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Equities
Canada’s main stock index opened lower Thursday morning with weaker crude prices weighing on energy stocks. Wall Street, meanwhile, saw a mixed start with the Nasdaq gaining, helped by a rise in shares of electric vehicle maker Tesla in the wake of the company’s latest results.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 66.69 points, or 0.35 per cent, at 18,953.98.
In the U.S., the Dow Jones Industrial Average fell 48.35 points, or 0.15 per cent, at the open to 31,826.49.
The S&P 500 opened lower by 4.43 points, or 0.11 per cent, at 3,955.47, while the Nasdaq Composite gained 16.50 points, or 0.14 per cent, to 11,914.15 at the opening bell.
“The overall lack of fireworks on earnings means boring is beautiful,” Stephen Innes, managing partner with SPI Asset Management, said.
“And while supply chain and inflation conversations are improving, a significant consumer-driven earnings headwind remains.”
Shares of Tesla Inc. were up about 5 per cent just after the opening bell after the company reported a smaller-than-expected drop in quarterly profit, beating market forecasts. The company posted an adjusted profit of US$2.27 per share for the second quarter ended June versus analysts’ consensus estimates of US$1.81.
“As Netflix, the Tesla results were worse than the previous quarter,” Swissquote analyst Ipek Ozkardeskaya said.
“The company announced the first sequential decline in profit since the end of 2020, but revealed that it nailed the highest vehicle production in its history despite the shutdown of the Shanghai mega factory due to the COVID restrictions and maintained its annual production growth target unchanged at 50 per cent.”
Elsewhere, United Airlines saw its stock drop about 7 per cent in premarket action after the U.S. airline reported its first quarterly profit since the onset of the pandemic but also fell short of market forecasts. The company reported adjusted profit of US$1.43 per share in the most recent quarter. Analysts had been looking for adjusted earnings per share of US$1.95, according to Refinitiv.
U.S. companies reporting on Thursday include American Airlines and AT&T.
In Canada, The Globe’s Andrew Willis and Alexandra Posadzki report Rogers Communications has a new chief technology officer, veteran telecom executive Ron McKenzie, in a wake of a nationwide outage earlier this month that resulted in the company promising change and investment to ensure network reliability. Canada’s largest cell phone company handed responsibility for the systems that support 12 million customers to Mr. McKenzie after a 19-hour shutdown of wireless in internet services on July 8 outraged customers.
Overseas, the pan-European STOXX 600 was down 0.02 per cent by midday. The ECB raised its deposit rate by 50 basis zero. It was the first increase by the central bank in 11 years.
Britain’s FTSE 100 fell 0.41 per cent. Germany’s DAX lost 0.54 per cent while France’s CAC 40 edged up 0.24 per cent.
In Asia, Japan’s Nikkei finished up 0.44 per cent. Hong Kong’s Hang Seng lost 1.51 per cent.
Commodities
Crude prices slid for a second session after a rising in U.S. gasoline stockpiles fuelled demand concerns.
The day range on Brent is US$102.70 to US$106.78. The range on West Texas Intermediate is US$95.57 to US$99.99.
Figures this week from the U.S. Energy Information Administration showed U.S. gasoline inventories rose 3.5 million barrels last week, more than analysts had been forecasting.
“Oil is trading off intersession highs on the back of the weekly EIA report showing back-to-back higher gasoline inventories and typically read as an indicator of lower consumer demand,” SPI Asset Management’s Stephen Innes said.
“And even more within the context of a seasonal counter-trend. Gasoline demand usually is quite strong during the U.S. mid-summer months.”
Meanwhile, Russia resumed shipping natural gas to Europe via the Nord Stream 1 pipeline after a 10-day maintenance outage. Markets had been concerned that Moscow could delay resumption of shipments as a tactic in the war in Ukraine.
On Thursday, flows were back at 40 per cent of the pipeline’s capacity, similar to the level seen before the maintenance shutdown, according to Reuters.
In other commodities, gold prices were down as markets anticipate more rate hikes from the world’s central banks as they look to battle high inflation.
Spot gold was down 0.2 per cent at US$1,692.80 per ounce by early Thursday, after falling to its lowest since early August 2021 at $1,689.40 earlier in the session.
U.S. gold futures fell 0.6 per cent to US$1,689.50 per ounce.
Currencies
The Canadian dollar was weaker as risk sentiment pulled back and crude prices slid.
The day range on the loonie is 77.37 US cents to 77.77 US cents.
There were no major Canadian economic releases on Thursday’s calendar.
On world markets, the euro initially slid early Thursday, weighed down by political uncertainty in Italy. However it gained versus the U.S. dollar after the ECB’s rate decision. The euro was trading at US1.025 shortly after the ECB’s policy announcement.
The Associated Press reports that Italian Premier Mario Draghi resigned Thursday after key coalition allies boycotted a confidence vote, signaling the likelihood of an early election.
The U.S. dollar was up at 138.575 yen, consolidating below the 24-year high at 139.38 seen one week ago, after the Bank of Japan held to its ultra-easy monetary policy position.
The risk-sensitive Australian dollar reversed course dipping 0.2 per cent to US$0.6875, while the New Zealand dollar did the same falling 0.5 per cent to US$0.6201, according to figures from Reuters.
More company news
Amazon.com Inc said on Thursday it would buy One Medical for US$3.49-billion in an all-cash deal.
American Airlines Group Incposted its first adjusted quarterly profit since the onset of the COVID-19 pandemic as a boom in travel demand more than offset higher costs. The lifting of coronavirus curbs and bottled-up travel demand have sparked the strongest summer for U.S. carriers in three years, putting them on track for a profitable quarter despite a larger fuel bill. American Airlines reported an adjusted profit of US$533-million, or US$0.76 per share, for the quarter ended June 30, compared with a loss of US$1.09-billion, or US$1.69 per share, a year earlier.
AT&T Inc on Thursday raised its forecast for annual revenue growth at its wireless service business on solid subscriber additions as more people travel during the summer and use the company’s roaming services. AT&T has been focusing on making its 5G and fiber internet services widely available and has doubled down on promotional activities to gain subscribers. The company added 813,000 net new monthly bill paying wireless phone subscribers in the second quarter, benefiting from the expansion of its 5G network, compared with 691,000 additions in the first quarter.
Microsoft Corp’s MS Teams was back up for most users, the company said on Thursday, after an hours-long outage that disrupted the chat application for tens of thousands of customers globally. The company cited a disruption on a recent software update that “contained a broken connection to an internal storage service”. “We’re addressing any residual impact related to this event. Additionally, we are monitoring for any signs of failure until we’re confident that all functions of the service are fully recovered,” the company said on its website.
Economic news
ECB Monetary Policy Meeting
(830 am ET) U.S. initial jobless claims for last week.
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.
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