Equity Markets
U.S. stocks opened little changed on Wednesday, following two days of strong gains, as investors remained on the sidelines ahead of a highly anticipated tax plan from the Trump administration. Earnings also remained in focus with heavyweights Boeing Co. and Procter & Gamble Co. reporting early and PayPal Inc. posting after the close.
The Dow Jones industrial average was up 19.19 points, or 0.09 per cent, at 21,015.31, the S&P 500 was up 0.03 points, or 0.02 per cent at 2,388.64 and the Nasdaq composite was up 2.81 points, or 0.05 per cent, at 6,028.31.
In Toronto, the S&P/TSX was down 29.38 points, or 0.19 per cent, at 15,715.81, led lower by financials, energy and materials stocks. Home Capital fell 50 per cent initially after announcing a plan for a $2-billion credit facility, and Restaurant Brands was off 7 per cent after reporting earnings that missed analyst expectations.
More than three-quarters of S&P 500 companies that have reported results until Tuesday have beaten earnings estimates, according to Thomson Reuters I/B/E/S.
On Tuesday, the Nasdaq rose to a record level while both the Dow and S&P 500 both neared recent highs.
World markets, meanwhile, hit record highs as concern about the French election moved to the sidelines. In early going European shares edged down slightly from 20-month highs as some disappointing earnings weighed on the market, but it turned higher later in the day, but Asian stocks advanced. Tokyo's Nikkei gained 1.1 per cent, Hong Kong's Hang Seng 0.5 per cent, and the Shanghai composite 0.2 per cent.
In Europe, the Paris CAC 40 was up 0.14 per cent, while London's FTSE 100 was up 0.06 per cent and Germany's DAX was flat. "It does feel foolhardy to expect the Trump administration to deliver the kind of tax reform that is being talked about, but hope springs eternal in markets (as the euro zone crisis showed)," Chris Beauchamp, senior analyst at IG, said in a note looking ahead to the trading day.
Commodities
Crude prices slid as rising inventories continued to cast doubt that OPEC supply cuts could ease the market overhang. Figures released Tuesday by the American Petroleum Institute showed crude stocks rose 897,000 barrels in the week to April 21. Analysts had expected a draw of 1.7 million barrels. The numbers also showed a big build in gasoline stocks. Brent crude futures were down slightly early on and sat about 8.5 per cent below April highs. U.S. West Texas Intermediate was also trading lower after a slight gain on Tuesday. WTI has declined for seven of the last eight sessions. The U.S. Energy Information Administration issues its inventory data at Wednesday morning. "Should these figures be mirrored by the EIA, widespread concerns over stubbornly high OECD oil stocks will have been justified in what would be a setback to the global oil rebalancing process," analysts at PVM said.
Gold rebounded from a two-week low on profit taking in the wake of recent losses, although continued geopolitical uncertainty was seen by some as providing price support down the road. Spot gold was down marginally in early trading. U.S. gold futures were also just below the break-even point. Gold has lost about 3 per cent since hitting a five-month high on April 17. Spot silver was flat after touching a one-month low. In London, copper was little changed.
Currencies and bonds
The Canadian dollar was down again after losing more than a quarter of a cent Tuesday on news that the U.S. would slap a 20-per-cent countervailing duty on Canadian softwood lumber exports. Some analysts see the loonie trading as low as 70 to 72 cents (U.S.) in the weeks ahead.
"The U.S. trade policies that could further weigh on the Canadian trade terms, soft oil markets and the broadly stronger U.S. dollar will likely keep the selling pressure tight on the loonie," London Capital Group senior market analyst Ipec Ozkardeskaya said. Elsewhere, the euro held onto most this weeks gains against a strengthening U.S. dollar.
The euro was down slightly in early trading but was still up 1.7 per cent from Friday's closing price.
In bonds, U.S. Treasury yields rose more than 2 per cent for the first time in two weeks. Euro zone government bond yields edged higher of Mr. Trump's tax announcement.
Stocks set to see action
Shares of Home Capital Group Inc. sank 50 per cent in the opening minutes of trading on Wednesday after the embattled alternative mortgage lender said ithas reached a non-binding agreement with "a major institutional investor" for a $2-billion credit-line for its Home Trust subsidiary, as the company's products face continued withdrawals. A firm commitment should be announced later Wednesday, the company said in a release, with the credit secured against a portfolio of mortgages. The terms of the agreement, it said, "would have a material impact on earnings, and would leave the Company unable to meet previously announced financial targets." The line of credit, "combined with Home Trust's current available liquidity, would provide Home Trust access to more than $3.5-billion in total funding, more than twice the amount of outstanding High Interest Savings Account (HISA) balances," the statement read. "Access to these funds is intended to mitigate the impact of a decline in Home Trust's HISA deposit balances that has occurred over the past four weeks and that has accelerated since April 20." It said HISA balances have fallen by $591-million in the period from March 28 to April 24 and stood at. $1.4-billion as at April 24.
BCE Inc. has lowered its benchmark earnings estimate for this year in revised guidance issued this morning ahead of the company's annual shareholders meeting. The company is now estimating its full-year adjusted earnings per share will be no higher than $3.40 per share, which is below the low end of its previous estimate issued in February. The revision was contained in first-quarter results issued by Canada's largest telecommunications and media company, which also increased its revenue guidance and free cash flow estimates as a result of acquiring Manitoba Telecom Services.
Restaurant Brands Inc., the owner of Tim Hortons and Burger King, is reporting flat sales at its established locations in the first quarter but a nine per cent increase in revenue, which was above analyst estimates. Adjusted earnings rose 20 per cent to $170.6 million, or 36 cents per share, two cents above estimates. Revenue rose to $1-billion. Its shares fell 0.8 per cent in premarket trading.
