Before the Bell: What every Canadian investor needs to know today – The Globe and Mail
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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.
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.
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.
Euro area manufacturing, services and composite PMIs. UK releases consumer confidence, retail sales and PMIs.
(830 am ET) Canada retail sales for May.
(945 am ET) U.S. S&P global PMIs for July.
With Reuters and The Canadian Press
‘People are going to be shocked’: NSLC hikes prices ahead of federal tax increase
Regular shoppers at Nova Scotia liquor stores faced significant price hikes Monday on beer, wine and spirits.
Retiree John McCracken was picking up his usual bottle of wine when he spoke to CTV News outside the NSLC store on Joseph Howe Drive in Halifax.
“I bought last week, the same bottle was $2 less,” said McCracken. “We’re talking like $15, $16 bottle of wine. So not high-end wine.”
“If you go into that liquor store right now, people are going to be shocked.”
Workers were replacing pricing signs in all stores on Monday, but officials insist the overall increase only amounts to about 3 per cent.
“It has to do with overall costs to our supplier community. So that could be anything from freight, transportation, commodities costs, things like glass or aluminum, or other commodities like barley — all of those things are seeing an increase in price, and that’s what factoring in to the overall price increase,” said Allison Himmelman, a spokesperson for the Nova Scotia Liquor Corporation (NSLC).
She says the increase is below the cost of inflation.
Last month, the corporation reported a healthy earnings increase of 6.6 per cent.
On April 1, federal excise taxes are set to increase another 6.3 per cent — the biggest increase in 40 years.
“The excise tax is actually just one factor that goes into our overall prices here at the NSLC,” said Himmelman.
“And it’s actually a very small factor because not all suppliers choose to pass on that excise tax to their retail product prices.”
Still, some local bars and restaurants say the hikes will have to be passed on to customers, which will hurt business.
“There’s no doubt, yeah, we can’t absorb it,” said Dimo Georgakakos, owner of the iconic Gus’ Pub & Grill in Halifax’s north end.
“We’ve been absorbing so many things, and in the bar business we’re a stoic bunch, and we just sort of put our heads down and keep doing it. And now, they just sort of do that and we’ve got to pass it on and it’s going to make customers come here less,” said Georgakakos, son of the bar’s founder.
He and others are still recovering from lost business in the pandemic, and worry many customers have gotten used to staying home.
“In general, things are not going to get back to the way they were,” said Georgakakos. “It’s going to be different.”
NSLC notes that increased revenue from price adjustments is also shared with producers, including Nova Scotia wineries, brewers and distillers.
Saudi National Bank appoints chairman after Credit Suisse loss
Decision made nearly two weeks after former chairman Ammar Al Khudairy said the kingdom’s biggest bank by assets would not buy more shares in Credit Suisse on regulatory grounds.
Saudi National Bank, the largest shareholder in Credit Suisse before the bank’s rescue this month, named a new chairman after the lender suffered significant losses on its investment.
CEO Saeed Mohammed Al Ghamdi will take over as the new chairman from Ammar Al Khudairy, who resigned for personal reasons, the bank said on Monday. Deputy CEO Talal Ahmed Al Khereiji takes over as acting chief executive, a bourse statement said.
All changes are effective on Monday and come nearly two weeks after Al Khudairy said the kingdom’s biggest bank by assets would not buy more shares in the Swiss financial institution on regulatory grounds.
The remarks were seen as a trigger to a further sell-off in Credit Suisse’s shares and intensified a crisis of confidence in the lender that had already seen clients pull out more than $110bn in the last three months of 2022.
Combined with global jitters in the banking sector and an already weakened share price, Al Khudairy’s comments contributed to Credit Suisse losing a fifth of its value, which eventually forced it into a takeover by its domestic rival UBS for $3.2bn.
Saudi National Bank, which acquired almost 9.9 percent of Credit Suisse for 5.5 billion riyals ($1.46bn) in November, has itself lost more than $26bn in market value since October 27 after committing to the investment.
By last week, it was sitting on a loss of more than $1bn but said on March 20 that the drop in its investment’s value had no impact on its growth plans and would not affect profitability.
Al Khudairy also said this month that the bank was not looking at any international acquisitions now and instead was focused on its Saudi business.
What every Canadian investor needs to know today
Canada’s main stock index opened up on Monday with energy and financial stocks adding upward pressure. On Wall Street, key indexes also started higher after a deal to acquire a big chunk of Silicon Valley Bank helped ease concerns about the health of the sector.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 58.63 points, or 0.3 per cent, at 19,560.12.
In the U.S., the Dow Jones Industrial Average rose 39.19 points, or 0.12 per cent, at the open to 32,276.72. The S&P 500 opened higher by 11.94 points, or 0.30 per cent, at 3,982.93, while the Nasdaq Composite gained 44.58 points, or 0.38 per cent, to 11,868.54 at the opening bell.
Overnight, First Citizens said it would buy Silicon Valley Bank’s deposits and loans along with certain other assets from the U.S. Federal Deposit Insurance Corporation.
