Equities
Canada’s main stock index slid at Tuesday’s opening bell with utilities and industrial stocks under pressure. On Wall Street, the S&P 500 and the Dow both started on the backfoot as traders await midday comments from Federal Reserve chair Jerome Powell.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 22.66 points, or 0.11 per cent, at 20,606.26.
In the U.S., the Dow Jones Industrial Average fell 121.24 points, or 0.36 per cent, at the open to 33,769.78. The S&P 500 opened lower by 5.73 points, or 0.14 per cent, at 4,105.35, while the Nasdaq Composite gained 3.80 points, or 0.03 per cent, to 11,891.25 at the opening bell.
On Tuesday, markets will be paying attention to comments from central bank heads with both Mr. Powell and Bank of Canada Governor Tiff Macklem scheduled to speak.
“This will be his [Mr. Powell’s] opportunity to provide further guidance and clarity on the Fed’s monetary policy in light of the strong U.S. [jobs] data,” AvaTrade chief market analyst Naeem Aslam said.
“Basically, the U.S. NFP data has made traders confused about the Fed’s monetary policy and they believe that the Fed may be continuing with the process of interest rate hikes for a few months as they see the U.S. labour market in a strong position while inflation trending well above their desired level.”
Mr. Powell is being interviewed at the Economic Club of Washington at noon ET.
Tuesday's analyst upgrades and downgrades
Mr. Macklem’s remarks to the CFA Society Quebec come after the Bank of Canada released its first survey of financial markets participants which showed many Bay Street analysts expect the Bank of Canada will cut interest rates later this year.
The Globe’s Mark Rendell reports that the survey of 28 financial-market participants – economists and strategists at banks, pension funds and asset-management firms – was conducted in the last two weeks of December. The publication of the survey results is part of a broader effort by the central bank to increase transparency.
Mr. Macklem’s remarks, scheduled for 12:30 p.m. ET, will be followed by a news conference.
“We’ll be focused on what could potentially trigger another hike from the bank,” BMO managing director of Canadian rates and macro strategist Benjamin Reitzes said. “Policymakers clearly signalled a pause after January’s hike, effectively taking March off the table for a potential move. However, beyond March, inflation and growth trends will drive policy, with the risks through at least the middle of the year skewed to more hikes.”
On the corporate side, Canadian investors got results from theatre chain Cineplex Inc. ahead of the start of trading.
Cineplex reported a profit of $10.2-million or 16 cents a share in its fourth quarter compared with a loss of $21.8-million or 34 cents a year earlier. Revenue totalled $350.1-million, up from $300-million last year.
Wall Street earnings include DuPont and Royal Caribbean.
Overseas, the pan-European STOXX 600 was up 0.18 per cent by midday. Britain’s FTSE 100 advanced 0.51 per cent. Germany’s DAX slid 0.23 per cent while France’s CAC 40 was little changed.
In Asia, Japan’s Nikkei closed down 0.03 per cent. Hong Kong’s Hang Seng added 0.36 per cent.
Commodities
Crude prices added to the previous session’s gains on continued optimism over China’s reopening and concerns over supply.
The day range on Brent was US$81.19 to US$82.88 in the early premarket period. The range on West Texas Intermediate was US$74.35 to US$75.98.
“Crude prices are rising on expectations that China’s recovery will take hold and on supply outages from the earthquake that devastated Turkey,” OANDA senior analyst Ed Moya said.
Mr. Moya also said in a note that OPEC’s secretary general offered an upbeat outlook with China’s reopening, but also expressed concerns that COVID still provides uncertainty to that market. Saudi Arabia, the world’s top oil exporter, raised prices for its crude for Asian buyers for the first time in six months.
“China remains the short-term key if oil prices can comfortably trade above the $80 level,” Mr. Moya said.
Meanwhile, supply concerns emerged in the wake of the devastating earthquake in Turkey and Syria which left thousands dead.
Reuters reports that operations at Turkey’s 1 million barrel per day (bpd) oil export terminal in Ceyhan were halted after the earthquake hit the region. The BTC terminal, which exports Azeri crude oil to international markets, will be closed on Feb. 6-8, the news agency said.
In other commodities, gold prices were up for a second day.
