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Equities
Canada’s main stock index started higher Tuesday with energy stocks helped by rising crude prices. South of the border, key indexes managed modest early gains as investors waited for earnings from Alphabet and Microsoft after the close and looked ahead to Wednesday’s Federal Reserve decision.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 17.97 points, or 0.09 ,At 09:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 17.97 points, or 0.09%, at 19,188.53 per cent at 19,188.53.
In the U.S., the S&P 500 opened higher by 0.63 points, or 0.02 per cent, at 4,188.25, while the Nasdaq Composite gained 32.14 points, or 0.23 per cent, to 14,170.91 at the opening bell.
The Dow Jones Industrial Average fell 49.44 points, or 0.15%, at the open to 33,932.13.
“Investors are likely to stand on the sidelines ahead of the FOMC meeting and the upcoming peak of the U.S. earnings season, so the consolidation is set to continue in the next 24 hours,” Axi market analyst Milan Cutkovic said.
“Strong earnings numbers are keeping Wall Street´s bullish mood intact.”
Investors will be closely watching results from Google-parent Alphabet and Microsoft after the close of trading. Both stocks hit record highs on Monday.
“Earnings expectations are strong on the back of the fast-growing and much lucrative cloud business for both companies,” Ipek Ozkardeskaya, senior analyst with Swissquote, said. said. “Any earnings miss could generate some profit taking, without however harming the solid positive trend in the Alphabet and Microsoft’s share prices.”
Shares of electric carmaker Tesla Inc. were down more than 3 per cent in early trading even after the company topped Wall Street’s first-quarter revenue forecasts. Tesla also posted record deliveries in the first quarter despite a global chip shortage that has slammed auto sector rivals, but its profit was not driven by auto sales.
In this country, Canadian National Railway, now in the midst of a battle to buy U.S.-based Kansas City Southern, raised its full-year forecasts for profit and volume growth. Canadian National now expects double-digit adjusted EPS growth for 2021 and high single-digit volume growth. The forecast was released after Monday’s close as the rail company reported adjusted earnings per share of $1.23 cents in the latest quarter. Analysts had been looking for adjusted earnings of $1.24 in the quarter, according to IBES data from Refinitiv.
Overseas, major European markets were mostly flat. The pan-European STOXX 600 was off 0.07 per cent. Germany’s DAX slid 0.22 per cent. Britain’s FTSE was flat. France’s CAC fell 0.02 per cent.
In Asia, Japan’s Nikkei closed down 0.46 per cent. The Bank of Japan announced Tuesday that it would keep monetary policy unchanged. Hong Kong’s Hang Seng lost 0.04 per cent.
Commodities
Crude prices gained ahead of an OPEC+ monitoring meeting Tuesday although concern over the impact of spiking COVID-19 cases in India capped the modest advance.
The day range on Brent is US$65.66 to US$66.44. The range on West Texas Intermediate is US$61.91 to US$62.74.
On Tuesday, the OPEC+ group will hold a monitoring meeting, which had originally been scheduled for April 28. A technical meeting on Monday had voiced concern about surging COVID-19 cases, although it kept its 2021 oil demand forecast unchanged.
“The global economic recovery seems to be firmly in place now that Europe is seeing COVID cases fall across most countries,” OANDA senior analyst Ed Moya said.
“India and Japan are big importers of oil but it seems that hit to the outlook has mostly been priced in.”
OPEC and its allies are set to begin pulling back production curbs starting in May as demand recovers from the pandemic. Markets, however, will be watch for indications that the worsening situation in India, the world’s third biggest crude importer, could change those plans.
“Oil prices are ticking up today on trader hopes that OPEC+ may address India’s demand destruction with supply policy amendments in its coming meeting,” Bjornar Tonhaugen of Rystad Energy said.
Later in the session, markets will also get the first of two weekly U.S. crude inventory reports with the release of figures from the American Petroleum Institute. Analysts are expecting to see an increase in crude stocks.
