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.
Canada’s main stock index opened lower on Thursday, hurt by losses in the heavy-weight financial sector on the back of disappointing earnings from Toronto-Dominion Bank .
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 36.25 points, or 0.23 per cent, at 16,038.05.
Financial stocks fell 0.9 per cent after TD reported a lower-than-expected increase in earnings due to losses at its wholesale banking business. It reported earnings per share, excluding special items, of $1.57, up from $1.56 the year before but lower than the $1.72 expected by analysts according to IBES data from Refinitiv. Still TD Bank raised its dividend. TD shares fell nearly 3 per cent.
CIBC raised its dividend but reported that first-quarter profit fell to $1.18-billion, down 11 per cent from $1.33-billion a year ago. On an adjusted basis, CIBC earned $3.01 per share, down from $3.18 a year ago and below the $3.08 expected by analysts surveyed by Thomson Reuters Eikon. Its shares fell 1.7 per cent.
Energy stocks fell 0.4 per cent as Seven Generations fell 6.7 per cent and Husky Energy 1 per cent.
Encana Corp.’s quarterly profit topped analyst estimates on Thursday as the Canadian oil and gas producer saw a 20-per-cent rise in output, and sold crude at a 7 per cent higher rate than last year. Excluding one-time items, the company earned 32 cents per share, beating analysts’ average estimate of 16 cents per share. Its shares rose 5 per cent.
Canadian packaged meat producer Maple Leaf Foods Inc. missed analysts’ estimates for quarterly profit, as weak pork prices offset growth in its prepared meats. Its shares fell 3.2 per cent.
Air Canada has signed a 10-year partnership deal with American Express for a new loyalty program that the airline is preparing to launch next year. Its shares were up 1.8 per cent.
The health care index gained 2.3 per cent. Cannabis producer Canopy Growth said lifestyle guru Martha Stewart will be an adviser to help develop a line of marijuana-based products. Its stock gained 3.4 per cent.
Wall Street’s main indexes opened slightly lower on Thursday after a U.S.-North Korea summit ended abruptly without a deal, but losses were limited as data showed the American economy slowed less than expected in the fourth quarter.
The S&P 500 opened lower by 4.27 points, or 0.15 per cent, at 2,788.11. The Nasdaq Composite dropped 21.19 points, or 0.28 per cent, to 7,533.31 at the opening bell.
The Dow Jones Industrial Average fell 0.88 points, or 0 per cent, at the open to 25,984.28.
The Commerce Department’s report showed gross domestic product (GDP) rose at a 2.6 per cent annualized rate in the fourth quarter, while economists polled by Reuters had forecast a 2.3 per cent growth rate.
“GDP number was solid as a rock, there are no signs of slowing down,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd in London. “Most of the market participants were expecting a weak number and this is a surprise, a good surprise.”
The sentiment was weaker in premarket trading after U.S. President Donald Trump said he had walked away from a nuclear deal at his summit with Kim Jong Un in Vietnam because of unacceptable demands from the North Korean leader to lift U.S.-led sanctions.
“Collapse in negotiations with North Korea seems to be weighing on sentiment to some extent,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
“There is very little substance that comes out of these things [the summit] but the market perceives that peace on the peninsula would be a good thing.”
The benchmark S&P 500 index closed slightly lower on Wednesday after testimonies to U.S. Congress from trade and central bank officials as well as President Donald Trump’s former lawyer brought few major surprises.
Still, optimism on trade and Fed policy had boosted equities from December lows in recent weeks, with the S&P 500 index roughly 5 percent below its record closing high hit in late September.
Among stocks, HP Inc tumbled 15.8 per cent after its quarterly revenue fell short of analysts’ estimates on weaker-than-expected sales in both its personal computer and printing businesses.
Bristol-Myers Squibb Co. rose 1.7 per cent after top shareholder Wellington Management came out against the drugmaker’s US$74-billion deal to buy biotech Celgene Corp . Celgene shares fell nearly 8 per cent.
