summer months.”
Meanwhile, Russia resumed shipping natural gas to Europe via the Nord Stream 1 pipeline after a 10-day maintenance outage. Markets had been concerned that Moscow could delay resumption of shipments as a tactic in the war in Ukraine.
On Thursday, flows were back at 40 per cent of the pipeline’s capacity, similar to the level seen before the maintenance shutdown, according to Reuters.
In other commodities, gold prices were down as markets anticipate more rate hikes from the world’s central banks as they look to battle high inflation.
Spot gold was down 0.2 per cent at US$1,692.80 per ounce by early Thursday, after falling to its lowest since early August 2021 at $1,689.40 earlier in the session.
U.S. gold futures fell 0.6 per cent to US$1,689.50 per ounce.
Currencies
The Canadian dollar was weaker as risk sentiment pulled back and crude prices slid.
The day range on the loonie is 77.37 US cents to 77.77 US cents.
There were no major Canadian economic releases on Thursday’s calendar.
On world markets, the euro initially slid early Thursday, weighed down by political uncertainty in Italy. However it gained versus the U.S. dollar after the ECB’s rate decision. The euro was trading at US1.025 shortly after the ECB’s policy announcement.
The Associated Press reports that Italian Premier Mario Draghi resigned Thursday after key coalition allies boycotted a confidence vote, signaling the likelihood of an early election.
The U.S. dollar was up at 138.575 yen, consolidating below the 24-year high at 139.38 seen one week ago, after the Bank of Japan held to its ultra-easy monetary policy position.
The risk-sensitive Australian dollar reversed course dipping 0.2 per cent to US$0.6875, while the New Zealand dollar did the same falling 0.5 per cent to US$0.6201, according to figures from Reuters.
More company news
Amazon.com Inc said on Thursday it would buy One Medical for US$3.49-billion in an all-cash deal.
American Airlines Group Incposted its first adjusted quarterly profit since the onset of the COVID-19 pandemic as a boom in travel demand more than offset higher costs. The lifting of coronavirus curbs and bottled-up travel demand have sparked the strongest summer for U.S. carriers in three years, putting them on track for a profitable quarter despite a larger fuel bill. American Airlines reported an adjusted profit of US$533-million, or US$0.76 per share, for the quarter ended June 30, compared with a loss of US$1.09-billion, or US$1.69 per share, a year earlier.
AT&T Inc on Thursday raised its forecast for annual revenue growth at its wireless service business on solid subscriber additions as more people travel during the summer and use the company’s roaming services. AT&T has been focusing on making its 5G and fiber internet services widely available and has doubled down on promotional activities to gain subscribers. The company added 813,000 net new monthly bill paying wireless phone subscribers in the second quarter, benefiting from the expansion of its 5G network, compared with 691,000 additions in the first quarter.
Microsoft Corp’s MS Teams was back up for most users, the company said on Thursday, after an hours-long outage that disrupted the chat application for tens of thousands of customers globally. The company cited a disruption on a recent software update that “contained a broken connection to an internal storage service”. “We’re addressing any residual impact related to this event. Additionally, we are monitoring for any signs of failure until we’re confident that all functions of the service are fully recovered,” the company said on its website.
Economic news
ECB Monetary Policy Meeting
(830 am ET) U.S. initial jobless claims for last week.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
/cloudfront-us-east-1.images.arcpublishing.com/tgam/VS3MLW6LBZO7DJZXBR5OOC2FFQ.JPG)
