Canada’s main stock index opened at a seven-week high on Tuesday, steered by rising optimism among investors over measures taken to ease coronavirus-led lockdowns across the globe.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 110.13 points, or 0.75%, at 14,752.24.
U.S. stock markets jumped at the open on Tuesday on another round of upbeat quarterly earnings reports, even as investors braced for a likely slide in consumer confidence data later in the day.
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The Dow Jones Industrial Average rose 223.39 points, or 0.93%, at the open to 24,357.17.
The S&P 500 opened higher by 31.48 points, or 1.09%, at 2,909.96, while the Nasdaq Composite gained 95.52 points, also 1.09%, to 8,825.69 at the opening bell.
World stocks jetted to their highest in almost six weeks on Tuesday as plans to ease coronavirus lockdowns in a number of major economies helped offset more chaos in oil markets and warning of mounting bad credit at HSBC and Santander.
Oil major BP had said it had suffered a near 80% plunge in profits too but with Wall Street rising higher it was the relatively good news, rather than the bad or plain ugly that investors seemed focused on.
Plans to ease major economies out of coronavirus lockdowns were continuing, reassuring UBS earnings lifted European banks nearly 6% while Italy’s bonds recovered further after it had dodged a damaging credit rating downgrade on Friday.
“The general mood seems to be definitely more positive today,” said CMC markets senior analyst Michael Hewson, highlighting that investors now viewed the peaks of coronavirus infections in Asia, Europe and North America as behind them.
“They are banking on a v-shaped recovery (in the global economy)… so the line of least resistance is for stock markets to go higher especially when central banks have got their pedals hard to the floor.”
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The near 2% jump in European stocks and the rise from Wall Street later meant MSCI’s 49-country index of world stocks was extending the more than 25% rebound it has made since hitting near four-year lows last month.
Oil remained total carnage though. U.S. WTI, which went negative last week, was down 10% having dived as much as 20% earlier after a scramble by the United States Oil Fund (USO) , the largest oil-focused U.S. exchange-traded product, to shift its holdings had underscored the dwindling capacity to store excess supply.
Benchmark brent Brent went down a more manageable 5% and had largely recovered by the time U.S. trading began, but it was still at only $20 a barrel which is way below where even the most efficient producer countries can balance their finances.
Petrocurrencies were whiplashed too. Canada’s dollar and the Norweigen crown both recovered from early falls with the crown tearing up as much as 1.4%.
Russia’s rouble also bounced back 0.5%, while Brazil’s battered real sprang up 1.2% along with Mexico’s peso and a host of other emerging market currencies that only tend to well when investors are feeling confident.
“Normally, a lower oil price disproportionately boosts consumer sentiment. However, the storage problem is due to reduced oil demand – if you are not putting petrol in your car, you will not notice the price,” UBS Chief Economist Paul Donavan said.
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“The good news is that the money saved by not buying petrol now may be spent later in the economic bounceback.”
Away from wild oil, there were signs that the market volatility gauges that have been triggered by the rapid spread of the coronavirus over the last few months were also easing.
The U.S. stock market’s so-called fear gauge, the VIX , was at its lowest in a month and the U.S. dollar was softer against other major currencies like the euro which stood up at $1.0880..
Markets are looking for any forward guidance from the U.S. Federal Reserve, which meets later on Tuesday and is due to issue a statement on Wednesday. The European Central Bank then meets on Thursday.
The Fed has led the global monetary policy response to the coronavirus pandemic by cutting interest rates to zero and aggressively buying bonds and corporate credit – a programme it extended overnight to include municipal debt of smaller U.S. cities.
Analysts said it was unlikely that the Fed would make further major policy moves, given the scope and depth of recent action to counter the economic damage caused by COVID-19.
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Sweden’s central bank had opted not to take its interest rates back into negative territory on Tuesday, sending its currency up 0.5% and to its highest in over a month.
“The major central banks are at comparatively expansionary levels. All of them have beefed up asset purchases as much as they could. All of them are close to or even at the minimum lower interest rate bound,” wrote Thu Lan Nguyen, an analyst at Commerzbank.
“They are likely to remain there for the foreseeable future, which would point towards relatively stable exchange rates.”
The ECB has had less room to manoeuvre on rates and announced an enormous bond-buying program. Still, bickering and indecision over a eurozone rescue package has some in the market expecting deeper action still, perhaps as soon as Thursday.
That has seen the euro left behind as expectations for an economic recovery from the pandemic has pressured the U.S. dollar and driven a rally in riskier currencies such as the Australian dollar.
The Aussie dollar briefly spluttered as oil went wacky again but regained its poise to add to its near 20% bounce from a 17-year low struck last month.
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Elsewhere the pound rose 0.6% to $1.25, having earlier been pressured after Prime Minister Boris Johnson warned it was too dangerous to relax a strict lockdown in Britain.
Reuters
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TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
