Equity Markets
Canada's main stock index moved lower in early trade on Tuesday as energy stocks weighed with lower oil prices and financials and mining companies also slipped.
The Toronto Stock Exchange's S&P/TSX composite index was down 73.44 points, or 0.46 per cent, at 15,952.82 shortly after the open.
Ahead of the open on Bay Street, Bombardier said that EgyptAir had signed a letter of intent to purchase 24 CS300 jets. The order is valued at $1.4-billion at list prices for a firm order of 12 planes. There is an option for an additional 12. Last month, Bombardier surprised the markets with news that European aerospace giant Airbus SE had agreed to take a majority stake in the C Series program in exchange for Airbus' marketing and purchasing power.
Also ahead of the open, marijuana company Canopy Growth reported its latest results. Canopy Growth said second-quarter revenue rose 10.7 per cent to $17.6-million. The company posted a net loss of a penny a share compared with a profit of 5 cents a year earlier. Canopy said the weaker profit showing likely reflected continued spending to expand production and international reach. "With our objective to win and retain significant future market share, and backed by the recent $245-million investment from Constellation, we remain focused on the expansion of our cultivation capacity, extraction platform and finished branded products programs" said Canopy CEO Bruce Linton said in a statement.
Recently, Beacon Securities analyst Vahan Ajamian cauctioned that shares of Canopy Growth are rising "too fast, too furious" and expressed concerns over the company's current valuation. He downgraded his rating for the stock to "hold" from "buy" ahead of the second-quarter results. He's keeping a price target of $16.50 on the shares. The Street's consensus is $15.17.
After the close, Home Capital reports.
The Canadian dollar strengthened against its U.S. counterpart on Tuesday as the greenback broadly fell, while investors turned their attention to the resumption of NAFTA renegotiations later this week.
The U.S. dollar retreated against a basket of major currencies after strong German economic growth data drove the euro to a three-week high.
U.S., Canadian and Mexican negotiators hope to make modest progress in the next round of North American Free Trade Agreement talks in Mexico City this week.
NAFTA working groups are due to begin meeting from Wednesday. On Friday, talks will formally get underway through Nov. 21.
At 9:23 a.m. ET, the Canadian dollar was trading at $1.2711 to the greenback, or 78.67 U.S. cents, up 0.2 per cent.
The currency's strongest level of the session was $1.2701, while it touched its weakest since last Wednesday at $1.2755.
The gain for the Canadian dollar came despite the third straight day of declining prices of oil, one of Canada's major exports.
U.S. stocks opened lower for the fifth straight day on Tuesday as worries about Republican tax plans and the economy's ability to deal with more interest rate hikes weighed on the mood among investors.
The Dow Jones Industrial Average fell 65.35 points, or 0.28 per cent, to 23,374.35. The S&P 500 lost 9.07 points, or 0.350892 per cent, to 2,575.77. The Nasdaq Composite dropped 23.36 points, or 0.35 per cent, to 6,734.24.
With the quarterly earnings season winding down, the market has halted after its rally to record highs last week.
Investors were waiting for any signs of compromise on U.S. tax policy after Senate Republicans unveiled a plan last week that would cut corporate taxes a year later than a rival House of Representatives' bill.
"You're at the end of the earnings season, economic data is all distorted because of the hurricanes, I don't think there is going to be any clear picture until we get a firm yes or no for the tax bill," Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
"We'll see a bit of back-and-forth, the market's got to breathe."
A Labor Department report showed producer prices increased 0.4 per cent in October, after similar gains in September. Economists polled by Reuters had a expected a 0.1-per-cent rise.
In the 12 months through October, the producer price index jumped 2.8 per cent, the largest rise since February 2012.
St. Louis Fed President James Bullard said on Tuesday the Fed should keep its benchmark interest rate at current levels until there is an upswing in inflation.
Investors are concerned that a tightening gap between short and long-term U.S. government bond yields suggests the Federal Reserve may be in danger of hiking rates too much and killing longer term inflation and growth.
