Equities
Canada’s main stock index opened up on Tuesday, helped by gains in precious metal stocks and a jump in Bellus Health shares on news it is being bought by GSK. On Wall Street, the S&P 500 and Nasdaq both got off to a positive start as big-name earnings roll in.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 36.97 points, or 0.18 per cent, at 20,678.94.
In the U.S., the Dow Jones Industrial Average fell 22.02 points, or 0.06 per cent, at the open to 33,965.16. The S&P 500 opened higher by 12.94 points, or 0.31 per cent, at 4,164.26, while the Nasdaq Composite gained 76.83 points, or 0.63 per cent, to 12,234.56 at the opening bell.
“Investors remain on guard ahead of a flurry of earnings results expected across the economy this week,” Stephen Innes, managing partner with SPI Asset Management, said.
“But the subtle yet positive data beat goes on after last week’s highlight reel was almost uniformly hopeful, including progress on inflation, better growth than expected, the possibility of fewer rate hikes, and some constructive big bank earnings.”
Tuesday saw big U.S. corporate names like Bank of America, Goldman Sachs and Johnson & Johnson report ahead of the opening bell. Netflix is scheduled to release results after the close of trading.
“The recovery in the Netflix share price since the five-year lows last year has started to stall over the last quarter, having hit a 9-month high in January in the wake of the Q4 numbers which saw Q4 revenues beat expectations, coming in at $7.85-billion, as did paid subscriber numbers,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
He noted Netflix rolled out paid sharing in the first quarter, which might prompt some cancellations in the short term. In last year’s third quarter, Netflix announced it would no longer be offering guidance on subscriber numbers. For the first quarter, Netflix expects to generate revenue of $8.17-billion and profit of $1.27-billion or $2.82 a share, he said.
In Canada, Statistics Canada said the country’s annual rate of inflation eased to 4.3 per cent in March, from 5.2 per cent a month earlier. The annual rate seen in March was the lowest since August 2021.
Later this morning, Bank of Canada Governor Tiff Macklem and Deputy Governor Carolyn Rogers appear before the House Standing Committee on Finance. The appearance is scheduled for 11:30 a.m. ET.
On the corporate side, Loblaw Cos. Ltd has tapped veteran European retail executive Per Bank as its next president and CEO. He will join the company in the first quarter of 2024. Galen Weston has been serving as president of Loblaw since 2021 and will remain chair of the board at Loblaw as well and chair and CEO of parent company George Weston Ltd.
Overseas, the pan-European STOXX 600 was up 0.57 per cent by midday. Britain’s FTSE 100 gained 0.21 per cent. Germany’s DAX and France’s CAC 40 advanced 0.73 per cent and 0.72 per cent, respectively.
In Asia, Japan’s Nikkei finished up 0.51 per cent. Hong Kong’s Hang Seng slid 0.63 per cent. New figures released early Tuesday showed China’s GDP grew at an annual rate of 4.5 per cent in the first quarter, beating forecasts as the end of COVID-19 restrictions boosted economic growth. Analysts had been looking for growth closer to 4 per cent.
Commodities
Crude prices were choppy in early trading despite new figures showing better than expected economic growth in China, a top oil consumer.
The day range on Brent was US$84.22 to US$85.28 in the early premarket period. The range on West Texas Intermediate was US$80.36 to US$81.28.
Both benchmarks lost about 2 per cent on Monday.
“Oil is continuing to tread water around the five-month highs, an area it has failed to surpass in the aftermath of the latest OPEC+ output cut,” OANDA senior analyst Craig Erlam said.
“Rather than propel the price towards US$100 as some feared (it could still happen, of course), the decision appears to have just moved the price back to previous ranges that the cartel was seemingly comfortable with.”
He said the next step will depend on global growth and whether the economy can weather the recent story, especially in the U.S. where tighter credit could weigh on growth throughout the year.
Prices got an initial lift from the latest GDP figures from China, which showed 4.5 per cent growth in the first three months of the year offering optimism for the demand outlook.
Later Tuesday, traders will get weekly U.S. inventory numbers from the American Petroleum Institute. Official government figures follow on Wednesday morning.