Monster Beverage Corp jumped 11.4 per cent after the beverage maker beat Wall Street estimates for quarterly revenue and profit.
Commodities
Oil prices fell on Thursday, as U.S.-China trade tensions persisted, the Chinese economy showed signs of slowing and record U.S. production undermined OPEC-led output curbs.
Brent crude was down 61 cents or 0.9 per cent at US$65.78 per barrel. U.S. West Texas Intermediate (WTI) crude was down 40 cents or 0.7 per cent at US$56.54.
Factory activity in China, the world’s biggest oil importer, shrank for a third month in February as export orders fell at the fastest pace since the financial crisis a decade ago.
“Further evidence of a slowdown in China hit risk sentiment,” said Jasper Lawler, head of research at futures brokerage London Capital Group.
Gold rebounded on Thursday from a near two-week low touched in the previous session as the dollar retreated, keeping bullion on track for a fifth straight monthly gain, while investors awaited economic data from the United States and clarity on its trade talks with China.
Spot gold was 0.4 per cent higher at US$1,324.80 per ounce, having hit its lowest since Feb. 15 at US$1,316.43 on Wednesday. U.S. gold futures were up 0.4 per cent at US$1,326.40.
“We expect gold prices to go slightly above these levels on expectations that the dollar will continue weakening,” Natixis analyst Bernard Dahdah said.
“The prospects for growth (in the U.S.) are more limited than they were last year.”
Copper prices fell on Thursday on concerns over demand from number one consumer China, but held on track for their best month since December 2017 as stocks of the metal in London Metal Exchange warehouses languished near record lows.
Prices lost ground as Chinese factory data and a U.S. warning that it was too early to predict the outcome of trade talks with Beijing raised concerns over the demand outlook.
Benchmark copper on the LME was down 0.2 per cent at US$6,492 a tonne but up 5.2 per cent in February, its second consecutive monthly gain.
Currencies and bonds
The Canadian dollar slipped below the 76 US cent level as oil prices declined.
“We continue to highlight a key long-term support trendline at $1.3116 (76.24 cents US) ; a daily close below this level favouring additional losses toward the 2019 low at $1.3069 (76.51 cents US),” said Adam Cole, chief currency strategist with RBC Europe Ltd.
Against a basket of its rivals, the U.S. dollar slipped 0.3 per cent to 95.84. Traders said some of its weakness was caused by month-end selling after a strong month for risky assets.
The index had edged up 0.1 per cent on Wednesday, pulling away from a three-week trough as Treasury yields rose ahead of the release of U.S. fourth-quarter GDP data later on Thursday.
The 10-year U.S. Treasury yield was off slightly at 2.666 per cent the Canada 10-year bond yield was off at 1.894 per cent.
Stocks to watch
Cannabis producer Canopy Growth said on Thursday it had roped in lifestyle guru Martha Stewart as an adviser to help develop a line of marijuana-based products. Marijuana companies in Canada have been pouring cash into their businesses to both fend off competition and open stores as the list of medical and recreational approvals for the drug’s use grows.
Air Canada has signed a partnership deal with American Express for a new loyalty program that the airline is preparing to launch next year. The 10-year agreement includes new co-branded payment cards, participation in the American Express membership rewards program, and expanded commercial co-operation between the two companies. The deal will allow American Express membership rewards customers in Canada and the U.S. to transfer their points into the new Air Canada program once it has rolled out.
Canadian packaged meat producer Maple Leaf Foods Inc missed analysts’ estimates for quarterly profit on Thursday, as weak pork prices offset growth in its prepared meats. Pork prices have taken a beating from the Sino-U.S. trade war, with China’s retaliatory tariffs affecting demand from the South Asian country, which is the world’s biggest pork importer. Excluding items, the company earned 29 Canadian cents per share, missing analysts’ average estimate of 34 Canadian cents, according to IBES data from Refinitiv.
