Wall Street futures saw early losses accelerate Tuesday morning after new figures showed U.S. inflation cooled in January, but by less than markets had been expecting. Major European markets were in the red. TSX futures were modestly lower.
In the early premarket period, Dow, S&P and Nasdaq futures were all underwater. On Monday, the Dow rose 0.33 per cent to hit a record high, although the S&P and Nasdaq both saw losses on the day. Canada’s S&P/TSX Composite Index finished yesterday up 0.27 per cent.
Ahead of the start of trading, markets got a higher-than-forecast reading on price pressures in the U.S. economy. New figures showed the annual rate of U.S. inflation eased to 3.1 per cent in January, from 3.4 per cent a month earlier. However, the latest number was above the 2.9 per cent analysts had been expecting. On a monthly basis, the consumer price index rose 0.3 per cent, also ahead of the 0.2-per-cent increase markets had been forecasting.
Core inflation, excluding food and energy costs, rose 0.4 per cent on a monthly basis in January. Analysts had been looking for a 0.3-per-cent increase. The annual rate of core inflation came in at 3.7-per-cent, also above forecasts.
“There won’t be high fives at the FOMC’s data briefing on today’s release,” CIBC economist Ali Jaffrey said. “We expect the Fed will be more comfortable easing in the second half of this year.”
In Canada, markets get more earnings, with results from Shopify and Tim Hortons parent Restaurant Brands International before the start of trading. Results are also due from Hydro One and Intact Financial. On Wall Street, Coca-Cola and Hasbro report.
Restaurant Brands International beat analysts’ revenue forecasts in the most recent quarter. The company, which also operates Burger King, posted total revenue rose to US$1.82-billion in the fourth quarter from US$1.69-billion a year earlier, compared with analysts’ average estimate of US$1.81 billion, according to LSEG IBES data.
Shopify, meanwhile, reported total revenue of US$2.14-billion for the three months to December, compared with analysts’ average estimate of US$2.08-billion, according to LSEG data.
Elsewhere, The Globe’s Alexandra Posadzki reports this morning that Rogers Communications Inc. president of residential operations Zoran Stakic has left the company, triggering a series of changes in the telecom giant’s leadership ranks. Mr. Stakic, a former Shaw Communications Inc. executive, joined Rogers Communications Inc. during its takeover of its Calgary-based rival.
Overseas, the pan-European STOXX 600 was down 0.26 per cent in morning trading. Britain’s FTSE 100 slid 0.07 per cent. Germany’s DAX lost 0.64 per cent while France’s CAC 40 fell 0.35 per cent.
In Asia, Japan’s Nikkei jumped 2.89 per cent, briefly touching the 38,000 level during intraday trading. Markets in Hong Kong were closed.
Commodities
Crude prices were higher early Tuesday with markets awaiting U.S. inventory data later in the day as heightened tensions in the Middle East continue to drive sentiment.
The day range on Brent was US$81.96 to US$82.73 in the early premarket period. The day range on West Texas Intermediate was US$76.87 to US$77.68.
“Note that rising oil prices are a double-edged sword,” Swissquote analyst Ipek Ozkardeskaya said in a note.
“Good growth is positive for oil prices, but higher oil prices are not good for easing inflation. Hence, any U-turn in inflation would get the major central banks to further tighten their purses’ strings, hit growth prospects and hammer a potential oil rally.”
Reuters reports that the conflict in the Middle East has kept prices elevated, as the U.S. and Jordan maintained pressure for a Gaza Strip ceasefire. Senior mediators were to resume work on Tuesday on an Israel-Hamas truce agreement.
Meanwhile, the American Petroleum Institute is scheduled to release its weekly inventory report later in the session. More official government numbers will follow on Wednesday morning. Analysts are expecting to see a rise in U.S. crude stocks of about 2.6 million barrels last week.
Markets also got OPEC’s monthly market report Tuesday. The International Energy Agency’s report for the month is due on Thursday. OPEC said it expects world oil demand will rise by 2.25 million barrels a day in 2024 and by 1.85 million barrels a day in 2025. Both forecasts were unchanged from last month.
In other commodities, spot gold was up 0.2 per cent to US$2,023.89 per ounce by early Tuesday morning, after briefly slipping to a more than two-week low of US$2,011.72 on Monday. U.S. gold futures also ticked up 0.2 per cent to US$2,037.50.
Currencies
The Canadian dollar was little changed while its U.S. counterpart was mostly steady against a basked of world currencies.
The day range on the loonie was 74.26 US cents to 74.37 US cents in the early premarket period.
The U.S. dollar index, which weighs the greenback against a group of currencies, was little changed at 104.16 ahead of the release of the latest U.S. inflation data.
The euro was up 0.02 per cent at US$1.0775. Britain’s pound rose 0.33 per cent to US$1.2669.
In bonds, the yield on the U.S. 10-year note was slightly higher at 4.181 per cent in the predawn period.
More company news
Hasbroreported a steeper-than-expected drop in holiday-quarter sales and profit on Tuesday, as a persistent demand weakness in the toy industry weighed on sales of the company’s digital and board games. Sluggish demand from a pullback in leisure spending and cautious inventory planning by retailers like Walmart and Target hurt Hasbro’s sales in the past year. For the full year 2024, the company expects revenue in its core Wizards of the Coast segment to be down 3% to 5%, owing to weakness in digital gaming. –Reuters
Coca-Cola beat Wall Street expectations for fourth-quarter revenue on Tuesday, as the beverage maker benefited from higher product prices and buoyant demand for its namesake drink and juices. The company’s net revenue rose to US$10.95-billion in the quarter compared with US$10.20-billion a year earlier, while analysts estimated US$10.68-billion, according to LSEG data. –Reuters
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
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.
