Equities
Canada’s main stock index fell at Tuesday’s opening bell with materials shares under pressure. Wall Street was mixed in early trading as traders wade through a slew of corporate earnings.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 103.25 points, or 0.5 per cent, at 20,523.39.
In the U.S., the Dow Jones Industrial Average rose 0.12 per cent, to 35,603.7, the S&P 500 lost 0.29 per cent, to 4,575.84 and the Nasdaq Composite dropped 0.6 per cent, to 14,260.44.
“As we approach the middle of summer, there is a prevailing belief among people on the street that the Federal Reserve has probably made its final rate hike in the current cycle,” Stephen Innes, managing partner with SPI Asset Management, said.
“This is due to the evident decrease in inflation pressures. Consequently, U.S. stock markets are expected to concentrate on the declining inflation figures as investors aim to navigate the final stages of the Fed’s initiative and reach the end goal.”
On Tuesday, earnings will continue to attract investors’ attention. Wall Street gets results from Pfizer, Caterpillar and Merck. On Bay Street, George Weston reports this morning.
After Monday’s closing bell, Toronto-based Centerra Gold reported a net loss of US$39.7-million in the second quarter of 2023, compared with a loss of US$2.6-million a year earlier. Centerra says revenue for the quarter ended June 30 was US$184.5-million, up from US$167.7-million last year.
Elsewhere, Canada’s Strathcona Resources said early Tuesday it will go public by acquiring smaller rival Pipestone Energy Corp in an all-stock deal that will value the combined business at $8.6-billion. Strathcona said the two companies will be amalgamated to form a new corporation that will retain Strathcona’s name.
Overseas, the pan-European STOXX 600 was down 0.65 per cent by midday. Britain’s FTSE 100 slid 0.30 per cent. Germany’s DAX lost 0.89 per cent while France’s CAC 40 fell 0.84 per cent.
In Asia, Japan’s Nikkei finished up 0.92 per cent. Hong Kong’s Hang Seng lost 0.34 per cent.
Commodities
Crude prices saw modest declines in early trading after rallying in July with markets awaiting the latest weekly U.S. crude inventory figures.
The day range on Brent was US$84.78 to US$85.39 in the early premarket period. The range on West Texas Intermediate was US$81.14 to US$81.80. Both benchmarks traded around their best levels since April on Monday.
“Crude prices are finishing a solid month on a high note as demand prospects remain impressive and no one doubts that OPEC+ will keep this market tight,” OANDA senior analyst Ed Moya said.
“The oil market is seeing the best month since early 2022 as most of the major central banks appear at the tail end of their tightening cycles.”
He noted that crude markets have also drawn support from growing expectations of a soft landing for the economies in the U.S. and Europe.
“The ace up the sleeve of oil bulls is that the energy market is still awaiting massive stimulus from China that should boost global growth prospects,” he said.
Later Tuesday, markets will get weekly inventory figures from the American Petroleum Institute. Those will be followed by more official U.S. government numbers on Wednesday morning.
A Reuters poll also estimated U.S. crude oil and gasoline stockpiles were expected to have declined last week. Figures suggested that, on average, crude inventories fell by about 900,000 barrels in the week to July 28, the news agency reported.
In other commodities, gold prices were lower, weighed down by a weaker U.S. dollar, after closing out July up more than 2 per cent.
Spot gold eased 0.4 per cent to US$1,955.68 per ounce by early Tuesday morning, while U.S. gold futures dropped 0.8 per cent to US$1,955.20 per ounce.
Currencies
The Canadian dollar was weaker, hit by tentative global risk sentiment, while its U.S. counterpart advanced against world currencies.
The day range on the loonie was 75.41 US cents to 75.91 US cents in the early premarket period.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, rose 0.2 per cent to 102.14, a three-week high, according to figures from Reuters.
The euro slid 0.16 per cent to $1.0979 early Tuesday morning, not to far from an almost three-week low seen on Friday.
The Australian dollar fell 1.1 per cent to US$0.6648 after that country’s central bank held rates steady for a second month at its latest policy meeting.
In bonds, the yield on the U.S. 10-year note was higher at 3.973 per cent in the predawn period.
More company news
George Weston Ltd. says its latest quarter delivered a profit attributable to common shareholders of $498-million. The company, which holds large stakes in Loblaw Companies Ltd. and Choice Properties Real Estate Investment Trust, says the second-quarter profit was almost 22 per cent lower than the earnings it reported a year earlier. The company says the decrease was primarily driven by unfavourable liabilities linked to Choice Properties. George Weston says its adjusted net earnings available to common shareholders totalled $377-million for the period ended June 30, up from $328-million a year before. -The Canadian Press
BP’s second-quarter profit slumped 70% from a year earlier to $2.6 billion, missing forecasts, as refining margins and oil trading income fell, but still allowing the energy giant to boost its dividend by 10%. Rivals Chevron, Exxon Mobil, Shell and TotalEnergies have also reported sharp drops in quarterly earnings, hurt by a drop in energy prices from highs hit following Russia’s invasion of Ukraine a year and a half ago. “Our underlying performance was resilient with good cash delivery - during a period of significant turnaround activity and weaker margins in our refining business,” Chief Executive Officer Bernard Looney said in a statement. -Reuters
Merck & Co posted narrower-than-expected second-quarter loss and raised its full-year profit forecast on Tuesday on the strength of its two top-selling products, cancer immunotherapy Keytruda and human papillomavirus (HPV) vaccine Gardasil. Sales in the quarter stood at US$15-billion, up from US$14.6-billion a year ago, despite a sharp drop in demand for Merck’s COVID-19 therapeutic Lagevrio. Analysts, on average, had expected sales of US$14.4-billion, according to Refinitiv data. -Reuters
Caterpillar Inc reported a rise in quarterly profit, as higher infrastructure spending in regions such as North America drove demand for its expensive construction equipment. Adjusted profit for the quarter rose to US$5.55 share from US$3.18 per share a year earlier. -Reuters
Uber Technologies forecast third-quarter operating profit above Wall Street expectations as it sees growing demand for ride hailing due to strong leisure travel trends and gradual return to in-office work. The ride-sharing platform’s cost controls ranging from layoffs to lower transaction costs and maintaining a steady headcount have helped the company maintain its target to post operating income profitability this year. At the same time, the number of rides after the pandemic is growing. -Reuters
Pfizer Inc on Tuesday fell short of Wall Street estimates for quarterly revenue, hit by declining sales of its COVID-19 products. Total revenue for the second quarter at US$12.73-billion missing analysts’ estimates of US$13.27-billion, according to Refinitiv data. -Reuters
Economic news
930 am ET: S&P Global Manufacturing PMI for July
10 am ET: U.S. construction spending for June.
10 am ET: U.S. job openings and labour turnover survey.
10 am ET: U.S. ISM Manufacturing PMI
With Reuters and The Canadian Press