Wall Street futures steadied Tuesday with a earnings remaining in focus ahead of tomorrow’s Federal Reserve rate decision. Major European markets were down. TSX futures were also little changed as traders weigh the latest reading on Canada’s broad economic health.
In the early premarket period, futures linked to the key U.S. indexes had been in the red but found their footing as the North American open approached. All three saw weaker finishes on Monday but are on track for solid gains heading for the month. The S&P 500 is up more than 4 per cent for the month so far while the Nasdaq has gained more than 8 per cent. The S&P/TSX Composite Index ended down 0.7 per cent on Monday.
“The January rally has hit a wall and probably won’t have a chance of returning until we get beyond Wednesday’s Fed press conference and Apple’s results after the Thursday close,” OANDA senior analyst Ed Moya said.
On Tuesday, U.S. markets get quarterly earnings from McDonald’s, General Motors, Caterpillar and Pfizer. Snap reports after the close.
GM shares jumped in premarket trading after the auto maker posted adjusted earnings per share of US2.12 in the fourth quarter, topping analysts’ forecasts of US$1.69. Quarterly revenue came in at US$43.11-billion, also beating market expectations.
In Canada, Imperial Oil reported this morning while Canadian Pacific Railway posts results after the close of trading.
Calgary-based Imperial Oil reported higher fourth-quarter profit helped by higher prices and tighter supply. Imperial reported net income of $1.7-billion, or $2.86 per share, for the three months ended Dec. 31, up from $813-million or $1.18 per share, a year earlier.
On the economic side, Canadian investors got a reading on November gross domestic product from Statistics Canada before the start of trading. Statscan says the economy grew by 0.1 per cent in the quarter, in line with market forecasts. A preliminary estimate from the agency also suggests real gross domestic product grew by an annualized rate of 1.6 per cent in the fourth quarter, above the Bank of Canada’s forecast of 1.3 per cent.
“This report isn’t likely to cause the BoC to have any second thoughts regarding its recent pause,” TD senior economist James Orlando said. “The economy hasn’t yet absorbed the impact of past rate hikes. Though we are seeing the beginning of this, there is more to come, with GDP and employment growth set to stall in the coming months.”
Overseas, the pan-European STOXX 600 was down 0.68 per cent by midday. Britain’s FTSE 100 slid 0.73 per cent. Germany’s DAX and France’s CAC 40 were off 0.46 per cent and 0.37 per cent, respectively. New figures released Tuesday showed GDP in the euro zone expanded by 0.1 per cent in the fourth quarter. Markets had been expecting a contraction of 0.1 per cent.
In Asia, Japan’s Nikkei closed down 0.39 per cent. Hong Kong’s Hang Seng lost 1.03 per cent.
Commodities
Crude prices were weaker as markets remain cautious ahead of Wednesday’s Fed rate decision and traders weigh oil outflows from Russia.
The day range on Brent was US$85.73 to US$85.25 in the early premarket period. The range on West Texas Intermediate was US$76.63 to US$78.14.
“Oil prices remain soggy despite Asia’s unquenching thirst for all things oil,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
“The problem for the oil bull is that thirst is getting satiated by discount Russian barrels.”
Reuters reports that Russia’s oil loadings from its Ust-Luga port are expected to rise at the beginning of February, despite western sanctions imposed over its invasion of Ukraine.
As well, traders remain wary of the midweek policy announcement from the Federal Reserve and a rate decision Thursday by the European Central Bank. Concerns remain that rising rates will temper economic growth and weigh on global demand.
However, the International Monetary Fund (IMF) has raised its 2023 global growth outlook slightly due to “surprisingly resilient” demand in the United States and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions, according to Reuters.
Gold prices hit a one-week low as the U.S. dollar firmed ahead of tomorrow’s Fed decision.
Spot gold was down 0.8 per cent at US$1,906.51 per ounce by early Tuesday morning, its lowest level since Jan. 19. Still, gold is up more than 4 per cent on the month and remains headed for its third consecutive monthly increase.
U.S. gold futures were down 0.9 per cent at $1,922.00.
“Gold’s main kryptonite is if the Fed can’t control inflation and they need to tighten much more than markets are expecting,” OANDA’s Ed Moya said.
