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.
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.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