On Wall Street, Home Depot ushered in a week of retail earnings. The home improvement retailer topped analysts sales and profit forecasts as hurricanes Harvey and Irma increased demand for emergency products and rebuilding materials. Same-store sales were up 7.9 per cent in the latest quarter. Earnings per share rose to $1.84. Analysts had been expecting earnings of $1.82. Home Depot stock initially moved higher on the results only to give back most of the gains as the open approached. Analysts said the less favourable impact of the storms on Home Depot's margins could explain why the stock was trading relatively flat after the release of the results.
Later in the week, other U.S. retailers including Wal-Mart Stores Inc. and Best Buy Co. also report results.
Outside the corporate sphere, U.S. Fed chair Janet Yellen told a European Central Bank panel on Tuesday that one of the Fed's challenges is effectively communicating its message to the public, given its large number of members. The Fed has 19 members and Ms. Yellen called effective communication "really one of the challenges of our system." At its most recent meeting, the Fed kept rates unchanged but it is expected to increase borrowing costs again before the end of the year.
Overseas, European markets were mixed on earnings and data. Vodafone was one of Europe's big movers with its shares climbing 4 per cent after the British telecom raised its full-year earnings growth outlook to 10 per cent from 4-to-8 per cent.
London's FTSE 100 was trading up 0.12 per cent while Germany's DAX edged down 0.22 per cent. France's CAC 40 was off by 0.45 per cent.
Asian markets were relatively calm despite below-forecast readings on Chinese industrial output and retail sales. China's retail sales rose 10 per cent in October. Industrial output grew by 6.2 per cent in the same month. Both figures fell short of market expectations.
"There doesn't seem to be much really driving the markets right now and what little there is doesn't appear to be having a great impact," OANDA senior market analyst Craig Erlam said. "The Chinese data overnight disappointed across the board and investors pretty much shrugged it off, although it's worth noting they were only marginal misses and were in keeping with the broader trend."
Meanwhile, market sentiment continues to struggle as investors nervously await clarity on the timing of U.S. tax cuts. Last week, Senate Republicans released a plan that would cut corporate taxes a year later than a rival House bill.
In Asia, shares finished lower on the disappointing Chinese data. Japan's Nikkei ended down 0.98 per cent. Hong Kong's Hang Seng slid 0.10 per cent and the Shanghai composite index was off 0.52 per cent.
Commodities
Oil prices were mostly unchanged early on with concerns about rising U.S. output weighing on the market's expectation that OPEC will extend production cuts beyond March. Ahead of the opening bell, West Texas Intermediate was trading lower with a day range of $56.49 to $56.77. The range on Brent, which was also a touch lower at last check, was $62.78 to $63.17. Last week, both had touched their best levels in two years, but early suggestions this week point to a more cautious market.
In its 2018 oil outlook, Fitch said it assumes 2018 average prices will be "broadly unchanged year-on-year and that the recent price recovery with Brent exceeding $60 per barrel may not be sustained."
Reuters notes that Brent has averaged $54.50 a barrel so far in 2017.
Adding to the cautious tone is rising U.S. crude output, which has rise more than 14 per cent since the middle of last year to a record 9.62 million barrels a day. U.S. government forecasts on Monday said shale production would rise in December for the 12th straight month.
In other commodities, gold hit its worst level in a week as U.S. Treasury yields rose ahead of an expected December rate hike by the Fed. However, traders said continued concern about the U.S. economic outlook also helped put a floor under the losses. Spot gold and U.S. gold futures for December delivery were both down in early going.
Silver prices were also lower. London copper moved off one-month lows seen last week, helped by steady demand.
Currencies and bonds
The Canadian dollar was higher and trading around the mid 78-cent (U.S.) mark. The loonie held to a fairly tight range overnight with little fresh domestic economic news to offer direction. The day range so far is 78.39 cents to 78.58 cents.
The next significant economic report for the currency is the Thursday release of September's manufacturing sales, although the news isn't expected to be good. The markets is forecasting a decline of 1 per cent for the month. New orders are expected to climb by about half a percentage point.
Sue Trinh, RBC's head of Asia FX strategy, described Tuesday's movement as "lacklustre" noting that easing oil prices recently and the spectre of the spectre of the fifth round of NAFTA negotiations hare keeping the loonie in check.