PepsiCo Inc. reported higher-than-expected quarterly revenue and profit as the company benefited from demand for its healthier drinks and snacks and kept a tight leash on costs. Net income rose to $1.32-billion, or 91 cents per share, in the quarter, from $931-million, or 64 cents per share, a year earlier. The year-earlier period included a $373-million charge related to its transaction with Tingyi (Cayman Islands) Holding Corp. Excluding items, the company earned 94 cents per share. Revenue rose 1.6 per cent to $12.05-billion, the second quarter of rising sales after eight quarters of decline. Analysts on average had expected earnings of 92 cents per share on revenue of $11.98-billion, according to Thomson Reuters I/B/E/S.
Canadian oil company Cenovus Energy Inc. reported a quarterly profit, compared with a year-ago loss, helped by lower operating costs and higher oil sands production. The company's net profit was $211-million, or 25 cents per share, in the first quarter ended March 31, compared with a loss of $118-million, or 14 cents per share, a year earlier. Total oil production rose about 19 per cent to 234,914 barrels per day.
Credit Suisse will raise around 4 billion Swiss francs ($4-billion) from its shareholders, the embattled bank said on Wednesday, trying to close the gap in financial strength with rivals. The bank said the decision, which saw management ditch an alternative plan to publicly list part of its Swiss business, should remove any concerns over the group's capital strength. "This was an option which – we got very clear views from our shareholders – was seen as the best option," the bank's finance chief David Mathers told journalists, as it unveiled a rebound in quarterly profit but struck a cautious tone about the future.
Procter & Gamble Co. reported an 8.3-per-cent decline in third-quarter profit, citing a slowdown in market growth, geopolitical uncertainty and a stronger dollar. Net income attributable to the Cincinnati, Ohio-based company declined to $2.52-billion, or 93 cents per share, in the three months ended March 31, from $2.75-billion, or 97 cents per share, a year earlier. P&G, whose iconic brands include Tide, Pampers, Head-and-Shoulders and Vicks, said net sales fell about 1 per cent to $15.61-billion - the thirteenth straight quarter of declines.
Twitter Inc. reported a 6-per-cent increase in monthly active users, beating analysts' expectations, after several quarters of stagnating growth. The microblogging service said its user base rose to 328 million average monthly active users in the first quarter from 319 million in the fourth quarter. Analysts on average had expected 321.3 million monthly active users, according to market research firm FactSet StreetAccount. Revenue fell 7.8 per cent to $548.3-million, its first drop since its initial public offering. Net loss narrowed to $61.6-million, or 9 cents per share, in the first quarter ended March 31, from $79.7-million, or 12 cents per share, a year earlier.
Boeing Co. is reporting a first-quarter profit of $1.45-billion (U.S.) or $2.34 per share. Earnings, adjusted for non-recurring gains, came to $2.01 per share, which surpassed Wall Street expectations of $1.91 per share. Its revenue of $20.98-billion fell short of Street forecasts of $21.44-billion. Its shares slipped 1.1 per cent in premarket trading.
United Technologies Corp., the maker of Otis Elevators, Pratt & Whitney aircraft engines and Carrier air conditioners, beat analyst expectations with a 17.8- per-cent rise in first-quarter profit, helped by higher sales in all four of its business units. Its net income attributable to common shareholders rose to $1.39-billion. Excluding a one-time 25-cent-per-share gain, earnings rose to $1.48 a share, compared with analyst consensus estimates of $1.39 a share, according to Thomson Reuters I/B/E/S. Its shares rose nearly 1 per cent in premarket trading.
AT&T Inc.'s quarterly revenue missed estimates due to lower equipment sales as customers held onto phones longer and rival wireless carriers offered new promotions on unlimited data plans, the No. 2 U.S. wireless carrier said. Total operating revenue fell nearly 3 per cent to $39.37-billion (U.S.), mainly due to record-low sales of wireless handset sales. Net income attributable to AT&T was $3.47-billion, or 56 cents a share, down from $3.8-billion, or 61 cents a share, in the year-ago period. Excluding items, earnings per share matched analysts' consensus estimate of 74 cents according to Thomson Reuters I/B/E/S. Revenue was shy of the $40.53-billion expected by analysts. Its shares fell 0.1 per cent in premarket trading.
Wynn Resorts jumped 5.7 per cent after the casino operator reported better-than-expected revenue from its new casino in China's gambling territory.
United States Steel tumbled nearly 17 per cent after the steelmaker's profit and revenue missed analysts' expectations.
Companies reporting after the bell include: PayPal Inc., Goldcorp. and Suncor Energy Inc.
More reading: Wednesday's analyst upgrades and downgrades
More reading: Wednesday's small-cap stocks to watch
Economic News
Statistics Canada says retail sales fell 0.6 per cent to $47.8-billion in February, following a 2.3-per-cent increase in January. Sales were down in 5 of 11 subsectors, representing 67 per cent of total retail sales. Most economists had been expecting a flat reading on monthly retail sales.
Lower sales at motor vehicle and parts dealers and gasoline stations were the main contributors to February's decline. Statscan said. Excluding these two subsectors, retail sales were up 0.5 per cent. After removing the effects of price changes, retail sales in volume terms slipped 0.1 per cent.
"Despite the pullback in February, the massive jump recorded in January leaves retail sales well above the levels seen in the fourth quarter of 2016," TD economist Dina Ignjatovic said. "As such, it is expected to be supportive of consumer spending and overall economic growth during the first quarter of this year."
Figures released Wednesday by the U.S. Energy Information administration showed crude inventories fell 3.64 million barrels to 528.7 million last week, more than twice the decline most analysts had expected. Gasoline stockpiles increased 3.37 million barrels, the first gain in nine weeks.
With files from Reuters