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Equities
Canada’s main stock index gained at Thursday’s opening bell helped by strength in energy and tech shares. On Wall Street, key indexes were also positive with gains by Facebook-parent Meta Platforms easing concerns about the battered tech sector.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 156.8 points, or 0.76 per cent, at 20,901.03.
In the U.S., the Dow Jones Industrial Average rose 124.0 points, or 0.37%, at the open to 33425.96.
The S&P 500 rose 38.6 points, or 0.92%, at the open to 4222.58, while the Nasdaq Composite rose 223.9 points, or 1.79%, to 12712.863 at the opening bell.
In early trading, shares of Facebook owner Meta Platforms spiked 11 per cent on investor relief over the company’s latest quarterly results. Meta’s profit topped Wall Street forecasts at US$2.72 a share, compared with an analyst consensus of $2.56, according to IBES data from Refinitiv. That showing helped offset news that Meta recorded its slowest revenue growth in a decade. during the latest quarter.
After markets close, big tech earnings continue with results from Apple and Amazon.
“Supply change disruptions, material price inflation and a cloudy outlook on the economic growth front are just some of the potential headwinds for both,” OANDA senior analyst Jeffery Halley said.
“I wouldn’t argue against a sparkling set of financials for Q1, but the real gold will be in their forward outlooks. Depending on what they say, today’s equity rally will either be real gold, or fool’s gold.”
Meanwhile, Twitter Inc, which agreed this week to a US$44-billion sale to Elon Musk, reported first-quarter revenue early Thursday that fell short of Wall Street estimates. The company reported revenue of US$1.2-billion, below analysts’ average estimate of US$1.23-billion, according to IBES data from Refinitiv. However, the company also reported daily active users rose to 229 million users in the first quarter, from 199 million, a year earlier. Analysts on average had expected 226.8 million daily active users.
Sentiment was tempered somewhat on Wall Street by new figures showing U.S. first-quarter GDP unexpectedly contracted by 1.4 per cent. Economists had been expecting to see a modest increase in broad economic growth of 1 per cent. The spread of the Omicron variant and the war in Ukraine were both seen as factors negatively affecting growth in the first three months of the year.
In Canada, investors got earnings from Precision Drilling ahead of the start of trading. The company said revenue rose 49 per cent to $351 million in the first quarter from year-earlier levels. U.S. and Canadian drilling activity grew by 56 per cent and 48 per cent, respectively. Precision Drilling posted a loss of $43.8-million or $3.25 per diluted share compared with a loss of $36.1-million or $2.70 per diluted share in the first quarter of 2021.
Suncor stock was up more than 9 per cent shortly after the open in Toronto after activist investor Elliott Investment Management said it is seeking changes to the board of directors at Suncor Energy Inc. and is calling for a review of the company’s executive leadership.
Forestry companies are set to report huge profits. Will their stock prices get spruced up?
Elsewhere, Bank of Canada Governor Tiff Macklem again suggested that Canadians get ready for higher borrowing costs over the coming year.
Speaking to the Senate Committee on Banking, Trade and Commerce late Wednesday, Mr. Macklem said that the central bank needs to push interest rates up relatively quickly to cool down Canada’s overheating economy, The Globe’s Mark Rendell reports.
Overseas, the pan-European STOXX 600 rose 0.56 per cent by afternoon. Britain’s FTSE 100 added 1.17 per cent. Germany’s DAX and France’s CAC 40 rose 1.10 per cent and 0.13 per cent, respectively.
In Asia, Japan’s Nikkei rose 1.75 per cent. Hong Kong’s Hang Seng gained 1.65 per cent.
Commodities
Crude prices steadied in early going after a choppy predawn period amid ongoing concerns the impact of COVID-19 restrictions on China’s economic outlook and worries about tight global supply.
The day range on Brent is US$102.90 to US$105.70. The range on West Texas Intermediate is US$100.13 to US$103.
“Oil markets were steady overnight as most of the news around the Russian gas ban on Poland and Bulgaria has been priced into the late New York session previously,” OANA’s Jeffery Halley said.
“In Asia, oil prices are sliding which I put down to a combination of two things. The start of mass testing around Beijing and the partial lockdown of the port city Qinhuangdao, and the FT article suggesting that major European energy companies will comply with Russia’s demands for payment in rubles.”
