Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Equities
Canada’s main stock index fell at Thursday’s opening bell, hit by weakness in mining shares and a decline in Manulife stock in the wake of the insurer’s latest earnings. Wall Street indexes also slid in early trading with growth stocks struggle amid concerns about aggressive rate hikes and the impact on the economy.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 215.28 points, or 1.09 per cent, at 19,621.97.
In the U.S., The Dow Jones Industrial Average fell 135.07 points, or 0.42 per cent, at the open to 31,699.04. The S&P 500 opened lower by 31.23 points, or 0.79 per cent, at 3,903.95, while the Nasdaq Composite dropped 164.98 points, or 1.45 per cent, to 11,199.25 at the opening bell.
The latest market gyrations came after new figures showed the annual rate of inflation in the United States pulled back somewhat in April but remained elevated. The annual rate slipped to 8.3 per cent for the month from 8.5 per cent a month earlier, although the latest figure was still above market forecasts and wasn’t far off recent four-decade highs.
“The consensus is that inflation has peaked, at least in the U.S.,” Stephen Innes, managing partner at SPI Asset Management, said. “A floor for global equity markets depends on how quickly U.S. CPI inflation falls.
“The stickier inflation is, the more hawkish the market debate toward neutrality,” he said.
In this country, Bank of Canada, deputy governor Toni Gravelle will address inflation concerns in remarks scheduled for later this morning to the Association des économistes québécois in Montreal. The topic of Mr. Gravelle’s remarks is “commodity price shocks and the impact on growth and inflation in Canada.” Mr. Gravelle is set to speak just before noon.
On the corporate side, retailer Canadian Tire reported earnings before the start of trading. Aurora Cannabis will release its results after the close.
Canadian Tire hiked its quarterly dividend by 25 per cent to $1.625 per share, up from $1.30 per share. The company posted net income attributable to shareholders of $182.1-million or $3.03 per diluted share, up from $151.8-million or $2.47 per diluted share a year earlier. Revenue for the quarter ended April 2 totalled $3.84-billion, up from $3.32-billion in the same quarter last year.
Meanwhile, Manulife and Sun Life, Canada’s biggest insurers, both reported results after Wednesday’s closing bell.
Manulife reported core earnings of $1.5-billion, or 77 cents a share, in the three months ended March 31, down from $1.6-billion, or 82 cents a share, a year earlier. Analysts had expected earnings to remain flat. Manulife stock fell 8 per cent in early trading in Toronto.
Underlying profit at Sun Life was $843-million, or $1.44 a share, in the three months ended March 31, down from $850-million, or C$1.45, a year earlier. Analysts had expected $1.41 a share. Sun Life shares fell about 1 per cent shortly after the opening bell.
On Wall Street, shares of Walt Disney Co. were down more than 4 per cent even as the company’s Disney+ streaming service’s latest subscription numbers topped analyst’s forecasts. Total subscriptions for Disney+, launched in November 2019, touched 137.7 million in the quarter, compared with Factset estimates of 135.06 million.
However, Disney reported adjusted earnings per share of US$1.08, below analyst forecasts of $1.19, according to IBES data from Refinitiv. Revenue in the quarter totalled US$19.2-billion, below the US$20.03-billion consensus estimate. Disney shares were down 3 per cent in New York.
Overseas, the pan-European STOXX 600 fell 1.93 per cent by midday. Britain’s FTSE 100 was down 2.16 per cent. Germany’s DAX and France’s CAC 40 lost 2.12 per cent and 2.51 per cent, respectively.
In Asia, Japan’s Nikkei lost 1.77 per cent. Hong Kong’s Hang Seng closed down 2.24 per cent.
Commodities
Crude prices fell in early going as global economic growth concerns offset worries about tight supply.
The day range on Brent is US$104.69 to US$108.11. The range on West Texas Intermediate is US$102.66 to US$106.27. Prices gained about 5 per cent on Wednesday.
Markets have been spooked by persistently high levels of inflation, raising concerns about aggressive moves by central banks. At the same time, COVID-19 lockdowns in China have also stoked fears of a slowdown in that country.
“There is one good news on the wire, though: COVID cases in Shanghai halved this week, sparking hope that the lockdown measures could soon be over in China’s economic heart,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
“Yet, zero COVID is hard to achieve, and the risk of a renewed lockdown is omnipresent, if the Chinese government doesn’t soften the rules, which they don’t seem to be willing to do.”
Meanwhile, the U.S. Energy Information Administration said U.S. inventories rose last week due to a record release of oil from the U.S. strategic reserves, but gasoline stockpiles fell ahead of the summer driving demand season.
In other commodities, spot gold slid 0.1 per cent to US$1,850.81 per ounce by early Thursday morning. U.S. gold futures were down 0.2 per cent at US$1,850.80.
Currencies
The Canadian dollar was weaker, hit by fragile global risk sentiment, while its U.S. counterpart touched new two-decade highs against a group of world currencies.
The day range on the loonie is 76.70 US cents to 77.07 US cents.
Markets will get fresh comments on inflation from Bank of Canada deputy governor Toni Gravelle later this morning.
“Expect him to use this opportunity to re-emphasize that the BoC will do what is necessary in order to keep inflation expectations anchored around their 2-per-cent target,” Elsa Lignos, global head of FX strategy with RBC, said.
On world markets, the U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.4 per cent to 104.44, its highest since December 2002, according to figures from Reuters.
The euro fell 0.5 per cent to US$1.0463, after hitting its lowest since January 2017 at US$1.044.
In bonds, the yield on the benchmark U.S. 10-year note was down slightly at 2.826 per cent by early Thursday morning.
More company news
Brookfield Asset Management Inc said it will separate and list 25% of the stake in its asset management unit, months after the Toronto-based company said it was considering the move to open up growth options. The company will initially hold a 75% stake in the new entity, with the rest distributed to its current shareholders by the year end, Brookfield said. Both the parent company and the separated unit will trade on the New York Stock Exchange and the Toronto Stock Exchange, the company said.
Quebecor Inc. reported its first-quarter profit edged higher compared with a year ago. The company said its net income attributable to shareholders totalled $121.4-million or 51 cents per share for the quarter ended March 31 compared with a profit of $121.3-million or 49 cents per share a year earlier. Revenue for the quarter totalled $1.088-billion, down from $1.091-billion in the first three months of 2021.
Crescent Point Energy Corp. raised its quarterly dividend as it reported first-quarter net income of $1.18-billion, boosted by a reversal of a non-cash impairment charge related to the rise in energy prices. The company said it will increase its quarterly dividend to 6.5 cents per share, up from 4.5 cents per share. The increased payment to shareholders came as Crescent Point said it earned $2.03 per diluted share for the quarter ended March 31, up from a profit of $21.7-million or four cents per diluted share a year ago.
Grocery delivery app Instacart said it had confidentially filed with the U.S. securities regulator to go public, not long after the pandemic darling was forced to slash its valuation by 40% following market turbulences and heated delivery wars. The move by San Francisco-based Instacart comes at a time capital markets investors, hit by heavy losses from 2021 listings, are shunning initial public offerings (IPOs), and equity markets are bleeding in anticipation of further aggressive U.S. interest rate hikes to tame inflation.
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of May 7.
(8:30 a.m. ET) U.S. PPI for April.
With Reuters and The Canadian Press