Wall Street futures were weaker early Monday with earnings from big tech names set to dominate this week. Major European markets turned mixed after a weaker start. TSX futures were little changed.
In the early premarket period, futures linked to the Dow, S&P and Nasdaq were all lower. All three saw gains on Friday but declines for the week. The S&P/TSX Composite Index closed Friday up and managed a 0.55-per-cent advance for the week.
“This week is all about the U.S. tech giants, which will be reporting and setting the tone for trading,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said.
“There is no doubt that the earnings from the U.S. banks have been somewhat better than expected (if you look at the overall picture). This kept the trading sentiment positive among traders, but what matters now is how well the US tech giants will perform.”
Alphabet and Microsoft are set to report Tuesday. Amazon, Intel and Meta are among the companies reporting later in the week.
In this country, Canadian National Railway reports results after Monday’s close. Canadian Pacific Kansas City Ltd. reports after Wednesday’s close.
On the economic side, Canadians will get a snapshot of the country’s broad economic health with the release of GDP figures for February on Friday from Statistics Canada. Statscan’s early estimate suggested growth of 0.3 per cent for the month. The report will also include an early look at expected growth in March.
“RBC Economics expects the increase in February monthly GDP to be weaker than Statscan’s initial flash estimate of 0.3 per cent (RBC 0.1 per cent) given a large 2.4-per-cent drop in manufacturing sale volumes and declines in wholesale (-1.8%) and retail sales (-0.7%) volumes,” Alvin Tan, Asia FX strategist with RBC, said.
“March GDP growth is expected to remain on the slow side as hours worked rose less than in January and February, and the monthly manufacturing PMI slipped back into contractionary territory.”
He also said the current strike by federal workers could be enough to push GDP growth into negative territory in April.
Overseas, the pan-European STOXX 600 was up 0.06 per cent in late morning trading. Britain’s FTSE 100 slid 0.0.06 per cent. Germany’s DAX and France’s CAC 40 advanced 0.05 per cent and 0.07 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.10 per cent. Hong Kong’s Hang Seng lost 0.58 per cent, giving up gains seen earlier in the session.
Commodities
Crude prices were choppy in early trading with rate concerns ahead of next month’s Federal Reserve policy meeting and growth worries weighing on sentiment.
The day range on Brent is US$80.48 to US$81.87 in the predawn period. The range on West Texas Intermediate was US$76.72 to US$77.98.
“The recent stress in the U.S. banking sector has heightened concerns around the growth trajectory, triggering a shift from a market heavily focused on inflation last year to growth concerns,” Stephen Innes, managing partner with SPI Asset Management, said.
“Oil markets have particularly suffered from growth worries and slowing inflation, with areas of the economy showing signs of reset, such as housing and wages.”
From the policy perspective, he said, the main risk to growth and oil markets is if the Fed signals a rate hike beyond May.
Currently, the markets have priced in a quarter point rate hike by the Fed next month.
Elsewhere, gold prices were trading in a narrow range early Monday.
Spot gold was little changed at US$1,982.34 an ounce while U.S. gold futures were up 0.1 per cent at US$1,991.30.
Currencies
The Canadian dollar was fairly steady in early trading while its U.S. counterpart edged higher against a group of world currencies.
The day range on the loonie was 73.11 US cents to 73.94 US cents in the early premarket period. The Canadian dollar is up nearly 1 per cent against the greenback over the past month.
Canadian investors get February GDP figures on Friday. Ahead of that, the Bank of Canada releases deliberations from its most recent meeting on Wednesday.
Overseas, the U.S. dollar index, which weighs the currency against a group of world counterparts, was up 0.12 per cent at 101.8, according to figures from Reuters
The index hit a one-year low of 100.78 by mid-April as markets speculated on the future direction of interest rates.
The pound slid 0.2 per cent to US$1.2420 and the euro fell 0.1 per cent at US$1.09775, with neither currency having been able to hold respective multi-month highs above US$1.25 and US$1.10 reached in mid April, Reuters reported.
In bonds, the yield on the U.S. 10-year note was slightly lower at 3.541 per cent in the predawn period.
More company news
Coca-Cola Cobeat Wall Street estimates for quarterly revenue on Monday, as demand for its sodas remained resilient in the face of multiple price increases. The company said net revenue rose to US$11-billion from US$10.49-billion in the first quarter, compared with analysts’ average estimate of US$10.80-billion, according to Refinitiv data. –Reuters
Bed Bath & Beyond — one of the original big box retailers known for its seemingly endless offerings of sheets, towels and kitchen gadgets — filed for bankruptcy protection, following years of dismal sales and losses and numerous failed turnaround plans. The beleaguered home goods chain made the filing Sunday in U.S. District Court in New Jersey and said it will start an orderly wind down of its operations, while seeking a buyer for all or some of its businesses. In the bankruptcy filing, the retailer said it anticipates closing all of its stores by June 30. Shares were down about 40 per cent in premarket trading. -The Associated Press
NBCUniversal Chief Executive Jeff Shell is leaving after acknowledging an inappropriate relationship with a woman in the company, following a complaint that prompted an investigation, parent company Comcast Corp said on Sunday. “I had an inappropriate relationship with a woman in the company, which I deeply regret,” Shell said in a statement. His departure is effective immediately. Shell, previously chairman of NBCUniversal Film and Entertainment, took over as CEO in 2020, replacing Steve Burke. –Reuters
Economic news
(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for March.
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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