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.
Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.
The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.
Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.
The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.
The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.
The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.
The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.
Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.
In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.
“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.
As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.
Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.
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