The FDIC said in separate statement it has received equity appreciation rights in First Citizens stock with a potential value of up to U.S. $500-million as part of the deal, Reuters reported. First Citizens said the transaction was structured to preserve its solid financial position and the combined company will have a diverse loan portfolio and deposit base.
SVB’s collapse, the biggest since the 2008 financial crisis, earlier this month sent shockwaves through the global banking sector, triggering huge market volatility and an heightened focus on the health of institutions around the world.
In Canada, Finance Minister Chrystia Freeland delivers the federal government’s next budget on Tuesday afternoon. Investors will be looking for inflation relief among efforts to address the rising cost of living for Canadians.
“Climate policy, and more specifically, Canada’s response to the massive U.S. Inflation Reduction Act, will headline the budget,” Alvin Tan, Asia FX strategist with RBC, said.
“Some targeted relief to help more vulnerable groups cope with higher living costs is also expected, but plans to return the budget to balance remain at best aspirational.”
Later in the week, investors will get a look at the health of the Canadian economy at the start of the year when Statistics Canada releases its report on January GDP on Friday. Early estimates suggest GDP grew 0.3 per cent for the month.
Canadian companies reporting results include Dollarama on Wednesday and BlackBerry on Thursday.
The latest deadline to close Rogers Communications’ $20-billion deal to buy Shaw Communications expires at the end of the week. The companies are awaiting federal approval for the acquisition.
Overseas, the pan-European STOXX 600 was up 1.21 per cent by midday. Britain’s FTSE 100 advanced 0.95 per cent. Germany’s DAX and France’s CAC 40 were up 1.29 per cent and 1.06 per cent, respectively.
In Asia, Japan’s Nikkei finished 0.33-per-cent higher. Hong Kong’s Hang Seng fell 1.75 per cent.
Crude prices advanced as developments in the banking sector helped ease jitters in broader markets.
The day range on Brent was US$74.80 to US$75.96 in the early premarket period. The range on West Texas Intermediate was US$69.13 to US$70.24.
Brent added about 2.8 per cent last week while WTI rose more than 3 per cent.
Sentiment drew some support from new that First Citizens would buy a big chunk of failed Silicon Valley Bank, helping ease concerns about the state of the global banking sector.
Prices also saw some upward pressure from rising geopolitical tensions in Europe amid Russian President Vladimir Putin’s plans to place tactical nuclear weapons in Belarus.
Reuters reports that the move is one of Russia’s most pronounced nuclear signals yet and a warning to NATO over its military support for Ukraine, which has called for a meeting of the U.N. Security Council in response. NATO slammed Putin for his “dangerous and irresponsible” nuclear rhetoric.
In other commodities, gold prices fell for a second session as the U.S. dollar held relatively steady.
Spot gold was down 0.5 per cent at US$1,967.86 per ounce by early Monday morning. U.S. gold futures slipped 0.8 per cent to US$1,968.90.
The Canadian dollar was up modestly while its U.S. counterpart held recent gains against a group of world currencies.
The day range on the loonie was 72.75 US cents to 72.90 US cents early Monday morning.
There were no major Canadian economic releases due Monday.
On world markets, the dollar index, which measures the currency against six rivals, rose 0.06 per cent at 103.05, after advancing 0.5 per cent on Friday as investors sought safer holdings amid concerns about the health of the world’s banking sector.
The euro was up 0.08 per cent to US$1.0771, after falling 0.6 per cent on Friday, according to figures from Reuters.
Britain’s pound was at US$1.2260, up 0.25 per cent, after falling 0.5 per cent on Friday. The Australian dollar rose 0.14 per cent to US$0.6652. The New Zealand dollar was up 0.02 per cent at US$0.6202.
More company news
The Globe’s James Bradshaw reports Onex Corp. is offering to shorten a sunset clause that would keep founder Gerry Schwartz in control of the company to three years in a bid to win support from shareholders over the founder’s plan to step down as CEO. Mr. Schwartz, 80, is chairman and chief executive officer and also controls the $50-billion private equity and asset management company through multiple voting shares. He plans to step aside this spring, with president Bobby Le Blanc taking over as CEO.
Australia’s Origin Energy Ltd on Monday agreed a A$15.35 billion (US$10.21-billion) takeover offer from a consortium led by Canada’s Brookfield, nearing the conclusion of one of the biggest private equity-backed buyouts in the country announced last year. Once the deal is finalized, Origin will be broken up into two businesses – Energy Markets business to be acquired by Brookfield; while MidOcean Energy, the other consortium partner, would take control of Origin’s integrated gas business. –Reuters
Toronto-based Li-Cycle Holdings Corp said on Monday it will build a French facility to break down batteries from forklift manufacturer The Kion Group, marking the latest expansion by the rapidly growing recycling company. The French facility, which is expected to open in 2024 and complement similar sites under development in Germany and Norway, will break down lithium-ion batteries that power Kion’s forklifts and other heavy machinery, giving Li-Cycle a fresh source of batteries to recycle beyond the consumer automobile market. –Reuters
Germany business climate
With Reuters and The Canadian Press
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