Movement in the U.S. dollar isn't offering much movement either way. Early on, the greenback was mostly steady against a basket of world currencies. The euro, meanwhile, rose to a two-week high as investors moved back to more risky assets in Europe on expectations that economic growth will remain strong. The U.S. dollar was slightly stronger against the yen.
"Major currencies have consolidated in ranges today, but something could emerge at the ECB conference later in the day," said Keiko Ninomiya, senior FX market analyst at SMBC Trust Bank in Tokyo.
In bonds, the yield on the U.S. 10-year note was lower at 2.391 per cent. The yield on the 30-year note was also lower at 2.85 per cent.
Stocks set to see action
<
Home Depot beat analysts' quarterly profit and sales estimates, as hurricanes Harvey and Irma boosted demand for emergency products and rebuilding materials. Home improvement retailers benefit from the sale of emergency storm-related merchandise such as generators, batteries and flashlights during hurricanes as well as from demand for rebuilding materials in the aftermath. Home Depot, which again raised its full-year forecasts, said hurricane-related sales added about $282-million to comparable sales in the third quarter. Sales at home improvement retailers have also been boosted by the multi-year recovery in the U.S. housing market, which has been supported by steadily rising wages and low unemployment rates. Still, its shares slipped 0.6 per cent in premarket trading.
Canopy Growth said second-quarter revenue rose 10.7 per cent to $17.6-million. The company posted a net loss of a penny a share compared with a profit of 5 cents a year earlier. Canopy said the weaker profit showing likely reflected continued spending to expand production and international reach. "With our objective to win and retain significant future market share, and backed by the recent $245-million investment from Constellation, we remain focused on the expansion of our cultivation capacity, extraction platform and finished branded products programs" said Canopy CEO Bruce Linton said in a statement.
Vodafone, the world's second-largest mobile operator, raised its full-year earnings growth forecast to 10 percent on Tuesday as its customers used more mobile data on their smartphones rather than looking for wifi. Chief Executive Vittorio Colao lifted guidance for the first time in Vodafone's recent history after reporting a 13-per-cent rise in first-half adjusted core earnings to 7.4 billion euros ($8.7-billion), comfortably ahead of market forecasts. Analysts said Vodafone was benefiting from a combination of investment in its mobile and fixed line networks and cost cutting. Its shares rose 4.6 per cent in premarket trading.
Tesco won provisional approval for its 3.7 billion pound ($4.9-billion) takeover of wholesaler Booker from the U.K. competition regulator on Tuesday, moving Britain's biggest retailer closer to securing a new avenue of growth.
DHX Media Ltd. earned $8.1-million in its latest quarter as its revenue was boosted by its acquisition of the Peanuts and Strawberry Shortcake characters earlier this year, The Canadian Press reports. The company says the profit amounted to six cents per share compared with a profit of $1.4-million or a penny per share a year ago.
Cenovus Energy Inc. has reached an agreement to sell its Weyburn oil facility for $940-million to Whitecap Resources Inc, Cenovus said, completing its main divesture plans.
General Electric was downgraded to "sector perform" from "outperform" by RBC Capital, saying its turnaround plan fell short of what the Street had hoped to see. Its shares were up 0.1 per cent after falling sharply on Monday.
TJX Cos Inc. disappointed with flat third-quarter same-store sales, blaming the impact of hurricanes in the United States and unseasonably warmer weather that dampened sales of cold weather apparel at its Marmaxx stores. Sales were higher by 6 per cent to $8.8-billion in the third quarter. TJX's comparable store sales, however, were flat, missing the 2.2 percent rise expected by analysts, according to Thomson Reuters I/B/E/S. Net income rose to $641.44 million, or $1 per share, from $550 million, or 83 cents per share, a year earlier. Its shares fell 4 per cent in premarket trading.
More reading: Tuesday's small-cap stocks to watch
More reading: Tuesday's Insider Report: Companies insiders are buying and selling
Economic News
The U.S. Labor Department said its producer price index for final demand increased 0.4 per cent last month. In the 12 months through October, the PPI jumped 2.8 per cent, which was the biggest increase since February 2012. Economists had forecast the PPI edging up 0.1 percent last month and increasing 2.4 percent from a year ago.
Also: Ontario fiscal update
With files from Reuters and Bloomberg