In other commodities, copper prices hit a 10-year high on Tuesday over supply worries in top producer Chile and as investors hope for an improvement in global demand.
Three-month copper on the London Metal Exchange hit US$9,965 a tonne, its highest since March 2011, before retreating to US$9,921 a tonne, still up 1.7 per cent, according to figures from Reuters.
“Copper is often considered a good gauge of economic activity, so the rally in copper certainly raises the question of whether this is Dr. Copper calling,” OANDA market analyst Sophie Griffiths said. “The recovery trade seems to be increasingly evident through commodities, particularly base metals and lumber.”
Gold prices, meanwhile, were little changed ahead of Wednesday’s Fed decision.
Spot gold was flat at US$1,780.86 per ounce. U.S. gold futures were little changed at US$1,780.70 per ounce.
Currencies
The Canadian dollar was trading around the mid-80-US-cent mark in early going as its U.S. counterpart held near recent lows against a basket of world currencies ahead of this week’s Fed decision.
The day range on the loonie is 80.53 US cents to 80.71 US cents.
There were no major Canadian economic releases on Tuesday’s calendar. On Monday, the loonie touched its best level in six weeks against the greenback.
On world markets, the U.S. dollar index, which tracks the U.S. currency against six peers, was less than 0.1 per cent higher at 90.972 in the London morning session, after dipping to the lowest since March 3 overnight at 90.679, according to figures from Reuters.
The U.S. dollar rose 0.2 per cent to 108.34 yen, continuing its bounce off the seven-week low of 107.48 reached Friday. The yen showed little reaction to the Bank of Japan’s decision to keep policy unchanged, which was largely expected by markets.
The euro slid 0.1 per cent to $1.2069, but held near the two-month high of US$1.2117 reached Monday.
The Australian dollar, often viewed as a barometer of risk appetite, eased 0.3 per cent to US$0.7781, after an earlier rally brought it near its best level in five weeks.
More company news
Quebecor says Videotron chief executive Jean-Francois Pruneau is stepping down effective June 4. The company says Mr. Pruneau is leaving the job to focus on personal investment projects.
General Electric reported a 20-per-cent fall in quarterly profit, hit by a slump in demand for aircraft engines as airlines struggle to recover from a pandemic-led collapse in travel. On an adjusted basis, GE’s industrial profit fell to $828-million in the first-quarter ended March 31, from $1.03-billion a year earlier.
BP’s first-quarter profit more than tripled from a year earlier to $2.6-billion, exceeding expectations, boosted by stronger oil prices and bumper revenue from natural gas trading. The energy company said it is committed to buying back shares after its net debt dropped below its target of $35 billion, earlier than expected.
UBS posted a 14-per-cent rise in first quarter net profit, as the world’s largest wealth manager unveiled a $774-million revenue hit from the default of U.S. investment firm Archegos which took the shine off record high client activity levels. First-quarter net profit of $1.824-billion overshot median expectations for $1.591-billion in a poll of 20 analysts compiled by the bank.
United Parcel Service Inc reported a 27-per-cent rise in first-quarter revenue, as it benefited from a surge in online purchases during the COVID-19 pandemic. The world’s biggest parcel delivery company, which is also delivering COVID-19 vaccines company, said adjusted earnings per share jumped 141 per cent to $2.77 in the quarter.
Total revenue gained 27% at $22.9 billion.
Hasbro Inc fell short of first-quarter revenue estimates on Tuesday as COVID-19 forced delays hammered the toymaker’s movie and TV production business. The company’s net revenue rose 1 per cent to $1.11-billion in the three months ended March 28, but missed analysts’ estimates of $1.17-billion, according to a Refinitiv IBES estimate.
Economic news
(9 a.m. ET) U.S. S&P 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. Conference Board Consumer Confidence Index for April.
Also: U.S. Fed meeting begins.
With Reuters and The Canadian Press
Terry Weber