Canada’s main stock index opened down Tuesday with lower crude prices pressuring energy stocks. On Wall Street, key indexes were also in the red at the start of trading amid a flood of corporate results.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 66.99 points, or 0.32 per cent, at 20,609.75.
In the U.S., the Dow Jones Industrial Average fell 47.06 points, or 0.14 per cent, at the open to 33,828.34. The S&P 500 opened lower by 10.61 points, or 0.26 per cent, at 4,126.43, while the Nasdaq Composite dropped 68.40 points, or 0.57 per cent, to 11,968.81 at the opening bell.
Earnings continued to dominate on Tuesday, with the first of a slew of big tech results this week due after the bell when Alphabet and Microsoft report. Alphabet stock is up about 20 per cent so far this year while Microsoft has gained about 17 per cent, Michael Hewson, chief market analyst with CMC Markets U.K., notes.
“With Facebook owner Meta Platforms due tomorrow and Amazon on Thursday, any disappointment here could well prompt investors to reassess earnings expectations over the course of the rest of the year,” Mr. Hewson said.
“That being said it’s more likely that this week’s earnings numbers could merely shift the markets focus to next week’s Fed meeting when we are likely to see another 25-basis-point rate hike.”
U.S. investors also got results this morning from McDonald’s and General Motors among others.
In Canada, West Fraser Timber and construction company Aecon report after the close.
Meanwhile, Canadian National Railway Co. reported record first-quarter revenue, helped by higher crude prices and a bumper grain crop.
CN posted revenue of $4.31-billion for the quarter ended March 31, up 16 per cent from $3.71-billion a year earlier. On an adjusted basis, diluted earnings per share rose 38 per cent to $1.82 from $1.32 a year ago, topping analysts’ forecasts of $1.72 per share, according to financial data firm Refinitiv.
Overseas, the pan-European STOXX 600 was down 0.32 per cent by midday. Britain’s FTSE 100 fell 0.14 per cent. Germany’s DAX was flat and France’s CAC 40 slid 0.57 per cent and 0.61 per cent, respectively.
In Asia, Japan’s Nikkei edged up 0.09 per cent. Hong Kong’s Hang Seng dropped 1.71 per cent.
Commodities
Crude prices turned negative ahead of the release of the latest U.S. weekly inventory figures.
The day range on Brent was US$82.44 to US$83.06 in the early premarket period. The range on West Texas Intermediate was US$78.49 to US$79.07.
“Time will tell whether OPEC+ decision to cut output will push oil prices back to US$100 as some feared but it doesn’t look particularly promising at this point,” OANDA senior analyst Craig Erlam said.
“The economic outlook has deteriorated but the degree to which that is the case is still unclear.”
Later in the day, the American Petroleum Institute reports its weekly inventory numbers. More official U.S. government figures will follow on Wednesday morning.
Analysts expect to see U.S. inventories fall by 1.7 million barrels last week.
Meanwhile, Reuters reports that bookings in China for trips abroad during the upcoming May Day holiday signal an ongoing recovery in travel to Asian countries.
“Investors expressed optimism that Chinese holiday travel would boost fuel demand in the world’s largest oil importer,” Leon Li, an analyst at CMC Markets, said.
In other commodities, spot gold was steady at US$1,988.27 per ounce early Tuesday morning, while U.S. gold futures was unchanged at US$1,999.40.
“The uncertainty over the outlook has seen the rally stall just shy of record highs and while traders don’t seem particularly keen to give up on it, the fact that interest rate expectations have become slightly more hawkish recently has made rediscovering momentum challenging,” Mr. Erlam said.
Currencies
The Canadian dollar was lower while its U.S. counterpart rose against a group of world currencies as risk sentiment weakened.
The day range on the loonie was 73.58 US cents to 73.94 US cents in the early premarket period. Over the past month, the Canadian dollar is up about 0.22 per cent against the greenback.
“The CAD is struggling again as risk appetite weakens and investors shy away from commodity FX,” Shaun Osborne, chief FX strategist with Scotiabank, said.
There were no major Canadian economic releases due Tuesday.
On world markets, the U.S. dollar index was last up 0.2 per cent at 101.48 in a flight to safety as worries about the health of the financial system resurfaced following earnings from First Republic Bank and UBS, Reuters reported.
The euro was down about 0.2 per cent against the U.S. dollar but still holding above US$1.10. The euro has gained about 1.7 per cent so far in April.
Britain’s pound was down 0.2 per cent at US$1.2463, but not far from the 10-month high of US$1.2545 reached earlier this month, according to figures from Reuters.
In bonds, the yield on the U.S. 10-year note was lower at 3.449 per cent in the predawn period.
More company news
McDonald’sglobal comparable sales rose 12.6 per cent in the first quarter, it said on Tuesday, blasting past Wall Street estimates as the burger chain banked on higher menu prices and more customer visits. Sales also rose by the same 12.6 per cent for all of McDonald’s Corp’s geographical segments. Analyst had expected an 8.54 per cent rise globally, according to Refinitiv IBES data. –Reuters
General Motors Co on Tuesday lifted its full-year profit and cash flow forecasts, citing stronger-than-expected demand and higher prices, even as pre-tax profits for the first quarter fell. The No. 1 U.S. automaker said it expects full-year pre-tax profits in a range between US$11-billion and US$13-billion, up US$500-million from a prior forecast. –Reuters
First Republic Bank shares sank more than 20 per cent just after Tuesday’s opening bell after the U.S. lender said deposits plunged by more than US$100-billion in the first quarter and it was exploring options such as restructuring its balance sheet. The deposit slump overshadowed profits that beat expectations for the beleaguered lender, which was shored up through an injection of deposits by larger U.S. banks last month after the collapse of two U.S. regional lenders. The bank plans to slash expenses by cutting executive compensation, paring back office space, and laying off nearly 20% to 25% of employees in the second quarter, it said Monday. –Reuters
UBS Group set aside more money to draw a line under its involvement in toxic mortgages, dealing a heavy blow to first-quarter profit as it prepares to integrate fallen rival Credit Suisse. Switzerland’s biggest bank reported a 52-per-cent slide in quarterly profit, having set aside a further US$665-million to cover the costs of the U.S. residential mortgage-backed securities that played a central role in the global financial crisis. –Reuters
PepsiCo Inc on Tuesday raised its annual revenue and profit forecasts, betting on steady demand for its sodas and snacks as well as price hikes to offset rising costs. The company said it expects 2023 organic revenue to rise 8%, compared with its prior forecast of a 6% increase. PepsiCo now sees annual core earnings per share of $7.27, compared with $7.20 earlier. –Reuters
3M Co said on Tuesday it would cut about 6,000 positions globally as the U.S. industrial conglomerate looks to restructure its business amid waning demand and increasing costs. Shares of the St. Paul, Minnesota-based company were up 1.6% at $106.7 premarket. –Reuters
Economic news
(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index (20 city) for February.
(9 a.m. ET) U.S. FHFA House Price Index for February.
(10 a.m. ET) U.S. new home sales for March.
With Reuters and The Canadian Press
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for April.
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.
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