Wall Street futures struggled to hold early gains Thursday as traders weigh the outlook for interest rates after the latest U.S. inflation report. Major European markets were mixed after the Bank of England again raised interest rates. TSX futures were little changed.
In the early premarket period, Dow and S&P slid into negative territory, giving up gains seen early in the session. Nasdaq futures were up slightly. On Wednesday, the Nasdaq added 1.04 per cent while the S&P 500 closed up 0.45 per cent. The Dow finished just south of break even, falling 0.09 per cent. Canada’s S&P/TSX Composite Index closed down 0.42 per cent.
Markets are now trying to gauge where the U.S. Federal Reserve goes on interest rates in coming months. On Wednesday, new figures showed the annual rate of inflation in the U.S. economy eased slightly to 4.9 per cent. Economists had been looking for a number around 5 per cent. In the wake of the report, Fed funds futures traders were pricing in a pause in rate increases at the central bank’s June meeting, and less than a 5-per-cent chance of another 25 basis point hike.
“Today, the consensus is that the Fed’s latest rate hike was certainly its last for this cycle,” Swissquote senior analyst Ipek Ozkardeskaya said.
“And if that’s the case, looking at what happened over the past 40 years, five over the past six tightening cycles ended with the Fed immediately cutting the interest rates after a peak, except in 2018 where the rates remained at peak for 5 months before being pulled down again.”
In that context, she said, expecting a rate cut in the next few months is reasonable and the negative outlook for the U.S. dollar makes sense, “even more so when inflation numbers hint that the trend is in the right direction.”
On Thursday, markets also got a reading on wholesale prices with the release of the latest producer price index ahead of the opening bell, offering further signs of easing inflationary pressures. From March to April, the U.S. producer price index rose 0.2 per cent after falling 0.4 per cent from February to March. Compared with a year earlier, wholesale prices rose 2.3 per cent last month.
Canada’s April inflation report is expected next week.
On the corporate side, Canadian investors got earnings from retailer Canadian Tire this morning. Insurer Sun Life reports after the close.
Canadian Tire reported net income attributable to shareholders of $7.8-million or 13 cents per diluted share for the quarter ended April 1, down from $182.1-million or $3.03 per diluted share a year ago. The quarter was affected by milder-than-normal weather and a fire at a key distribution centre. Revenue for the quarter totalled $3.71-billion, down from $3.84-billion a year earlier. Canadian Tire says its normalized earnings for the quarter were $1 per diluted share, down from a normalized profit of $3.06 per diluted share a year ago. Analysts on average had expected an adjusted profit of $1.31 per share and $3.64 billion in revenue, according to estimates from financial markets data firm Refinitiv.
Elsewhere, Manulife Financial reported adjusted earnings per share of 79 cents in the latest quarter, below estimates of 80 cents, according to Refinitiv data. Manulife’s global wealth and asset management unit posted net inflows of $4.4-billion in the first quarter, compared with inflows of $6.8-billion a year earlier, Reuters reported. The results were released after Thursday’s closing bell.
On Wall Street, shares of Walt Disney Co. were down more than 4 per cent in the premarket after company reduced streaming losses by US$400-million and reported quarterly earnings in line with analysts’ forecast, but also shed streaming subscribers.
Overseas, the pan-European STOXX 600 was up 0.20 per cent in late morning trading. Britain’s FTSE 100 fell 0.33 per cent. Early Thursday, the Bank of England raised its key rate by a quarter percentage point, marking its 12th consecutive increase. Germany’s DAX slid 0.14 per cent while France’s CAC 40 added 0.25 per cent.
In Asia, Japan’s Nikkei closed 0.02-per-cent higher. Hong Kong’s Hang Seng shed 0.09 per cent.
Commodities
Crude prices slipped into the red, reversing early gains, despite a report showing a drop in U.S. gasoline stocks.
The day range on Brent was US$76.54 to US$77.31 in the early premarket period. The range on West Texas Intermediate was US$72.68 to US$73.39. Both benchmarks were up more than 1 per cent early Thursday morning but lost altitude as the North American open approached.
Both saw losses on Wednesday but are on track for their best weekly percentage gain in four, according to Reuters.
Figures released Wednesday by the U.S. Energy Information Administration showed gasoline inventories fell by 3.2 million barrels last week, more than the 1.2 million barrel draw forecast by analysts.
Distillate stocks also declined while U.S. jet fuel demand rose to its highest since December 2019.
