What every Canadian investor needs to know today: TSX, Wall Street start down as earnings roll in

Equities

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’s global 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.