Spot gold was up 0.4 per cent to US$1,875.36 per ounce by early Tuesday morning, after hitting its lowest level since Jan. 6 on Monday.
U.S. gold futures edged 0.3 per cent higher to US$1,874.30.
Currencies
The Canadian dollar was higher amid rising commodities prices and improved risk sentiment in the broader markets while its U.S. counterpart held near one-month highs.
The day range on the loonie was 74.28 US cents to 74.62 US cents in the early premarket period.
Canadian investors got December international trade figures before the start of trading. Statscan says December exports fell 1.2 per cent while imports were down 1.3 per cent for the month, with the trade deficit narrowing to $160-million.
On world markets, the U.S. dollar index, which measures the greenback against a basket of six rivals, made a brief breach of Monday’s one-month highs, and was last trading at 103.52, roughly flat on the day, according to Reuters.
Elsewhere, the Australian dollar jumped roughly 1 per cent after that country’s central bank hiked borrowing costs by a quarter percentage point and signalled more increases down the road. The Australian dollar traded as high as US$0.6952 in the wake of that announcement.
The euro fell 0.1 per cent to US$1.0695, having fallen earlier in the day to its lowest since Jan. 9.
In bonds, the yield on the U.S. 10-year note was lower at 3.625 per cent in the predawn period.
More company news
Canada’s Hut 8 Mining Corp. plans to merge with rival U.S. Bitcoin in an all-stock deal to create a mining giant in North America, the companies said on Tuesday. The companies said the combined entity will have a market capitalization of around $990-million, and be equally owned by shareholders of both the companies. The merged entity, to be called Hut 8 Corp, will be listed on both the Toronto Stock Exchange and the Nasdaq after the all-stock deal.-Reuters
TMX Group says its revenue and earnings rose in the fourth quarter of 2022 compared to the same period last year, and announced an increase to its dividend of five per cent to 87 cents per common share. The company, which operates the Toronto Stock Exchange, says its net income attributable to shareholders for the quarter ended Dec. 31 was $102.2-million, up 16 per cent from $87.9-million during the same quarter last year. Diluted earnings per share were $1.83, up from $1.56 a year earlier. -The Canadian Press
BP on Tuesday reported a record profit of US$28-billion for 2022 while boosting its dividend in a sign of confidence as it sharply raised overall spending plans but scaled back ambitions to reduce oil and gas output by 2030. The blockbuster profit follows similar reports from rivals Shell, Exxon Mobil and Chevron last week after energy prices surged in the wake of Russia’s invasion of Ukraine. The bumper earnings have prompted new calls to further tax the sector as households struggle to pay their energy bills. -Reuters
Bed Bath & Beyond Inc said it was planning to raise some $1-billion through an offering of preferred stock and warrants in a last-ditch effort to stave off bankruptcy. The home goods retailer said in securities filings that if it can’t complete the complex transaction, it would “likely file for bankruptcy protection.” The chain has said in recent weeks that it had defaulted on a loan and may not be able to remain in business, raising concerns about its future.
DuPont de Nemours Inc on Tuesday forecast fiscal 2023 sales below estimates as the industrial materials maker expects lower volumes of products to be sold to consumer electronics and chip industries during the first half of the year. The company’s shares fell 2.1% to $70.88 in premarket trading. -Reuters
Royal Caribbean Group reported a smaller-than-expected loss for its fourth quarter on Tuesday, as pent-up demand for leisure travel helped offset the pressures from rising fuel prices and stronger U.S. dollar. Shares of the company rose about 4% in premarket trade after the company said booking volumes in the reported quarter were significantly higher than the corresponding period in 2019, before the pandemic outbreak shut down the industry. -Reuters
Economic news
(8:30 a.m. ET) Canada’s merchandise trade balance for December.
(8:30 a.m. ET) U.S. goods and services trade deficit for December.
(12 p.m. ET) U.S. Fed Chair Jerome Powell is interviewed at the Economic Club of Washington.
(12:30 p.m. ET) Bank of Canada Governor Tiff Macklem speaks to CFA Society Quebec in Quebec City on “How Monetary Policy Works” with press conference to follow.
(9 p.m. ET) U.S. President Joe Biden delivers State of the Union address.
With Reuters and The Canadian Press
Terry Weber