Crude inventories rose, meanwhile, by 3 million barrels in the week to May 5 to 462.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 900,000-barrel drop. The increase came amid another release from national reserves.
In other commodities, spot gold held steady at US$2,031.10 per ounce early Thursday morning, while U.S. gold futures were flat at US$2,037.50.
Currencies
The Canadian dollar was down while its U.S. counterpart advanced against a group of world currencies.
The day range on the loonie was 74.50 US cents to 74.83 US cents early Thursday morning. The Canadian dollar has fallen nearly 1 per cent against the greenback over the last five days.
There were no major Canadian economic releases on Thursday’s calendar.
On world markets, the dollar index measuring the greenback against a basket of six major peers, rose 0.45 per cent to 101.87.
The euro, meanwhile, slid 0.5 per cent to a three-week low of $1.0924.
Sterling fell 0.5 per cent to US$1.2567, pulling back from Wednesday’s one-year high of US$1.2679, ahead of Thursday’s Bank of England rate decision, according to figures from Reuters.
In bonds, the yield on the U.S. 10-year note was slightly lower at 3.431 per cent in the predawn period.
More company news
The Globe’s Tim Kiladze reports that H&R Real Estate Investment Trust has parted ways with its president, who also ran its U.S. residential division, in a surprise move with little explanation. Philippe Lapointe, a Canadian based in Texas, joined H&R a decade ago and rose through the ranks of the REIT’s U.S. multi-family division, known as Lantower Residential. Lantower is one of H&R’s bright spots amid a tough market for commercial real estate and in May, 2022, Mr. Lapointe was promoted to president of the entire REIT.
Algonquin Power & Utilities Corp said on Thursday it had initiated a strategic review of its renewable energy group, following a push by Corvex Management and other activist firms for changes. The company said in January that it planned to raise $1-billion through asset sales and would slash its dividend by 40%, to bolster its finances. A deal to buy the Kentucky operations of American Electric Power also fell through last month, following multiple delays since its announcement nearly 1-1/2 years ago. –Reuters
Quebecor Inc. reported its first-quarter profit attributable to shareholders fell to $120.9-million compared with $121.4-million in the same quarter a year ago. The company says the profit amounted to 52 cents per diluted share for the quarter ended March 31, up from 51 cents per share a year earlier when it had more shares outstanding. Revenue for the quarter totalled $1.12-billion, up from $1.09-billion in the same quarter last year. –The Canadian Press
Maple Leaf Foods Inc.reported a loss in its first quarter compared with a profit a year ago as it faced a difficult pork market, cost inflation and higher startup expenses. The company says it lost $57.7-million or 48 cents per share for the quarter ended March 31 compared with a profit of $13.7-million or 11 cents per share in the same quarter last year. –The Canadian Press
Peloton Interactive Inc has recalled two million exercise bikes due to possible breakage of the seat post during use that could lead to injuries, the U.S. Consumer Product Safety Commission (CPSC) said on Thursday. Shares of the company were down 13% before the bell. –Reuters
Economic news
Bank of England monetary policy announcement
(8:30 a.m. ET) U.S. initial jobless claims for week of May 6.
TORONTO – Cineplex Inc. reported a loss in its latest quarter compared with a profit a year ago as it was hit by a fine for deceptive marketing practices imposed by the Competition Tribunal.
The movie theatre company says it lost $24.7 million or 39 cents per diluted share for the quarter ended Sept. 30 compared with a profit of $29.7 million or 40 cents per diluted share a year earlier.
The results in the most recent quarter included a $39.2-million provision related to the Competition Tribunal decision, which Cineplex is appealing.
The Competition Bureau accused the company of misleading theatregoers by not immediately presenting them with the full price of a movie ticket when they purchased seats online, a view the company has rejected.
Revenue for the quarter totalled $395.6 million, down from $414.5 million in the same quarter last year, while theatre attendance totalled 13.3 million for the quarter compared with nearly 15.7 million a year earlier.
Box office revenue per patron in the quarter climbed to $13.19 compared with $12 in the same quarter last year, while concession revenue per patron amounted to $9.85, up from $8.44 a year ago.
This report by The Canadian Press was first published Nov. 6, 2024.
TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.
Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.
Consolidated comparable sales were up 0.3 per cent.
On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.
The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.
The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.
Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.
Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.
On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.
The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
/cloudfront-us-east-1.images.arcpublishing.com/tgam/YUL4VKAH5FONXEQK6IMMMELGVY.JPG)
