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Equities

Canada’s main stock index opened higher Tuesday after new figures showed the annual rate of inflation eased in December. On Wall Street, key indexes were weaker with traders sifting through earnings from the financial sector.

At 09:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 60.57 points, or 0.3 per cent, at 20,450.9.

On Wall Street, the Dow Jones Industrial Average fell 80.29 points, or 0.23 per cent, at the open to 34,222.32.

The S&P 500 fell 0.01 per cent to 3,999.09 points at the open, while the Nasdaq Composite dropped 9.15 points, or 0.08 per cent, to 11,070.00 at the opening bell.

On Tuesday, Canadian investors got a reading on inflation when Statistics Canada releases the consumer price index for December.

The government agency says the annual rate of inflation eased to 6.3 per cent in December from 6.8 per cent a month earlier. Economists had been expecting a reading of 6.4 per cent for December. On a monthly basis, consumer prices fell 0.6 per cent, more than the 0.5-per-cent economists had been forecasting.

The report comes ahead of the Bank of Canada’s Jan. 25 interest rate announcement. Economists are expecting the central bank to raise interest rates by a quarter percentage point.

“Overall, this report is largely as anticipated and we therefore continue to expect the Bank of Canada to raise rates by 25 basis points next week before pausing for the rest of the year,” CIBC economist Karyne Charbonneau said.

Tuesday's analyst upgrades and downgrades

On Wall Street, earnings continue to drive sentiment. Traders got results from Goldman Sachs and Morgan Stanley before the bell. United Airlines reports after the close of trading.

“Recession expectations – per se – are not bad news for the markets,” Swissquote senior analyst Ipek Ozkardeskaya said. “Decline in profit expectations, as a result of recession, is. So, all eyes are on corporate earnings.”

Goldman Sachs reported a 69-per-cent drop in fourth-quarter profit, hit by weakness in its consumer and investment banking units. The U.S. bank reported a profit of US$1.19 billion, or US$3.32 per share, for the three months ended Dec. 31, compared with US$3.81-billion, or US$10.81 per share, a year earlier. Shares were down more than 3 per cent in early trading in New York.

Overseas, the pan-European STOXX 600 was down 0.11 per cent by midday. Britain’s FTSE 100 slid 0.15 per cent. Germany’s DAX lost 0.01 per cent while France’s CAC 40 was flat.

In Asia, Japan’s Nikkei finished up 1.23 per cent. Hong Kong’s Hang Seng lost 0.78 per cent. Overnight, new figures showed China’s economy grew by 3 per cent in 2022, the second lowest rate since the 1970s and below the official target of 5.5 per cent as COVID-19 controls weighed.

Commodities

Crude prices wavered in early trading as weak economic data out of China raised concerns over global growth.

The day range on Brent was US$84.04 to US$85.20 in the early premarket period. The range on West Texas Intermediate was US$78.53 to US$80.22.

New figures showed the Chinese economy grew by 3 per cent last year, the second-lowest rate since 1976. Growth in the last quarter of 2022 came in towards the higher end of expectations, at 2.9 per cent year-on-year, The Globe’s James Griffiths reports this morning.

“Brent crude has gained nearly 10 per cent over the past 10 days as optimism over China’s reopening boosted sentiment. However, the outlook for the rest of the global economy is uncertain,” ANZ commodities analysts said in a note.

Crude prices were also tempered Tuesday by a firmer U.S. dollar as well as global economic uncertainty. A survey of private and public economists released at the World Economic Forum in Davos suggested two-thirds of those polled expect a world recession this year.

In other commodities, gold prices were down for a second day.

Spot gold dropped 0.5 per cent to US$1,908.70 per ounce early Tuesday morning. The metal closed lower on Monday, after having risen to its highest since April 2022, Reuters reported.

U.S. gold futures fell 0.5 per cent to US$1,912.00.

Currencies

The Canadian dollar was little changed early Tuesday while its U.S. counterpart bounced off seven-month lows against a group of world currencies.

The day range on the loonie was 74.45 US cents to 74.66 US cents in the early premarket period.

The Canadian dollar showed little immediate reaction to the latest inflation figures.

On world markets, the U.S. dollar index has risen from a seven-month low of 101.77 hit on Monday and held at 102.4, up 0.1 per cent, according to figures from Reuters.

The euro steadied at US$1.0819.

Britain’s pound rose 0.2 per cent to US$1.2218 on positive employment data.

In bonds, the yield on the U.S. 10-year note was higher at 3.557 per cent in the predawn period.

More company news

The Globe’s Josh O’Kane reports Montreal payments-and-retail platform Lightspeed Commerce Inc. said it will lay off about 300 people amid a reorganization as it integrates the many companies it has acquired in recent years. It’s the latest major Canadian technology company to shed workers amid a prolonged downturn in the sector that’s seen more than 175,000 people lose their jobs globally since the start of 2022. That’s when months of surging inflation prompted a spike in interest rates, weighing on tech valuations and forcing companies to reconsider their high spending.

The Globe’s Nicolas Van Praet reports that Canadian luxury jet maker Bombardier Inc. reported preliminary results for its fourth quarter that top its own forecasts as it pushes on with a turnaround effort now in its fourth year. Bombardier shares surged 5 per cent in morning trading on the Toronto Stock Exchange, to $59.82. They gained 24.5 per cent in 2022, defying the Toronto Stock Exchange’s overall 8.7 per cent decline.

Morgan Stanley beat analysts’ estimates for fourth-quarter profit on Tuesday as the investment bank’s trading business got a boost from market volatility, offsetting the hit from sluggish dealmaking. On an adjusted basis, the bank earned US$1.31 per diluted share, compared with analysts’ estimates of US$1.19 per share, according to Refinitiv IBES data.

Barrick Gold Corp said on Tuesday its fourth-quarter production rose 13.4% sequentially, helped by strong performance at Cortez, Carlin and Tongon mines. The company reported total preliminary gold output of 1.1 million ounces in the quarter ended Dec. 31, up from 988,000 ounces in the previous quarter. -Reuters

Elon Musk and Tesla Inc are set to go to trial in San Francisco on Tuesday in a case where the company’s shareholders claim they were defrauded by Musk’s 2018 statement that funding was “secured” to take the electric car maker private. The lawsuit seeks damages for shareholders who bought or sold Tesla stock in the days after Musk’s tweets on Aug. 7, 2018. The company’s shares shot higher and then fell again after Aug. 17, 2018, when the New York Times reported that funding for the take-private bid was “far from secure.” The shareholders have not specified the damages, but said Musk’s tweets cost investors “billions.” -Reuters

Cargojet Inc. says it has extended its master services agreement with Canada Post Corp. and Purolator Inc. until Sept. 30, 2029. The company says the extended agreement with the Canada Post Group of Companies (CPGOC) will continue to have minimum guaranteed volumes. -The Canadian Press

Economic news

(8:15 a.m. ET) Canadian housing starts for December.

(8:30 a.m. ET) Canada’s CPI for December.

(8:30 a.m. ET) Canadian international securities transactions for November.

(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for January.

With Reuters and The Canadian Press