Wall Street futures edged higher early Tuesday with key U.S. inflation data in focus. Major European markets were mostly positive. TSX futures were up.
In the early premarket period, Dow, S&P and Nasdaq futures all saw gains. All three finished in positive territory on Monday with the Nasdaq popping 1.5 per cent while the S&P 500 added nearly 1 per cent. Both the S&P and Nasdaq managed their best closing levels yesterday since last spring. Canada’s S&P/TSX Composite Index closed yesterday up 0.15 per cent, helped by gains in the tech sector.
Tuesday’s key event for markets is the release of May inflation figures. The report comes one day before the Federal Reserve’s interest rate decision.
The figures released early Tuesday morning showed that the annual rate of U.S. inflation fell to a two-year low of 4 per cent in May from 4.9 per cent a month earlier. The annual rate of U.S. inflation peaked at 9.1 per cent last June.
On a monthly basis, consumer prices rose 0.1 per cent last month. The annual rate of core inflation, excluding food and energy, was 5.3 per cent in May, roughly in line with forecasts and down from 5.5 per cent in April.
“The CPI data has shown clearly that the Fed needs to take summer off now with respect to their monetary policy,”Naeem Aslam, chief investment officer with Zaye Capital Markets, said.
“The data is showing that inflation is slowing down and it is moving in the direction. Traders are already expecting some kind of a pause from the Fed or at least some hints coming in their meeting which is planned tomorrow. In simple terms, it seems like there is less wood to chop for the Fed as inflation begins to cool down.”
As of early Tuesday morning, markets were pricing in a more than 70-per-cent chance that the Fed would hold interest rates steady in its policy decision, due Wednesday afternoon.
Canada’s May inflation report is expected next week.
On the corporate side, shares of Oracle were up more than 4 per cent in premarket trading after the cloud and software company beat fourth-quarter revenue estimates and forecast a positive first quarter. Oracle forecast total revenue to rise 8 per cent to 10 per cent in the first quarter. Analysts on average were expecting growth of about 8 per cent, Reuters reported.
In Canada, The Globe’s Nicolas Van Praet reports Rio Tinto PLC is investing $1.4-billion to expand its aluminum manufacturing operations in Saguenay, Que., breathing new life into the industrial centre after years of uncertainty. The mining giant said Monday it will build out a smelter that uses lower-carbon AP60 technology at its Complexe Jonquière site, adding 96 new pots to the existing 38 and increasing capacity to about 220,000 metric tonnes of primary aluminum per year.
Overseas, the pan-European STOXX 600 was up 0.01 per cent in late morning trading. Britain’s FTSE 100 dipped 0.09 per cent. Germany’s DAX and France’s CAC 40 advanced 0.15 per cent and 0.02 per cent, respectively. The European Central Bank is scheduled to release its next rate decision on Thursday. That central bank is expected to hike rates again by a quarter percentage point.
In Asia, Japan’s Nikkei closed up 1.8 per cent, topping the 33,000 level for the first time in more than three decades. Hong Kong’s Hang Seng gained 0.60 per cent.
Commodities
Crude prices recouped some of the previous session’s steep losses as traders await Wednesday’s Fed rate decision.
The day range on Brent was US$71.94 to US$72.87 in the early premarket period. The range on West Texas Intermediate was US$67.15 to US$67.89. Both benchmarks were up more than 1 per cent early Tuesday morning after losing US$3 a barrel on Monday.
“With every energy trader buckling up for a massive week of central bank rate decisions and important economic data, volatile price action should be expected,” OANDA senior analyst Ed Moya said.
“Oil could get many conflicting signals this week as we are expecting a hawkish skip by the Fed, another ECB rate hike and a signal for more tightening, possibly a technical recession for New Zealand, and a growing case for easing by the People’s Bank of China.”
He added that the global economic outlook could mean more demand weakness ahead “which could support oil prices remaining under pressure unless OPEC+ signals and delivers on more production cuts.”
Later Tuesday, markets will get the first of two weekly U.S. inventory reports, with fresh numbers from the American Petroleum Institute. More official government figures are due Wednesday morning.
In other commodities, gold prices saw tentative gains, helped by a softer U.S. dollar.
Spot gold rose 0.3 per cent to US$1,962.59 per ounce by early Tuesday. U.S. gold futures gained 0.3 per cent to US$1,975.80.
“With stocks in bull market territory, demand for safe-havens has disappeared,” Mr. Moya said.
“Gold either needs investors to get nervous about earnings, disinflation trends to improve, or for the PBOC to send a strong message that they will energize growth.”
Currencies
The Canadian dollar was slightly firmer in early trading as its U.S. counterpart saw a modest decline against a basket of global currencies.
The day range on the loonie was 74.74 US cents to 74.96 US cents in the early premarket period. As of early Tuesday morning, the Canadian dollar had gained 0.94 per cent against the greenback over the last month.
There were no major Canadian economic releases due Tuesday.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.3 per cent at 103.27. The index has lost about 0.8 per cent over the past month.
Elsewhere, the euro was up 0.42 per cent to $1.08 on Tuesday, after touching its highest since May 23 earlier in the session at US$1.081, according to figures from Reuters.
Britain’s pound was up 0.43 per cent at US$1.257 after a stronger-than-expected reading on employment prompted traders to bet the Bank of England would have to raise interest rates further than previously expected. Still, it remained below the one-month peak of US$1.26 hit on Monday, Reuters reported.
In bonds, the yield on the U.S. 10-year note was lower at 3.726 per cent in the predawn period.
More company news
U.S. grains merchant Bunge and Glencore-backed Viterraon Tuesday announced an US$18-billion deal including debt to merge, creating one of the world’s largest agriculture trading firms. The deal brings Bunge closer in global scale to leading rivals Archer-Daniels-Midland and Cargill and will be examined closely by antitrust regulators. Shares of Bunge fell 5 in premarket trading. -Reuters
Nippon Steel remains interested in Teck Resources’ steelmaking coal assets, a spokesperson said on Tuesday, adding that talks continue despite Glencore’s latest offer for the Canadian miner’s coal business. Swiss trading and mining firm Glencore on Monday offered to buy Teck’s steelmaking coal business as a standalone unit, after the Canadian miner twice rebuffed its $22.5 billon offer to combine the two companies. Nippon Steel’s spokesperson declined to comment on Glencore’s latest proposal. –Reuters
Toyota will introduce high-performance, solid-state batteries and other technologies to improve the driving range and cut costs of future electric vehicles (EVs), the automaker said on Tuesday, a strategic pivot that sent its shares higher. The Japanese giant’s technology roadmap, covering aspects as varied as next-generation battery development and a radical redesign of factories, amounted to the automaker’s fullest disclosure of its plan to compete in the fast-growing market for EVs where it has lagged rivals led by Tesla. –Reuters
Economic news
(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for May.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
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