“Gold could enter the ‘danger zone’ if we get a couple more hotter-than-expected inflation reports and a robust [U.S. non-farm payrolls] report that suggests wage pressures will be here for a while.”
Currencies
The Canadian dollar was down while its U.S. counterpart advanced against a group of currencies but still looked set for its fourth monthly decline in a row.
The day range on the loonie was 74.30 US cents to 74.76 US cents in the early hours.
“The CAD gains are hard to come by but are easily conceded still, it seems, even if movement is driven mainly by external factors,” Shaun Osborne, chief FX strategist with Scotiabank, said, noting risk aversion and a strong U.S. dollar are both weighing on the loonie this morning.
On world markets, the U.S. dollar index, which weighs the currency against a group of peers, was up 0.31 per cent at 102.56 early Tuesday morning.
However, the index was down nearly 1 per cent for the month. A January decline would mark the fourth straight down month.
Elsewhere, the euro slid in early trading in Europe and was last down 0.41 per cent at US$1.081, according to figures from Reuters.
Britain’s pound was down 0.29 per cent at US$1.231, but was on track for its fourth monthly increase. The yen gained 0.1% at 130.34 per U.S. dollar and was set for its third monthly gain.
In bonds, the yield on the U.S. 10-year note was lower at 3.531 per cent in the predawn period.
More company news
Caterpillar Inc on Tuesday reported a lower-than-expected quarterly profit as increasing manufacturing costs related to materials and freight pressured the heavy machinery maker’s margins. Adjusted profit for the quarter ended December rose to $3.86 share from $2.69 a year earlier. Analysts on average had expected a profit of $4.02 per share, according to Refinitiv IBES data. –Reuters
Exxon Mobil Corpposted $59-billion in adjusted profit for 2022, the company said on Tuesday, taking home more than $6.7-million per hour last year, and setting not only a company record but a historic high for the Western oil industry. Oil majors are expected to break their own annual records on high prices and soaring demand, pushing their combined take to near $200-billion. The scale has renewed criticism of the oil industry and sparked calls for more countries to levy windfall profit taxes on the companies. Exxon’s results far exceeded the then-record $45.2 billion net profit it reported in 2008, when oil hit $142 per barrel, 30% above last year’s average price. Deep cost cuts during the pandemic helped supercharge last year’s earnings. -Reuters
Volkswagen is looking at setting up a battery cell factory in Ontario, the Handelsblatt business daily reported on Tuesday, adding that the province had offered investments and other incentives. Five entries from this month are listed in a lobby register of the province for Volkswagen, including one that mentions Chief Executive Oliver Blume by name, the report said, citing the documents. –Reuters
General Motors Co and Lithium Americas Corp on Tuesday announced they would jointly invest to develop the Thacker Pass mine in Nevada. Under the agreement, GM will make an equity investment of $650-million in Lithium Americas. -Reuters
Pfizer Inc. forecast 2023 sales of its COVID-19 products of $21.5-billion that fell short of Wall Street expectations, hit by lower demand in international markets and slower uptake of booster vaccines. The U.S. drugmaker said it expects sales of $13.5-billion from the vaccine for 2023, below Refinitiv estimates of $14.39-billion, and projected $8-billion in sales of its antiviral pill, Paxlovid, short of $10.33-billion the Street expects. –Reuters
McDonald’s Corpbeat Wall Street estimates for quarterly comparable sales on Tuesday, boosted by higher menu prices, increased restaurant traffic and gains in most major markets. The burger chain’s global same-store sales increased 12.6% in the fourth quarter ended Dec. 31, compared with estimates for an 8.6% rise, according to IBES data from Refinitiv. Sales in the UK, Germany and France rose despite fears of a recession in Europe. -Reuters
Economic news
(8:30 a.m. ET) Canada’s monthly real GDP for November.
(8:30 a.m. ET) U.S. employment cost index for Q4.
(9 a.m. ET) S&P CoreLogic Case-Shiller Home Price Index (20 city) for November.
(9 a.m. ET) U.S. FHFA House Price Index.
(9:45 a.m. ET) U.S. Chicago PMI for January.
(10 a.m. ET) U.S. Conference Board Consumer Confidence for January.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
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.
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