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 – 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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