Equities
Canada’s main stock index moved higher at Tuesday’s opening bell with improved crude prices supporting energy shares. Major U.S. index saw a mixed start as traders look ahead to tomorrow’s Federal Reserve interest-rate announcement.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 38.13 points, or 0.2 per cent at 18,894.9.
In the U.S., the Dow Jones Industrial Average rose 100.15 points, or 0.30 per cent, at the open to 33,029.11.
The S&P 500 opened higher by 4.51 points, or 0.11 per cent, at 4,171.33, while the Nasdaq Composite dropped 2.87 points, or 0.02 per cent, to 12,786.62 at the opening bell.
On Tuesday, the Fed begins its two-day meeting, culminating in Wednesday’s rate announcement. Markets aren’t expecting the central bank to change its key rate but traders will be carefully listening to comments from Fed Governor Jerome Powell for clues about where the central bank goes from here.
“The probability of no change is priced as being almost 100 per cent sure,” Swissquote senior analyst Ipek Ozkardeskaya said.
“The Fed members will still be raising their eyebrows given the strength of the recent economic data, the uptick in inflation and global uncertainty. But they won’t necessarily be raising the rates. Therefore, what they will say they will do will matter more for the market pricing than what they will do.”
At the moment, she said, markets also aren’t expecting hikes at either the December or January Fed meetings.
“That could change, but for now, no more rate hike is what investors are betting on,” she said.
In Canada, investors got a reading on the health of the country’s economy with release of August GDP figures before the start of trading.
Statistics Canada said growth was flat on a monthly basis in August, in line with analysts’ forecasts. Early estimates from the government agency also suggest the economy contracted by 0.1 per cent in the third quarter. That figure is subject to revision, but if it holds it would mark the second consecutive quarter of negative growth.
“The fact that the economy appears close to tipping into a mild recession already clearly reduces the likelihood of any further interest rate hikes, and will likely see financial markets pulling forward expectations for rate cuts which will weigh on the Canadian dollar,” CIBC senior economist Andrew Grantham said.
On the corporate side, earnings continue to roll in on both sides of the border. At this point roughly half of the S&P 500 companies have released results. On Wall Street, Advanced Micro Devises, Caterpillar and Pfizer are among the companies reporting results today.
Centerra Gold and TMX Group release earnings in Canada.
Overseas, the pan-European STOXX 600 was up 0.76 per cent by early afternoon. Britain’s FTSE 100 rose 0.42 per cent. Germany’s DAX and France’s CAC 40 gained 0.72 per cent and 1.07 per cent, respectively.
In Asia, Japan’s Nikkei added 0.53 per cent. The Bank of Japan further loosened its grip on long-term interest rates by tweaking its bond yield control policy again on Tuesday, Reuters reports this morning.
Hong Kong’s Hang Seng fell 1.69 per cent.
Commodities
Crude prices rebounded after the previous session’s sharp drop with supply concerns continuing to underpin sentiment.
The day range on Brent was US$87.78 to US$88.42 in the early premarket period. The range on West Texas Intermediate was US$82.29 to US$83.17. Both benchmarks lost about 3 per cent on Monday.
“Outside of the heightened geopolitical risk headlines supporting oil prices, most other key trends are softer, with a decrease in China oil demand, a slight pick-up in Iran supply, a further rise in seaborne OPEC exports and a decrease of the Brent crude basis into negative territory, perhaps the surprise is why oil is not trading lower,” Stephen Innes, managing partner with SPI Asset Management, said.
Later in the session, markets will get the first of two weekly U.S. crude inventory reports, with the release of new figures from the American Petroleum Institute. More official government data follow on Wednesday morning.
In other commodities, spot gold was flat at $1,995.50 per ounce by early Tuesday morning. U.S. gold futures were trading at US$2,006.10.
Currencies
The Canadian dollar was steady while its U.S. counterpart edged higher against a basket of currencies and looked set to finish the month little changed.
The day range on the loonie was 72.18 US cents to 72.36 US cents in the early premarket period. The Canadian dollar has lost about 0.82 per cent against the greenback over the past month.
On world markets, the U.S. dollar index, which weighs the greenback against a selection of currencies, was last up 0.22 per cent at 106.39. The index is little changed for the month.
Japan’s yen was weaker against the U.S. dollar after the Bank of Japan left monetary policy unchanged but made a small change to its bond yield control policy. The yen slid nearly 0.7 per cent against the U.S. dollar, past the 150 per dollar threshold to hit an intraday low of 150.12. It later pared some of those losses to stand at 149.95, Reuters reported.
Elsewhere, the euro was up 0.18 per cent at US$1.0595 early this morning and looked set to add about 0.2 per cent against the U.S. dollar in October after two months of declines, according to figures from Reuters.
In bonds, the yield on the U.S. 10-year note was lower at 4.841 per cent in the predawn period.
More company news
BHP says it has approved a plan to spend $6.4-billion for the second stage of its Jansen potash mine that it is developing in Saskatchewan. The decision comes as the company is still building the first stage of the project, which is expected deliver first production in 2026. The company says the first stage is 32 per cent complete and on schedule. -The Canadian Press
TMX Group Ltd. reported its third-quarter profit rose compared with a year ago, helped by higher revenue, partly offset by an increase in operating expenses. The operator of the Toronto Stock Exchange says its earned net income attributable to equity holders totalled $85.3-million or 31 cents per diluted share for the quarter ended Sept. 30. The result was up from a profit of $81.0-million or 29 cents per diluted share in the same quarter last year. -The Canadian Press
Origin Energy’s largest shareholder said on Tuesday it plans to vote against a Brookfield-led consortium’s A$15.35-billion (US$9.78-billion) takeover offer for the company, casting doubt on the bid’s future weeks ahead of a shareholder vote on the deal. AustralianSuper, the country’s largest pension fund, owns a 13.68% stake in Origin Energy and said the consortium’s offer was “substantially below” its estimate of long-term value for Australia’s biggest energy retailer. The A$300-billion pension fund said the assumptions used in the independent expert’s report created an “unrealistically low” valuation, including on its stakes in UK renewable energy group Octopus and Australia Pacific LNG, with valuation multiples well below recent relevant deals. -Reuters
Caterpillar reported a rise in third-quarter profit on Tuesday, as strong infrastructure investments across key markets boosted demand for its high-end construction equipment. Its profit rose to US$2.79-billion, or US$5.45 per share, from US$2.04-billion, or US$3.87 per share, a year earlier. -Reuters
BP on Tuesday reported third-quarter earnings of US$3.3-billion, missing analysts’ forecasts as strong oil trading and refining margins were offset by weak gas results while the firm wrote down a large chunk of a U.S. offshore wind project. The British company maintained its dividend at 7.27 US cents per share and extended its US$1.5 billion share buyback program over the next three months, leaving its payout policy unchanged. -Reuters
Pfizer on Tuesday reported its first quarterly loss since 2019, as the U.S. drugmaker recorded US$5.6-billion in charges related to its COVID products like its antiviral treatment Paxlovid and vaccine Comirnaty. The company posted a loss of 42 US cents per share for the third quarter. It had reported a profit of US$1.51 per share in the year-ago quarter. -Reuters
Economic news
(8:30 a.m. ET) Canada’s monthly real GDP for August.
(8:30 a.m. ET) U.S. employment cost index for Q3.
(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index for August.
(9 a.m. ET) U.S. FHFA House Price Index for August.
(9:45 a.m. ET) U.S. Chicago PMI for October.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for October.
Also: U.S. Fed meeting begins
With Reuters and The Canadian Press
Terry Weber