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Equities
Canada’s main stock index fell early Thursday with a drop in Shopify stock weighing after the company’s latest results missed market forecasts. South of the border, key indexes pulled back after the previous session’s Fed-inspired relief rally.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 97.29 points, or 0.46 per cent, at 21,087.66.
In the U.S., the Dow Jones Industrial Average fell 206.89 points, or 0.61 per cent, at the open to 33,854.17.
The S&P 500 opened lower by 29.74 points, or 0.69 per cent, at 4,270.43, while the Nasdaq Composite dropped 177.33 points, or 1.37 per cent, to 12,787.52 at the opening bell.
On Wednesday afternoon, the Fed hiked interest rates by a half a percentage point, the biggest increase in two decades. It also said it will begin shrinking the Fed’s $9-trillion balance sheet in June. However, Fed chair Jerome Powell also indicated that, while the central bank will likely raise rates by 50 basis points at its next two meetings, a move bigger than that “is not something the committee is actively considering.” Traders had been concerned the bank would hike rates by 75 basis points at a coming meeting as it looks to head of rising inflation.
“This policy stance was much less aggressive than some of the more hawkish scenarios that the markets had feared,” Michael Hewson, chief market analyst with CMC Markets U.K., said.
“With the Federal Reserve decision firmly in the rear-view mirror, Fed policymakers now have the freedom to start articulating their own version of last nights events, with some of the more hawkish members like St. Louis Fed President James Bullard likely to pour cold water on some of [Wednesday]’s positive narrative.”
In this country, investors got a raft of earnings from Canadian companies before the start of trading, including Shopify, BCE, Canadian Natural Resources, SNC-Lavalin and Bombardier.
Shopify also said on Thursday it would buy U.S.-based logistics firm Deliverr for US$2.1-billion, to help mitigate supply chain snarls that have plagued the e-commerce sector. The news came as the company reported a 22-per-cent jump in first-quarter revenue to US$1.2-billion, compared with analysts’ average estimate of US$1.24-billion, according to IBES data from Refinitiv. Shopify shares were down more than 16 per cent in early trading in Toronto.
On Wall Street, shares of eBay were down more than 6 per cent in premarket trading after the company’s revenue forecast disappointed. The company projected second-quarter revenue between US$2.35-billion and US$2.40-billion, compared with the average analyst expectation of US$2.54-billion, according to Refinitiv IBES data.
Overseas, the pan-European STOXX 600 was up 0.70 per cent by afternoon. Britain’s FTSE 100 gained 1.3 per cent. Germany’s DAX and France’s CAC 40 rose 0.97 per cent and 1.02 per cent, respectively. Early Thursday, the Bank of England raised interest rates to their highest since 2009 at 1 per cent to head off rising inflation.
In Asia, Hong Kong’s Hang Seng ended down 0.36 per cent. Markets in Japan remained closed.
Commodities
Crude prices firmed in early going as supply concerns linger and traders weigh the outcome of the latest OPEC+ meeting.
The day range on Brent is US$109.98 to US$111.49. The range on West Texas Intermediate is US$107.35 to US$109.00. Both added more than US$5 a barrel on Wednesday.
On Thursday, OPEC members and their allies were met to consider future production levels. As expected the group agreed to stick with its current production plan for modest increases, according a Reuters report.
Reuters also reported that OPEC Secretary General Mohammad Barkindo reiterated it was not possible for other producers to replace Russian supply, but expressed concerns about slowing demand in China, because of COVID-19 restrictions.
“The OPEC countries haven’t been able to meet the daily quotas over the past couple of months, so it doesn’t really make sense to have quotas in place if the producer countries fall repeatedly behind their target,” Swissquote senior analyst Ipek Ozkardeskaya said.
Earlier in the week, the EU outlined a proposal to phase out imports of Russian refined products by the end of the year, heightening concerns over tight supply. The plan would need the unanimous support of the 27 EU countries.
In other commodities, gold prices advanced after after the Fed indicated that more hawkish moves aren’t currently under consideration.
Spot gold was up 0.8 per cent at US$1,895.20 per ounce by early Thursday morning, after rising over 1 per cent to its highest since April 29 of US$1,903.22 earlier in the session. U.S. gold futures gained 1.4 per cent to US$1,895.40.
Currencies
The Canadian dollar was down slightly in early going while its U.S. counterpart pulled back from near two-decade highs in the wake of the latest Fed news.
The day range on the loonie early Thursday was 78.33 US cents to 78.67 US cents.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, fell 0.9 per cent to 102.450 in the wake of the Fed decision. It bounced 0.2 per cent in early London trading but held at a one-week low, according to figures from Reuters.
Britain’s pound rose more than 1 per cent to US$1.2637 on Wednesday but it was under pressure at US$1.2548 in Asia ahead of a Bank of England meeting.
In bonds, the yield on the U.S. 10-year note was higher at 2.952 per cent in the predawn period.
More company news
The Globe’s Alexandra Posadzki reports BCE Inc. boosted its first-quarter profit and revenue as it added new wireless and internet customers. The telecom reported $5.85-billion in revenue for the three-month period ended March 31, up 2.5 per cent from $ 5.71-billion during the same period last year.
Canadian Natural Resources Ltd said its quarterly profit more than doubled, helped by a surge in oil and gas prices after Russia’s invasion of Ukraine stoked global supply concerns. The company said net earnings stood at $3.1-billion, or $2.63 cents per share, for the first quarter ended March 31, from $1.38-billion, or $1.16 per share, a year earlier.
Bombardier Inc reported a smaller quarterly adjusted loss, benefiting from higher jet demand as more wealthy travelers flew private due to the pandemic. Bombardier’s first-quarter free cash flow from continuing operations, a metric closely watched by investors, was $173-million, compared with an outflow of $405-million a year earlier. The company reported an adjusted loss of 3 cents per share, compared with a loss of 7 cents per share, a year earlier.
SNC-Lavalin Group Inc. reported its first-quarter profit fell compared with a year ago as its revenue edged higher to start the year. The company said its profit from continuing operations attributable to shareholders totalled $24.8-million or 14 cents per diluted share for the quarter ending March 31. The result compared with a profit of $67.7-million or 39 cents per diluted share in the same quarter last year. Revenue for the quarter totalled $1.89-billion for the quarter, up from $1.82-billion in the first three months of 2021.
The Globe’s Andrew Willis reports Michael McCain is stepping down as chief executive of Maple Leaf Foods Inc. after 27 years at the helm of Canada’s largest meat producer, handing the top job to president Curtis Frank.
Shell reported on Thursday a profit of US$9.13-billion in the first quarter, its highest ever, boosted by higher oil and gas prices and a strong performance of its trading division. First-quarter adjusted earnings rose 43 per cent from the previous quarter to US$9.13-billion, above an average analyst forecast provided by the company for a US$8.67-billion profit. That compares with earnings of US$3.13-billion a year earlier.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of April 30.
(8:30 a.m. ET) U.S. productivity and unit labour costs for Q1.
(9:40 a.m. ET) Bank of Canada Deputy Governor Lawrence Schembri speaks in Gatineau, Que., on economic reconciliation, inclusion and prosperity to the NACC Indigenous Prosperity Forum.
With Reuters and The Canadian Press
Terry Weber