Canadian Utilities reporter higher earnings with adjusted earnings of 69 cents per share, beating estimates of 62 cents per share.
Seven Generations Energy reported higher revenues and earnings per share of 68 cents.
HP Inc tumbled 13.8 per cent in premarket trading after its quarterly revenue fell short of analysts’ estimates on weaker-than-expected sales in both its personal computer and printing businesses.
Bristol-Myers Squibb Co. rose 2.5 per cent after top shareholder Wellington Management came out against the drugmaker’s US$74-billion deal to buy biotech Celgene Corp . Celgene shares fell 7.8 per cent.
China’s JD.com Inc. jumped 9.7 per cent after the e-commerce firm reported quarterly revenue above analysts’ estimates on the back of stronger online retail sales.
J.C. Penney is closing more stores after a weak holiday sales season. Net income tumbled nearly 70 per cent and revenue slid 8 per cent in the fourth-quarter, the most crucial period of the year for retailers who bank on a surge in holiday sales. The company did beat Wall Street expectations, and shares jumped 20 per cent before the opening bell Thursday.
California power company PG&E Corp, which filed for bankruptcy last month because of potential liabilities from wildfires in the state, recorded a $10.5 billion charge related to 2018 Camp Fire, the company said in a filing on Thursday. PG&E also said it would take an additional $1 billion charge related to 2017 Northern California wildfires. Federal filings showed on Wednesday the power utility had delayed a safety overhaul of a high-voltage transmission line, a prime suspect behind the deadliest wildfire in California’s history.
Novavax Inc. said on Thursday its vaccine to prevent RSV infection, a leading cause of a respiratory disease in infants, failed to meet the main goal of a late stage study. The vaccine failed to prevent lower respiratory tract infection related to RSV, or respiratory syncytial virus, the company said.
Earnings include: Advantage Oil & Gas Ltd.; Africa Oil Corp.; Aimia Inc.; Algonquin Power & Utilities Corp.; AltaGas Ltd.; Artis REIT; Atco Ltd.; Atlantic Power Corp.; Calfrac Well Services Ltd.; Canadian Imperial Bank of Commerce; Canadian Utilities Corp.; Cascades Inc.; Encana Corp.; Equitable Group Inc.; Extendicare Inc.; Major Drilling Group International Inc.; Maple Leaf Foods Inc.; Martinrea International Inc.; Parkland Fuel Corp.; Pattern Energy Group Inc.; Plaza Retail REIT; Seven Generations Energy Ltd.; ShawCor Ltd.; Stantec Inc.; Storm Resources Ltd.; Tecsys Inc.; Toronto-Dominion Bank; Transcontinental Inc.; Vermilion Energy Inc.; Whitecap Resources Inc.
Economic news
Japan reports industrial production and retail sales.
China reports Purchasing Managers Index (PMI).
Germany reports Consumer Price Index (CPI).
(8:30 a.m. ET) Canada’s current account deficit for fourth quarter is announced. The Street expects $14-billion ($56-billion on annualized rate).
(8:30 a.m. ET) Canada’s industrial product price index and raw materials price index for January are released. Estimates are rises of 0.3 per cent and 3 .0 per cent, respectively.
(8:30 a.m. ET) U.S. reports initial jobless claims for week of Feb. 23. Estimate is 225,000, or a rise of 9,000 from the previous week.
(8:30 a.m. ET) U.S. reports real GDP and GDP deflator for fourth quarter (preliminary). Consensus is annualized rate increases of 2.5 per cent and 1.7 per cent, respectively.
(9:45 a.m. ET) U.S. Chicago PMI for February is released. The Street expects a reading of 58,.0 increasing from 56.7 in January.
(8:15 p.m. ET) U.S. Fed chair Jerome Powell speaks about “Recent Economic Developments and Longer-Term Challenges.”
With files from Reuters