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Equities

Canada’s main stock index opened lower Tuesday with energy and consumer discretionary stocks weighing as traders await tomorrow’s Bank of Canada rate decision. On Wall Street, key indexes were also in the red in early trading with corporate earnings squarely in focus.

At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 90.37 points, or 0.44 per cent, at 20,541.21.

In the U.S., the Dow Jones Industrial Average fell 184.84 points, or 0.55 per cent, at the open to 33,444.72. The S&P 500 opened lower by 18.07 points, or 0.45 per cent, at 4,001.74, while the Nasdaq Composite dropped 61.48 points, or 0.54 per cent, to 11,302.93 at the opening bell.

“Earnings season will continue to dominate and so far, there isn’t really anything positive to take away from it,” OANDA senior analyst Craig Erlam said.

“There are still a lot of huge names to report, of course, but so far it basically underlines everything investors already think about the economy at the moment.”

In Canada, investors got results from grocer Metro Inc. ahead of the start of trading. CN Rail, meanwhile, reports after the closing bell.

Quebec-based Metro said first-quarter sales rose 8.2 per cent to $4.671-billion while adjusted earnings per share came in at $1. Analysts had been forecasting revenue of $4.64-billion. Metro also raised its dividend by 10 per cent.

Tuesday's analyst upgrades and downgrades

On Wall Street, companies including Johnson & Johnson and General Electric ahead of the start of trading. Software giant Microsoft reports after the close of trading.

“All eyes are on Microsoft – not only because it will release Q4 earnings after the bell, but also because it’s been making a great buzz since the start of the year thanks to its bet on [chatbot sensation] ChatGPT,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.

“The company confirmed yesterday that is putting $10-billion into the now-very-famous ChatGPT. And given the traction that ChatGPT has gained since the start of the year, Microsoft could be on a winning path with its AI-bet.”

Ahead of the opening bell, General Electric forecast lower-than-expected adjusted profit for 2023 amid supply shortages and challenges at its renewable energy business. GE said it expects adjusted profit per share of US$1.60 to US$2.00 for the full year, compared with the average analyst expectation of US$2.36 per share, as per Refinitiv.

Johnson & Johnson, meanwhile, forecast annual profit above analysts’ estimates on expectations of stronger demand for pharmaceuticals products and a recovery in its medical devices business. J&J said it expects to earn between US$10.45 and US$10.65 per share on an adjusted basis for 2023, above analysts’ estimates of US$10.35 per share profit at midpoint. Shares gave up early premarket gains on investor concerns that J&J’s medical devices business would be hit by China’s COVID-19 spike in the first half of this year.

Elsewhere, the Rogers-Shaw deal goes before the Federal Court of Appeal on Tuesday as the Competition Bureau looks to overturn the Competition Tribunal’s approval of the transaction. The hearing is set for one-day although a decision date has not yet been set.

Overseas, the pan-European STOXX 600 was down 0.32 per cent by midday. Britain’s FTSE 100 lost 0.25 per cent. Germany’s DAX slid 0.26 per cent while France’s CAC 40 was flat.

In Asia, Japan’s Nikkei finished up 1.46 per cent. Markets in China, Hong Kong and many other parts of the region are closed for a public holiday.

Commodities

Crude prices steadied as traders keep a cautious eye on the global economy even as China’s reopening continues to bolster optimism over demand.

The day range on Brent was US$87.31 to US$88.44 in the early premarket period. The range on West Texas Intermediate was US$80.75 to US$81.90.

“The economy still could rollover and some energy traders are still skeptical on how quickly China’s crude demand will bounce back this quarter,” OANDA senior analyst Ed Moya said.

Mr. Moya noted markets get a clearer picture of the demand outlook this week with results due from Chevron as well as from major airlines.

“Oil should be stuck in wait-and-see mode until we learn more about the health and outlook of the U.S. economy,” he said.

Later Tuesday, markets will get the first of two weekly U.S. inventory reports with fresh figures from the American Petroleum Institute. More official government numbers follow on Wednesday morning.

A Reuters poll suggests analysts are expecting to see a rise in crude and gasoline inventories, while distillate stocks are forecasts to decline.

In other commodities, gold prices were up, helped by recent weakness in the U.S. dollar.

Spot gold was up 0.3 per cent at US$1,936.32 per ounce by early Tuesday morning. U.S. gold futures gained 0.5 per cent to US$1,937.70.

“Gold might consolidate here as the bond market probably won’t rally until we get to some major U.S. GDP or core PCE [personal consumption expenditures] data later this week.”

Currencies

The Canadian dollar was mostly steady in early trading as investors await tomorrow’s Bank of Canada interest rate decision while its U.S. counterpart held near its lowest levels in more than seven months against a group of currencies.

The day range on the loonie was 74.70 US cents to 74.93 US cents.

Traders are now waiting for Wednesday’s interest rate announcement from the Bank of Canada. The central bank is expected to raise rates by a quarter percentage point. The BoC will also release its monetary policy report and hold a news conference later in the morning.

“The CAD is little changed on the day, with the impending BoC decision keeping spot movement depressed,” Shaun Osborne, chief FX strategist with Scotiabank, said.

“Stocks are modestly lower while crude oil is flat. The broader dollar trend also looks stuck so there is little for the market to focus on beyond tomorrow’s policy announcement.”

On world markets, the U.S. dollar index - which measures the greenback against a basket of six major currencies, fell 0.1 per cent to 101.93, heading back towards the 7-1/2-month low of 101.51 reached last week, according to figures from Reuters.

The euro, which traded around its highest since last April on Monday, was last flat against the dollar at US$1.8725.

Elsewhere, the greenback fell 0.4 per cent to 130.18 yen, breaking a two-day rally, Reuters reported.

In bonds, the yield on the U.S. 10-year note was lower at 3.495 per cent.

More company news

Magna International Inc. says its margins for 2022 are expected to come in lower than it forecast. The auto parts company says its adjusted earnings before interest and taxes (EBIT) margin is expected to be about 4.3 per cent for 2022. The ratio of adjusted EBIT to total sales is below the range of 4.8 to 5.0 per cent expected in its November outlook for the year. Based on the preliminary results, Magna says total sales for 2022 were about US$37.8-billion. -The Canadian Press

3M Co said on Tuesday it would cut 2,500 manufacturing jobs after reporting a lower profit, as the U.S. industrial conglomerate faces a demand slowdown in its unit that sells products including notebooks, air purifiers and respirators. A softer-than-expected consumer spending amid inflationary pressures has eaten into the sales of 3M’s consumer unit which generated about $5.30 billion in revenue in 2022. Additionally, a cut back from U.S. retailers dealing with elevated inventory levels also dampened demand. -Reuters

Economic news

Japan and Euro zone PMI

Germany consumer confidence

With Reuters and The Canadian Press