Equities
Canada’s main stock index slid at Tuesday’s opening bell with energy and financial stocks weighing as traders look ahead to tomorrow’s Bank of Canada rate decision. On Wall Street, the S&P 500 and Nasdaq saw early gains as investors sift through earnings and await late-day results from Microsoft and Alphabet.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 44.7 points, or 0.24 per cent, at 18,873.7.
In the United States, the S&P 500 opened higher by 2.10 points, or 0.06 per cent, at 3,799.44, while the Nasdaq Composite gained 44.35 points, or 0.40 per cent, to 10,996.97 at the opening bell.
The Dow Jones Industrial Average fell 35.97 points, or 0.11 per cent, at the open to 31,463.65.
Tuesday will see Google parent Alphabet and Microsoft report results after the close of trading.
“No one wants to aggressively buy big tech stocks until we hear this week’s big earnings from Apple, Alphabet, and Amazon,” OANDA senior analyst Ed Moya said.
“Investors are getting more confident that inflation will soften as the consumer rethinks massive purchases. Fed rate hike expectations will remain volatile, but expectations are growing that a weaker economy will let the Fed pause their tightening after the February policy meeting.”
Swissquote analyst Ipek Ozkardeskaya said Alphabet’s revenue is expected to rise, but at a slower rate than in recent quarters, while earnings per share is likely to be negatively affected by a challenging advertising environment and rising competition from TikTok.
Microsoft, she said, is expected to reveal the fifth consecutive quarter of slowing revenue, due to a steep decline in PC demand, the strong U.S. dollar, and challenging macroeconomic conditions.
Tuesday's analyst upgrades and downgrades
Ahead of the opening bell, companies reporting include General Electric, Coca-Cola and General Motors.
In Canada, earnings season also gathers steam with CN Rail reporting results after the close of trading. CP Rail reports on Wednesday.
According to Factset, total earnings for companies in the S&P/TSX Composite Index are forecast to rise by roughly 18 per cent in the third-quarter. Excluding energy, the increase is pegged closer to 8.8 per cent.
Overseas, the pan-European STOXX 600 was up 0.10 per cent by midday. Britain’s FTSE 100 slid 0.63 per cent. Germany’s DAX lost 0.76 per cent while France’s CAC 40 rose 021 per cent.
In Asia, Japan’s Nikkei rose 1.02 per cent. Hong Kong’s Hang Seng dipped 0.10 per cent.
Commodities
Crude prices slid in early going with concerns about global demand continuing to weigh.
The day range on Brent was US$92.37 to US$93.63 in the early premarket period. The range on West Texas Intermediate was US$83.77 to US$85.09. Both benchmarks finished Monday’s session lower.
“The short-term crude outlook has been heavy mostly on European weakness and China’s COVID woes, but now the U.S. outlook is softening very quickly,” OANDA’s Ed Moya said.
“Oil might struggle over the short-term as Europe enjoys warm weather, the strong dollar trade that is not going away anytime soon, and as the global outlook quickly deteriorates.”
Early Tuesday, crude prices found some in the currency markets, with the U.S. dollar holding relatively steady against a group of global peers.
Later Tuesday, traders will get the first of two weekly U.S. inventory reports with fresh figures from the American Petroleum Institute. More official government figures follow on Wednesday morning.
Analysts polled by Reuters are expecting to see an increase in weekly crude inventories of about 200,000 barrels.
In other commodities, gold prices were little changed.
Spot gold fell 0.1 per cent to US$1,646.79 per ounce by early Tuesday morning, while U.S. gold futures eased 0.1 per cent to US$1,652.50 per ounce.
“Gold is at last finding some relative stability above $1,600,” Clifford Bennett, chief economist at ACY Securities, said.
Currencies
The Canadian dollar was down slightly as markets await tomorrow’s Bank of Canada’s rate decision.
The day range on the loonie was 72.82 US cents to 73.11 US cents in the predawn period.
The Bank of Canada delivers its next rate decision on Wednesday morning. Many economists are forecasting another increase of 75 basis points, although some suggest a half point increase is also possible.
“This is a Monetary Policy Report meeting, so the BoC will release fresh forecasts and Governor Macklem will hold a post-meeting press conference,” Benjamin Reitzes, managing director, Canadian rates and macro strategist with Bank of Montreal, said.
“We anticipate that GDP growth forecasts will be marked down—substantially for 2023, which was pegged at 1.8 per cent in July — while the near-term inflation forecasts will be trimmed as well.”
Still, he said, stickier core inflation as well as the persistent breadth and depth of price increases will keep the central bank on high alert when it comes to price pressures.
“With respect to the tone of the statement and press conference, Governor Macklem is expected to remain hawkish as he’s fighting against inflation expectations, and can’t afford to be seen as backing down at all,” he said.
On world markets, the U.S. dollar index, which measures the currency against six major peers, edged up 0.13 per cent to 112.00, according to figures from Reuters
Britain’s pound edged toward this month’s highs, up 0.3 per cent to US$1.13125 after the announcement that Rishi Sunak would become the next prime minister.
The euro slid 0.07 per cent to US$0.9866, but was not far from its highest level since early October ahead of Thursday’s European Central Bank rate announcement. The ECB is expected to deliver a 75-basis-point increase amid spiking inflation.
In bonds, the yield on the U.S. 10-year note was slightly lower at 4.182 per cent.
More company news
Top Canadian cannabis producer Canopy Growth Corp said it was fast-tracking its entry into the United States by creating a holding company for its interest in U.S. partners Acreage Holdings Inc, Wana and Jetty. Canopy’s TSX-listed shares jumped 22 per cent in morning trading, with the deal expected to give the company a leading market share in the United States as soon as legally possible. -Reuters
United Parcel Service Inc reported a rise in third-quarter adjusted profit as higher delivery prices offset softening e-commerce demand. The world’s largest parcel delivery firm’s adjusted third-quarter profit rose to $2.99 per share, from $2.71 per share, a year earlier. The company reaffirmed its full-year revenue forecast of about $102 billion and adjusted operating margin of around 13.7%. -Reuters
General Electric Co reported a 19% drop in adjusted quarterly profit, as the U.S. industrial conglomerate struggles with company-wide supply snarls, inflationary pressures and weakness in its renewable energy business. GE, which is in the process of breaking up into three companies, said adjusted profit fell to US$1.06-billion for the quarter through September. -Reuters
General Motors Co reported a higher quarterly profit, and reaffirmed its full-year outlook. The automaker reported net income of $3.3-billion, compared with $2.4-billion a year earlier. Revenue jumped to $41.9-billion, from $26.8-billion a year ago. GM’s net margin slipped to 7.9%, from 9.0% a year earlier. -Reuters
Popular messaging app WhatsApp was slowly coming back online by early on Tuesday, with some users in India, Asia and the United Kingdom saying they were able to send and receive some messages and videos. Users across the world had reported issues with the platform earlier in the day. Facebook parent Meta Platforms, Inc. also owns WhatsApp. -Reuters
Coca-Cola Co raised its annual revenue forecast, banking on demand to remain steady for its sugary sodas amid multiple price increases taken to blunt the impact of surging costs. The company forecast organic revenue, which excludes the impact of a stronger U.S. dollar, to rise 14% to 15% in 2022, compared to prior expectation of 12% to 13% increase. -Reuters
Economic news
(9 a.m. ET) U.S. CoreLogic Case-Shiller Home Price Index (20 city) for August.
(9 a.m. ET) U.S. FHFA House Price Index for August.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for October.
With Reuters and The Canadian Press