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Equities

Canada’s main stock index was treading water in early treading early Tuesday with gains in the energy sector being offset by weakness in materials stocks. South of the border, the S&P 500 touched a record high helped by strong earnings from companies like General Electric and Johnson & Johnson.

At 9:39 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 4.66 points, or 0.03 per cent, at 17,901.36.

On Wall Street, the Dow Jones Industrial Average rose 8.5 points, or 0.03 per cent, at the open to 30968.55. The S&P 500 rose 7.6 points, or 0.20 per cent, at the open to 3862.96, while the Nasdaq Composite rose 45.7 points, or 0.34 per cent, to 13681.717 at the opening bell.

Markets continue to keep a close eye on stimulus talks in Washington, with Democrats holding a narrow majority and Republicans voicing concern about the size of the proposed plan. On Monday, Senate Majority Leader Chuck Schumer said he’s looking to pass the relief bill “in the next month, month and a half,” according to reports.

“The rally since November has slowed noticeably, but it has yet to move to the downside, and instead most indices are content to tread water, with a decent earnings season in the U.S. and expectations of fiscal stimulus providing a reason to hang around the party until the situation improves,” IG chief market analyst Chris Beauchamp said.

On the corporate side, earnings continue to roll in. Wall Street got results this morning from General Electric, 3M and Johnson & Johnson, among others. After the close, Microsoft reports its latest earnings.

General Electric shares jumped more than 6 per cent in early trading after the company reported a better-than-expected free cash flow for the fourth quarter and forecast 2021 cash flow to be about $2.5-billion to $4.5-billion, as it benefits from a recovery at its power and renewable energy units.

On Bay Street, grocer Metro raised its quarterly dividend to 25 cents per share, up from 22.5 cents. The company reported a profit of $191.2-million or 76 cents per diluted share for its first quarter, up from a profit of $170.2-million or 67 cents per diluted share in the same quarter a year earlier.

After the close of trading, Canadian National Railway will release results after the markets close.

Oversea, the pan-European STOXX 600 gained 0.69 per cent in morning trading with financial services stocks among the winners. Britain’s FTSE 100 rose 0.51 per cent. Germany’s DAX was up 1.3 per cent and France’s CAC 40 advanced 0.89 per cent.

In Asia, markets had a weaker finish with Japan’s Nikkei losing 0.96 per cent and Hong Kong’s Hang Seng dropping 2.55 per cent with shares of tech giant Tencent falling more than 6 per cent a day after its valuation hit US$1-trillion for the first time.

Commodities

Crude prices edged higher in early going with OPEC compliance with current production caps and other production curbs helping offset concerns about potential delays in U.S. stimulus.

The day range on Brent is US$55.39 to US$56.24. The range on West Texas Intermediate is US$52.29 to US$53.11.

On Monday, new figures showed compliance by OPEC and its allies with current production caps averaged 85 per cent this month, indicating improved adherence to the measures.

At the same time, output from the giant Tengiz field in Kazakhstan was disrupted by a power cut on Jan. 17, reducing supply, according to a Reuters report.

“Crude prices remain surprisingly stable despite the [broader] market struggles,” Axi chief global market strategist Stephen Innes said.

“Still, upward price momentum has stalled as concerns about COVID vaccine efficacy and rollout are also weighing oil demand risks.”

Gold prices, meanwhile, edged lower.

Spot gold fell 0.2% to US$1,852.30 per ounce. U.S. gold futures eased 0.3% to US$1,849.60.

“People are going into bonds and dollar, shying away from gold,” Mr. Innes said.

Currencies

The Canadian dollar slipped in early going as its U.S. counterpart rose against global currency with investors seeking out safer holdings amid concerns over the progress of the U.S. stimulus package and COVID-19 lockdowns in some regions.

The day range on the loonie is 78.24 US cents to 78.51 US cents.

There were no major Canadian economic reports on the calendar Tuesday.

“There is little apparent conviction behind the CAD drop at the moment; crude is firm and equity market trends are somewhat mixed and there is little ‘new”' news on the domestic front to weigh significantly on the CAD this morning,” Shaun Osborne, chief FX strategist with Scotiabank, said.

On global markets, the U.S. dollar index managed its best level in a week as trading took a cautious tone.

Against a basket of its rivals, the U.S. dollar rose 0.2% to 90.65, its highest level since Jan. 20, according to figures from Reuters. The index has risen 1.6 per cent in the past three weeks.

The euro, which fell on Monday after the Ifo survey showed German business morale slumping, is also trading in a range between support around US$1.2050 and resistance at US$1.2215.

More company news

Johnson & Johnson posted an 8.3% rise in quarterly sales and said it would share details from its keenly watched coronavirus vaccine trial soon, as the healthcare conglomerate races to develop a potential single-dose vaccine for COVID-19. Quarterly sales rose to $22.48-billion from $20.75-billion.

3M Co, which makes N95 face masks and Post-it notes, reported a higher quarterly profit on Tuesday, helped by an increase in demand for its healthcare products during the COVID-19 pandemic. Net income attributable to 3M rose 43% to $1.40-million, or $2.38 per share, in the fourth quarter ended Dec. 31. Net sales rose 5.8% to $8.6-billion.

American Express Co posted a better-than-expected quarterly profit on Tuesday, as improved card spending and a reserve release helped it cushion a slump in demand for travel and entertainment during the COVID-19 pandemic. Net income fell to $1.44-billion, or $1.76 per share, for the fourth quarter ended Dec. 31, from $1.69-billion, or $2.03 per share, a year earlier. Analysts had expected a profit of $1.31 per share, according to IBES data from Refinitiv.

UBS reported its highest annual pre-tax profit of the post financial crisis era on Tuesday, as lending to the world’s ultra-rich and bumper trading volumes during the global pandemic triggered a surge in revenue. The results handily beat forecasts, as investment gains and lower provisions for expected credit losses helped the bank post fourth-quarter net profit of $1.708-billion, nearly double the $966-million analysts expected for the quarter.

Economic news

(8:30 a.m. ET) U.S. S&P Case-Shiller Home Price Index (20 city) for November.

(9 a.m. ET) U.S. FHFA House Price Index for November.

(10 a.m. ET) U.S. Conference Board Consumer Confident Index for January.

Also: U.S. Fed meeting begins.

With Reuters and The Canadian Press