Meanwhile, prices were underpinned by the latest U.S. inventory figures. The U.S. Energy Information Administration said crude stocks rose by 692,000 barrels last week, below market expectations. But, distillate inventories, which include diesel and jet fuel, hit their lowest since 2008.
In other commodities, gold prices fell to a 10-week low early Thursday morning, stung by continued strength in the U.S. dollar.
Spot gold was down 0.1 per cent at US$1,885.06 per ounce in the predawn period, and hit its lowest since Feb. 17 earlier in the session. U.S. gold futures slipped 0.1 per cent to US$1,885.90.
Currencies
The Canadian dollar was trading around 78 US cents, buoyed by continued suggestions from the Bank of Canada that higher rates are coming, while its U.S. counterpart continued to advance against world currencies.
The day range on the loonie is 77.77 US cents to 78.14 US cents.
On Wednesday evening, Bank of Canada Governor Tiff Macklem again suggested Canadians prepare for higher rates and reiterated that the central bank will consider another half percentage point increase at its June 1 policy meeting.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, the dollar index rose as high as 103.70, its highest in five years and close to levels not visited since 2002, according to figures from Reuters. The U.S. dollar pared some gains after new figures showed that the U.S. economy contracted at an annual rate of 1.4 per cent in the first quarter of the year.
Meanwhile, a decision by the Bank of Japan to hold to its low-yield policy triggered a sell-off in the yen which saw the U.S. dollar climb as high as 131 yen, its highest level in 20 years.
The euro slid and briefly touched a more than five-year low of US$1.0481, bringing its losses for the month to 5 per cent, Reuters reported.
More company news
McDonald’s Corp beat estimates for quarterly sales on Thursday as the world’s largest fast-food chain benefited from price increases in the United States and the launch of a new loyalty program. Global comparable sales rose 11.8%, beating estimates of an 8.2% increase, boosted by the easing of COVID-19 restrictions in some overseas markets. Total revenue increased 11 per cent to US$5.67-billion, beating expectations of $5.59-billion.
Canadian Pacific Railway Ltd. saw revenue and profits dip in its first quarter as a weak grain harvest, a harsh winter and a work stoppage took their toll. Total net income slipped to $590-million in the quarter ended March 31, compared with $602-million in the same period in 2021. First-quarter revenues fell to $1.84-billion from $1.96-billion last year. Diluted earnings per share plunged to 63 cents from 90 cents a year earlier, well below analyst estimates of 73 cents per share, according to financial data firm Refinitiv. The results were reported after Wednesday’s close.
Qualcomm Inc forecast third-quarter revenue above analyst expectations after beating second quarter revenue and profit estimates on Wednesday, largely due to its move to focus on a growing non-handset business to cushion a likely hit from slowing smartphone demand. Qualcomm forecast current-quarter revenue between a range of US$10.5-billion and US$11.3-billion, compared with analysts’ estimates of US$9.98-billion, according to IBES data from Refinitiv.
The Globe’s Alexandra Posadzki reports two advocacy groups are asking the federal cabinet to overturn the telecom regulator’s approval of the transfer of Shaw Communications Inc.’s broadcasting services to Rogers Communications Inc. The Canadian Radio-television and Telecommunications Commission last month approved Rogers’ acquisition of Shaw’s broadcasting distribution business with some conditions, clearing the first of three regulatory hurdles facing the Toronto-based telecom’s $26-billion takeover of Calgary-based Shaw. The decision came after a public proceeding that heard from a number of stakeholders, including consumer advocates and rival telecoms.
Caterpillar Inc reported a 14.3-per-cent rise in first-quarter revenue on Thursday, as construction-led demand and higher commodity prices boosted sales of its heavy equipment across businesses. Sales and revenue for the quarter rose to US$13.6-billion from US$11.9-billion a year earlier.
Moderna Inc said it asked U.S. regulators to authorize its COVID-19 vaccine for children under the age of 6, which would make it the first shot against the coronavirus available for those under 5-years-old. The COVID-19 vaccine from Pfizer Inc and BioNTech SE is authorized for children 5 and older. But their trial results for 2- to 4-year-olds showed a weaker immune response than in adults, forcing the study to be extended to test a third dose. Pfizer has said that data would come in April.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of April 23.
(8:30 a.m. ET) U.S. real GDP and GDP deflator for Q1.
(11 a.m. ET) U.S. Kansas City Fed Manufacturing Activity for April.
Also: Ontario budget
Terry Weber