Wall Street futures slid early Tuesday as economic concerns linger ahead of U.S. inflation numbers this week. Major European markets were down. TSX futures were also in the red.
Futures tied to the Dow, S&P and Nasdaq were all underwater in the early premarket period following a muted session on Monday. The S&P 500 and Nasdaq managed slight gains yesterday while the Dow dipped 0.17 per cent. Canada’s S&P/TSX Composite Index closed the session up 0.21 per cent.
OANDA senior analyst Ed Moya said in a note that traders had been watching Monday’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices in the U.S., although the report didn’t deliver major surprises aside from a weaker picture of loan demand.
“Investors will shift the focus back to inflation, with a close look at core services, excluding shelter,” he said. “This inflation report might prove to be sticky and that could help delay Fed rate cut bets.”
U.S. inflation figures for April are due Wednesday morning. Economists are expecting to see the consumer price index rise by 0.4 per cent from March while the annual rate of inflation in the U.S. economy is expected to come in around 5 per cent. Canadian inflation figures are due next week.
On the corporate side, Calgary-based Suncor Energy reported adjusted earnings per share of $1.36 in the latest quarter, better than the $1.32 analysts had been forecasting. Suncor’s total upstream production was 742,100 barrels of oil equivalent per day in the first quarter of 2023, compared to 766,100 boe/d in the prior year’s quarter. The results were released after Monday’s closing bell.
On Tuesday, Canadian investors get results from SNC-Lavalin and Chorus Aviation. Great-West Lifeco releases results after the close of trading. Sun Life and Manulife report later in the week.
SNC-Lavalin said profit attributable to shareholders rose to $28.4-million or 16 cents per diluted share for the quarter ended March 31, up from $24.8-million or 14 per diluted share a year earlier. Revenue totalled $2.02-billion, up from $1.89-billion in the first three months of 2022.
In the U.S., Airbnb and Rivian report after the close of trading. About 85 per cent of the companies in the S&P 500 have now posted results for the current reporting period.
Overseas, the pan-European STOXX 600 was down 0.83 per cent by midday. Britain’s FTSE 100 lost 0.52 per cent. Germany’s DAX and France’s CAC 40 fell 0.44 per cent and 1.05 per cent, respectively.
In Asia, Japan’s Nikkei finished up 1.01 per cent. Hong Kong’s Hang Seng lost 2.12 per cent. New figures released Tuesday showed China’s imports shrank sharply in April, while exports rose at a slower pace, Reuters reported.
Commodities
Crude prices were down in early trading following two solid sessions of gains as markets await this week’s U.S. inflation data for clues about the path ahead of interest rates.
The day range on Brent was US$75.93 to US$76.90 in the early premarket period. The range on West Texas Intermediate was US$72.13 to US$73.08. Both benchmarks added about 2 per cent on Monday.
“The oil market was extremely oversold and it will probably continue to stabilize as long as Wall Street is still confident the Fed will cut rates later this year,” OANDA’s Ed Moya said.
“Oil prices won’t be able to rise that much from here given all the growth demand fears, but expectations are high for OPEC+ to try to keep prices above the US$70 a barrel level.”
Later Tuesday, markets will get the first of two weekly U.S. inventory reports with fresh numbers from the American Petroleum Institute. More official U.S. government figures follow on Wednesday morning.
Meanwhile, prices drew some support from a move by energy producers in Alberta to shut in production after wildfires prompted a state of emergency in the province. The move affected about 3 per cent of Canada’s output, according to a Reuters report.
In other commodities, spot gold rose 0.2 per cent to US$2,025.02 per ounce by Tuesday morning, holding an about-$9 range.
U.S. gold futures were little changed at US$2,032.80.
Currencies
The Canadian dollar was little changed in early trading while its U.S. counterpart edged up against a group of world currencies.
The day range on the loonie was 74.70 US cents to 74.82 US cents in the predawn period.
There were no major Canadian economic releases due on Tuesday.
On world markets, the U.S. dollar index edged up 0.1 per cent to 101.56, but remained near recent lows as traders await this week’s inflation data, according to figures from Reuters.
The euro slid 0.3 per cent to US$1.09750.
Britain’s pound last bought US$1.25975, down 0.1 per cent ahead of Thursday’s rate announcement by the Bank of England.
In bonds, the yield on the U.S. 10-year note was lower at 3.496 per cent ahead of the North American open.
More company news
Battery recycler Li-Cycle Holdings Corp said on Tuesday it planned to develop a recycling hub in Italy along with Swiss miner and commodity trader Glencore Plc to produce battery materials including lithium. Canada-based Li-Cycle had earlier announced in March that it would be building a French battery processing facility amid rising demand for lithium due to its key role in transition towards net zero. The two companies are expected to complete a joint feasibility study for the project by mid-2024, Li-Cycle said. –Reuters
George Weston Ltd. raised its dividend as it reported its first-quarter profit and revenue rose compared with a year ago. The company, which holds large stakes in Loblaw Companies Ltd. and Choice Properties Real Estate Investment Trust, says it will increase its quarterly dividend to 71.3 cents per share from 66 cents per share. The increased payment came as George Weston says it earned a profit attributable to common shareholders of $426-million or $3.01 per diluted share for the 12-week period ended March 25.
Economic news
(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for April.
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.
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