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Equities
Canada’s main stock index rose at Friday’s opening bell, marking the sixth straight session of gains, in the wake of a better-than-forecast reading on retail sales. On Wall Street, indexes were mixed at the start of trading with the tech-heavy Nasdaq lower after disappointing results took a toll on Snap Inc. shares.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 58.51 points, or 0.31 per cent, at 19,121.36. The TSX has posted gains in the five previous sessions.
In the U.S., the Dow Jones Industrial Average rose 131.02 points, or 0.41 per cent, at the open to 32,167.92.
The S&P 500 opened lower by 0.52 points, or 0.01 per cent, at 3,998.43, while the Nasdaq Composite dropped 34.24 points, or 0.28 per cent, to 12,025.37 at the opening bell.
All three U.S. indexes are on track for weekly gains.
Early Friday, shares of Snap Inc. sank 35 per cent in early trading after the company’s latest quarterly results disappointed investors. Revenue for the second quarter ended June 30 was US$1.11-billion, up 13 per cent from the year-earlier quarter. However, the figure also fell short of the US$1.14-billion analysts had been expecting. The company also said it planned to slow hiring.
“The Snap results came as a warning for other Big Tech names that rely on ad revenue,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
“Therefore, FAANG stocks, which recovered to an almost two-month high yesterday, may not extend gains to the weekly close as the latest Snap results could reverse appetite for at least a couple of them, including Google and Meta before the closing bell.”
Meanwhile, Twitter Inc. reported a decline in quarter revenue citing industry headwinds due to the macroenvironment and uncertainty related to Elon Musk’s takeover bid. The two sides are now facing off in court after Mr. Musk pulled out of the deal. The social media company reported second-quarter revenue of US$1.18-billion, compared with US$1.19-billion a year earlier. Analysts were expecting US$1.32-billion, according to Refinitiv IBES data. Twitter shares were trading up slightly just after the opening bell.
In Canada, investors got a better-than-forecast reading on retail sales. Statistics Canada says sales rose 2.2 per cent in May. Economists had been looking for an increase of about 1.6 per cent. Sales were up in 8 of 11 subsectors, led by increased sales at gasoline stations and motor vehicle and parts dealers. Sales rose in every province.
“The advance estimate for June suggested a slowdown in sales to 0.3 per cent, which would represent a decline in volume terms,” CIBC economist Katherine Judge said. “Indeed, with consumption to shifting towards services, while inflation erodes consumer purchasing power, demand for discretionary goods will be under more pressure ahead.”
However, the agency also said it expects to see sales slow in June, with an early estimate indicating growth of 0.3 per cent for the month.
In Asia, Japan’s Nikkei finished 0.40-per-cent higher despite seeing losses early in the session. Hong Kong’s Hang Seng added 0.17 per cent.
Commodities
Crude prices struggled in a choppy session with demand concerns coming up against continued worries over tight supply.
The day range on Brent is US$103.20 to US$105.72. The range on West Texas Intermediate is US$95.65 to US$97.95. Both benchmarks feel about 3 per cent on Thursday.
“Global recession fears and the resumption of Russian gas flows to Europe seem to have been the catalyst [for the previous session’s losses], although I am sure that trading volatility recently is reducing liquidity as well, exacerbating movers,” OANDA senior analyst Jeffrey Halley said.
SPI Asset Management’s Stephen Innes also noted that traders are now looking ahead to next week’s rate decision from the Federal Reserve as recession fears cloud the outlook for demand.
“While 75 [basis-point rate hike] is in the cards, guidance will be important and any softening in the rate hike outlook would be great for global growth,” he said.
In other commodities, gold prices edged lower amid a stronger U.S. dollar and continued rate hikes by global central banks.
Spot gold was down 0.2 per cent at US$1,715.93 per ounce by early Friday morning. Prices dropped to their lowest level in more than a year at US$1,680.25 on Thursday before ending up 1.3 per cent. Gold has gained 0.5 per cent so far this week, according to Reuters.
U.S. gold futures rose 0.3 per cent to US$1,717.70 per ounce.
Currencies
The Canadian dollar was little changed while its U.S. counterpart advanced against a group of world currencies.
The day range on the loonie is 77.44 US cents to 77.74 US cents. The dollar was closer to the top end of that spread in the predawn period. The Canadian dollar is up more than 1 per cent against the greenback so far this week.
“The risk mood and broader USD tone is likely to set the tone for the CAD to a large extent on the session but the weekly gain in the CAD looks impressive,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, U.S. dollar index, which weighs the greenback against six major peers, was last up 0.52 per cent to 107.17, following a 0.34-per-cent decline during the previous session. The index is off about 0.79 per cent for the week so far and looks headed to its first losing week in four, according to figures from Reuters.
The euro was down 0.8 per cent at US$1.0152, falling further from Thursday’s peak of US$1.0279 following the ECB first rate hike in 11 years.
Britain’s pound slipped 0.4 per cent to US$1.1955, trimming its gain for the week to 0.72 per cent, Reuters reports.
In bonds, the yield on the benchmark U.S. 10-year note was lower at 2.811 per cent.
More company news
Calgary-based Bonterra Energy Corp. says George Fink will be retiring as the company’s president and CEO effective Sept. 6. Mr. Fink will remain on Bonterra’s board. Patrick Oliver will be succeeding Mr. Fink in the post and will be joining the board.
American Express Co posted a 14-per-cent fall in quarterly profit on Friday as higher costs and an increase in reserves for potentially sour loans overshadowed record cardholder spending. Net income fell to $1.96-billion, or $2.57 per share, in the three months ended June 30, from $2.28-billion, or $2.8 per share, a year earlier. But adjusted card member spending surged by 30 per cent as customers, undeterred by decades-high inflation, spent heavily on travel and entertainment.
Verizon Communications Inc cut its annual adjusted profit forecast after adding fewer-than-expected monthly bill-paying phone subscribers in the second quarter, a sign that red-hot inflation has begun impacting its business. The U.S. wireless carrier added 12,000 net phone subscribers who pay a monthly bill in the quarter compared with FactSet estimates of 150,800 additions. In the first quarter, Verizon had lost about 36,000 subscribers. The company now expects 2022 adjusted earnings per share in the range of US$5.10 and US$5.25 per share, lower than the prior outlook of US$5.40 to US$5.55.
Economic news
Euro area manufacturing, services and composite PMIs. UK releases consumer confidence, retail sales and PMIs.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
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