Analysts expect U.S. crude inventories to fall by about 2.5 million barrels and also forecast declines in gasoline and distillates, according to Reuters.
In other commodities, spot gold was up 0.3 per cent at US$2,000.09 per ounce by early Tuesday morning after two sessions of losses. U.S. gold futures rose 0.2 per cent to US$2,010.20.
“The yellow metal came close to record highs late last week but didn’t quite have the legs to properly test it,” Mr. Erlam said.
“That may still come but it seems we’re now seeing some profit-taking, which is coinciding with yields creeping higher and interest rate expectations doing similar.”
Currencies
The Canadian dollar was higher while its U.S. counterpart paused after recent gains.
The day range on the loonie was 74.62 US cents to 74.86 US cents in the predawn period.
Inflation figures for March are due from Statistics Canada ahead of the opening bell.
On world markets, the U.S. dollar index, which measures the greenback against a basket of currencies, fell 0.3 per cent to 101.76, having risen over 1% in the last two trading sessions, according to figures from Reuters.
The euro was last up 0.4 per cent versus the U.S. dollar at US$1.0969 after losing 0.5 per cent over the past two sessions.
The pound was up 0.4 per cent at US$1.2431 despite a surprise increase in unemployment in the three months to February. The report, however, also showed pay growth was revised up to 5.9 per cent for the period.
In bonds, the yield on the U.S. 10-year note was up slightly at 3.597 per cent in the early hours.
More company news
GSK Plc will buy Canada-based drug development company Bellus Health Inc in an all-cash deal for US$2-billion, the companies said on Tuesday, as the British pharmaceuticals maker bets on respiratory therapies. GSK’s offer of US$14.75 per share is more than double Bellus’ closing price of US$7.26 on the Nasdaq on Monday. The acquisition gives GSK access to camlipixant, which is in late-stage development for the first-line treatment of adult patients with refractory chronic cough (RCC). Bellus shares nearly doubled in morning trading in Toronto on the news. -Reuters
Bank of America Corp’s profit rose in the first quarter as it earned more from customers’ interest payments while the Federal Reserve raised borrowing costs. The company’s net income applicable to common shareholders rose to US$7.66-billion, or 94 cents per share, for the three months ended March 31, the second-largest U.S. lender reported on Tuesday. That compares with US$6.6-billion, or 80 US cents per share, a year earlier. -Reuters
Johnson & Johnson on Tuesday raised its 2023 profit forecast, banking on its newer cancer treatments and multiple myeloma drug Darzalex to soften the blow from declining sales for some of its older medications. The company, which is spinning off its consumer health business, is betting on Darzalex and newer cancer drugs including Carvykti and Tecvayli to drive it closer to its goal of about US$60-billion in drug sales by 2025, as older treatments such as Crohn’s disease drug Stelara face impending competition. -Reuters
Goldman Sachs Group Inc’s first-quarter profit dropped as the worst three months for dealmaking in more than a decade eroded the Wall Street giant’s fees from investment banking, while its consumer unit continued to weigh on results. Profit fell to US$3.09-billion for the three months ended Mar. 31 compared with US$3.83-billion a year earlier, while earnings per share slid to US$8.79 from US$10.76 last year, the bank reported on Tuesday. -Reuters
Apple Inc. opened its first flagship store in India in a much-anticipated launch Tuesday that highlights the company’s growing aspirations to expand in the country it also hopes to turn into a potential manufacturing hub. The company’s CEO Tim Cook posed for photos with a few of the 100 or so Apple fans who had lined up outside the sprawling 20,000-square-foot store in India’s financial capital, Mumbai, its design inspired by the iconic black-and-yellow cabs unique to the city. A second store will open Thursday in the national capital, New Delhi. -The Associated Press
Economic news
(8:30 a.m. ET) Canadian CPI for March.
(8:30 a.m. ET) U.S. housing starts for March.
(8:30 a.m. ET) U.S building permits for March.
(11:30 a.m. ET) Bank of Canada Governor Tiff Macklem and Deputy Governor Carolyn Rogers appear before the House Standing Committee on Finance.
With Reuters and The Canadian Press