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Equities
Canada’s main stock index edged higher at Wednesday’s open with higher crude prices supporting energy stocks while a hotter-than-expected reading on inflation added a note of caution for investors. On Wall Street, key indexes were up for a second day helped by earnings optimism despite a sharp drop in Netflix stock on the back of disappointing subscriber numbers.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 10.54 points, or 0.05 per cent, at 22,029.36.
In the U.S., the Dow Jones Industrial Average rose 51.5 points, or 0.15 per cent, at the open to 34,962.67.
The S&P 500 rose 10.1 points, or 0.23 per cent, at the open to 4,472.26, while the Nasdaq Composite rose 45.7 points, or 0.34 per cent, to 13,665.37 at the opening bell.
On Wednesday, Netflix stock remains in focus after weak subscriber numbers sent the shares into a tailspin. In the early trading, Netflix shares were down about 35 per cent.
In the latest quarter, the company posted its first loss in worldwide subscribers in its history. The company’s customer base fell by 200,000 subscribers during the January-March period. Analysts were looking for a gain of 2.5 million subscribers.
“The biggest challenge going forward will not just be a more intensive landscape competition wise, but also the rising cost of living, as well as starting to hit critical mass in some of its key markets,” CMC Markets chief market analyst Michael Hewson said.
“This in turn will prompt a sharp reassessment of future subscriber growth estimates, across the sector, with Disney, Apple TV+ and Amazon Prime expected to come under similar scrutiny in the days ahead, although at least on their part at least they have other revenue streams to fall back on.”
Investors were also keeping a close eye on bond yields. Canadian bond yields on Tuesday tracked U.S. yields higher, with the five-year bond yield - which has a significant influence on fixed mortgage rates - hitting a fresh 11-year high of more than 2.7 per cent. By early Wednesday morning, the yield on the U.S. 10-year note had eased to 2.886 per cent shortly after markets opened in North America.
In this country, investors got results from Rogers Communications before the start of trading. The telecom company reported a 4-per-cent increase in fourth quarter revenue to $3.62-billion in the quarter ended March 31, compared with analysts’ average estimates of $3.63-billion, according to IBES data from Refinitiv. Net income rose to $392-million, or 77 cents per share, from $361-million, or 70 cents per share, a year earlier.
Meanwhile, the Globe’s Alexandra Posadzki and Andrew Willis report that Rogers Communications Inc. has presented the federal government with a deal that would see rural internet provider Xplornet Communications Inc. acquire wireless carrier Freedom Mobile in an attempt to win approval for Rogers’s $26-billion takeover of Shaw Communications Inc., according to sources.
Canadian investors also got a hotter-than-expected reading on inflation with the annual rate spiking to 6.7 per cent in March, the highest in decades and more than the 6.1 per cent economists had been expecting.
“Gasoline prices have ticked lower to-date in April, and home price growth has begun to slow on the back of quickly rising borrowing costs,” RBC economist Claire Fan said.
“That will all start to put some more downward pressure on price growth in the coming months. But inflation pressure also continued to broaden. Our own diffusion index showed prices for just over 70 per cent of the goods and services in the consumer basket growing faster than the Bank of Canada’s 2-per-cent target price growth over the last 6 months.”
On Wall Street, earnings continue to roll in with results due from Tesla Inc. after the close of trading.
Overseas, the pan-European STOXX 600 rose 1 per cent by afternoon. Britain’s FTSE 100 gained 0.20 per cent. Germany’s DAX and France’s CAC 40 advanced 1.22 per cent and 1.33 per cent, respectively.
In Asia, Japan’s Nikkei rose 0.86 per cent. Hong Kong’s Hang Seng fell 0.40 per cent.
Commodities
Crude prices recouped some of the previous session’s sharp losses in early going helped by continued supply concerns amid the Russia-Ukraine war and fresh U.S. figures showing a decline in weekly U.S. inventories.
The day range on Brent is US$106.96 to US$108.81. The range on West Texas Intermediate is US$102.53 to US$104.
Both bench marks fell more than 5 per cent on Tuesday after the International Monetary Fund cut its global growth outlook for the year.
“There remain plenty of upside risks to the oil price, even at these levels, which makes [Tuesday’s] large declines all the more interesting,” OANDA senior analyst Craig Erlam said.
“Protests in Libya have knocked out around half a million barrels per day of output which contributed to Monday’s rally. While this is only a temporary hit, it comes at a bad time as far as global supply is concerned.”
Prices drew some support early Wednesday from new data from the American Petroleum Institute showing that U.S. crude stocks fell by 4.5 million barrels last week. Analysts had been expecting to see an increase in inventories.
More official numbers are due later in the morning from the U.S. Energy Information Administration.
In other commodities, gold prices fell to a two-week low, hit by a strong U.S. dollar and rising Treasury yields.
Spot gold was down 0.4 per cent at US$1,941.40 per ounce by early Wednesday morning, after hitting its lowest since April 8. U.S. gold futures fell 0.7 per cent to US$1,944.80.
Currencies
The Canadian dollar was higher in early trading while its U.S. counterpart held near its best level in two years against a basket of global currencies.
The day range on the loonie is 79.21 US cents to 79.66 US cents. The loonie added to early gains after the latest inflation reading raised the prospect of more aggressive moves by the Bank of Canada.
On world markets, the U.S. dollar index, which measures the currency against six major peers including the yen, early in the day matched Tuesday’s high at 101.03 - a level not seen since March 2020 - before easing to 100.76, down 0.3 per cent in the day, according to Reuters.
Japan’s yen, meanwhile, hit a two-decade low against the greenback. The U.S. dollar reached 129.43 yen for the first time since April 2002 in Asian trading before easing to last trade 0.21 per cent lower at 128.615, the news agency reported.
More company news
The Globe’s James Bradshaw reports this morning that U.S. investment bank Morgan Stanley, which has been hiring aggressively throughout the pandemic to expand its Montreal technology hub, has promoted Sophia Bennaceur to lead the office as it plans to add hundreds more staff this year. Ms. Bennaceur will take over as the regional head of Morgan Stanley in Montreal on May 1, leading a technology centre with 2,700 tech professionals and engineers.
Lululemon Inc. says it aims to double its revenue to US$6.25-billion by 2026 under a new five-year growth plan. The Vancouver-based yoga-wear maker said it expects significant growth across key pillars including product innovation, guest experience, and market expansion.
Procter & Gamble Co beat third-quarter sales estimates on Wednesday, as consumer demand for cleaning and personal healthcare products remained resilient even in the face of higher prices. The Tide detergent maker said net sales rose 7% to $19.38-billion in the quarter ended March 31, compared with analysts’ estimates of $18.73-billion, according to Refinitiv data.
Economic news
(8:30 a.m. ET) Canadian CPI for March.
(8:30 a.m. ET) Canada’s new housing price index for March.
(10 a.m. ET) U.S. existing home sales for March.
(2 p.m. ET) U.S. Beige Book released.
Also: G20 finance ministers and central bank governors meet in Washington.
With Reuters and The Canadian Press