Canada’s main stock index opened lower Tuesday with energy stocks under pressure. Key U.S. indexes saw a muted start to the trading day in the wake of fresh U.S. inflation figures.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 35.33 points, or 0.17 per cent, at 20,283.03.
In the U.S., the Dow Jones Industrial Average rose 37.17 points, or 0.10 per cent, at the open to 36,442.10.
The S&P 500 opened lower by 4.14 points, or 0.09 per cent, at 4,618.30, while the Nasdaq Composite dropped 9.48 points, or 0.07 per cent, to 14,423.01 at the opening bell.
On Tuesday, investors got the latest reading on inflation with the release of November’s consumer price index ahead of the start of trading. Economists are expecting to see a continued cooling of price pressures.
The figures largely matched market forecasts with the annual rate of U.S. inflation easing to 3.1 per cent in November from 3.2 per cent a month earlier. On a monthly basis, the consumer price index rose 0.1 per cent.
Core inflation held steady at 4 per cent year-over-year, also in line with economists’ expectations.
“Somewhere between bad and good, today’s November CPI showed price pressures mildly accelerate as the market expected,” CIBC economist Ali Jaffrey said.
“While today’s data shows less progress than the FOMC would have liked, the Fed still has room to be patient,” he said in a note.
The report comes as the Fed begins its two-day policy meeting today and will make its rate announcement tomorrow afternoon. Markets are widely looking for the central bank to hold borrowing costs steady although traders will also be watching for hints about the timing of possible rate cuts in the new year. Markets are now pricing in about a 48-per-cent chance of a rate cut in March, according to CME FedWatch tool.
Later this week, markets will hear from Bank of Canada Governor Tiff Macklem, who is scheduled to speak in Toronto on Friday. Earlier this month, Canada’s central bank again held its key policy rate steady at 5 per cent but also indicated that it could hike again if needed to combat inflation.
“We expect him to stick to the bank’s mildly hawkish script, pushing back against expectations for imminent rate cuts,” BMO economist Shelly Kaushik said. “Despite the progress made on inflation so far, and evidence of the economy stalling in recent months (and, in our view, through Q1), there’s still plenty more to be done.”
Overseas, the pan-European STOXX 600 was little changed by midday. Britain’s FTSE 100 added 0.37 per cent. Germany’s DAX and France’s CAC 40 gained 0.10 per cent and 0.22 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.16 per cent. Hong Kong’s Hang Seng added 1.07 per cent.
Commodities
Crude prices turned lower as demand concerns continue to temper market sentiment.
The day range on Brent was US$75.94 to US$76.66 in the early premarket period. The range on West Texas Intermediate was US$71.27 to US$71.96.
“It’s notable that there is a palpable lack of interest in this market, which is heavily intervened and controlled,” Stephen Innes, managing partner with SPI Asset Management, said in an early note.
“Several factors, including a mild winter, rising fuel inventories in developed economies, and doubts about OPEC+ production cuts, have contributed to oil prices experiencing their lengthiest losing streak in five years.”
Prices advanced early Tuesday as geopolitical tensions remain high. Reuters reported that a cruise missile launched from Houthi-controlled Yemen struck a commercial chemical tanker, causing a fire and damage but no casualties in the latest such attack to heighten safety risks for tankers in vital shipping lanes.
Later Tuesday, markets will get the first of two weekly U.S. inventory reports, with new figures from the American Petroleum Institute. More official U.S. government figures follow on Wednesday. Markets are expecting to see a decline in crude inventories of more than 1 million barrels last week.
In other commodities, gold prices were firmer after hitting their lowest level in three weeks during the previous session.
Spot gold was up 0.2 per cent at US$1,984.39 per ounce, by early Tuesday morning. U.S. gold futures rose 0.3 per cent to US$1,999.60.
Currencies
The Canadian dollar was slightly firmer while its U.S. counterpart slipped against a basket of world currencies.
The day range on the loonie was 73.59 US cents to 73.81 US cents in the early premarket period.
“The CAD is still not really finding much support on its own merits amid wide short-term rate spreads and a renewed slump in commodity prices,” Shaun Osborne, chief FX strategist with Scotiabank, said.
On world markets, the U.S. dollar index, which weighs the greenback against a basket of currencies, was down 0.28 per cent in early trading at 103.80. The index has slid 0.24 per cent over the past five days.
The euro rose 0.22 per cent to US$1.0788, and Britain’s pound was steady at US$1.2556, according to figures from Reuters.
In bonds, the yield on the U.S. 10-year note was lower at 4.195 per cent in the predawn period.
More company news
The Globe’s Alexandra Posadzki reports Rogers Communications Inc. is selling its entire stake in Cogeco Inc. and subsidiary Cogeco Communications Inc. for $829-million to the Caisse de dépôt et placement du Québec as the Toronto-based telecom looks to pay down debt after its takeover of Shaw Communications Inc. The Caisse will then sell some of those shares to the public as well as back to Cogeco Inc. through a complex series of deals, leaving it with a 16.1-per-cent stake in Cogeco Communications.
Oracle missed estimates for second-quarter revenue on Monday, as an uncertain economy and competition in the cloud computing market weighed on demand for its cloud offerings. Sticky inflation and high borrowing costs have forced firms to cut back on expenditure, hurting firms like Oracle that depend on enterprise spending. The cloud-based software maker reported second-quarter revenue of US$12.94-billion, below analysts’ average estimate of US$13.05-billion, according to LSEG data. –Reuters
Transat AT Inc. says it has named veteran Quebec executive Jean-Francois Pruneau as its next chief financial officer. Pruneau will start officially at the travel company on Jan. 9. He was most recently executive vice-president and chief financial officer at Starpax Biopharma. –The Canadian Press
Economic news
(8:30 a.m. ET) U.S. consumer price index for November.
(10 a.m. ET) U.S. quarterly services survey for Q3.
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.
