Equities
Canada’s main stock index opened slightly higher Tuesday, helped by strength in tech and energy stocks. On Wall Street, key indexes also saw a tame start as uncertainty around the timing of rate cuts lingers.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 25.86 points, or 0.12 per cent, at 20,897.75.
The Dow Jones Industrial Average rose 12.78 points, or 0.03 per cent at the open, to 38,392.90.
The S&P 500 opened higher by 7.35 points, or 0.15 per cent, at 4,950.16, while the Nasdaq Composite gained 40.52 points, or 0.26 per cent, to 15,638.19 at the opening bell.
“The latest ISM data printed yesterday showed that U.S. services grew at their biggest pace in four months, screaming that the US economy is too resilient and too healthy for the Fed to start cutting the rates in a hurry,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
“A March rate cut is off the table, and activity on fed funds futures gives no more than a two-thirds chance for a May cut – which remains quite high and could be further curbed,” she said.
This afternoon, investors will hear from Bank of Canada Governor Tiff Macklem when he speaks in Montreal on the effectiveness and limits of monetary policy. Mr. Macklem’s remarks will be released by the central bank at 12:45 p.m. ET.
“In testimony to the House last week, Macklem and Senior Deputy Governor [Carolyn] Rogers seemed to argue that interest rates aren’t great at controlling housing inflation, for example, which was… interesting,” BMO senior economist Robert Kavcic said.
“We know the bank believes policy is tight enough at current levels, so any insight on how much longer at these levels would be closely scrutinized.”
On the corporate side, Canadian investors will get results from Precision Drilling this morning. Wall Street will get earnings from Ford Motor Co. after the close of trading.
In premarket trading, shares of Palantir Technologies jumped more than 25 per cent in early trading in New York after the data analytics company forecast 2024 profit above Wall Street estimates and reported its “first profitable year” on Tuesday on strong demand for its AI offerings.
Overseas, the pan-European STOXX 600 was up 0.38 per cent by afternoon. Britain’s FTSE 100 gained 0.67 per cent. Germany’s DAX rose 0.29 per cent while France’s CAC 40 added 0.46 per cent.
In Asia, Japan’s Nikkei ended down 0.53 per cent. Hong Kong’s Hang Seng jumped 4.04 per cent after authorities in China announcement measures to support markets.
Commodities
Crude prices turned higher with markets awaiting the first of two weekly U.S. inventory reports later in the session.
The day range on Brent was US$77.63 to US$78.44 in the early premarket period. The range on West Texas Intermediate was US$72.38 to US$73.19. Both benchmarks added about 1 per cent on Monday to mark the first positive session in four.
The American Petroleum Institute will release its weekly tally of crude inventories this afternoon. More official U.S. government figures are scheduled to follow on Wednesday. Five analysts polled by Reuters estimated on average that crude inventories rose by about 2.1 million barrels in the week to Feb. 2.
Traders will also continue to monitor geopolitical tensions after U.S. Secretary of State Antony Blinken arrived in Saudi Arabia on Monday for his fifth visit to the region since the Israel-Hamas war broke out in October.
In other commodities, gold prices rose in early trading after nearing two-week lows on Monday.
Spot gold edged up 0.2 per cent to US$2,027.85 per ounce by early Tuesday morning, after hitting its lowest level since Jan. 25 on Monday.
U.S. gold futures rose 0.1 per cent to US$2,044.00 per ounce.
Currencies
The Canadian dollar was steady while its U.S. counterpart continued to trade near its best levels in three months against a group of world currencies amid fading expectations of an early interest rate cut by the Federal Reserve.
The day range on the Canadian dollar was 73.80 US cents to 74.05 US cents in the early premarket period.
“The fact that markets see about half as much easing risk in Canada through June (around 20 basis points) versus the U.S. (around 40 basis points) and have about 50-basis-points less easing risk for the BoC implied in swaps through the end of the year suggests that scope for significant CAD losses may be limited,” Shaun Osborne, chief FX strategist with Scotiabank, said in an early note.
The U.S. dollar index, which weighs the greenback against a group of currencies, edged up 0.05 per cent to 104.50. On Monday, the index hit 104.60, its highest since Nov. 14. The index is up about 3 per cent so far this year.
The euro dipped 0.08 per cent to US$1.0735. Britain’s pound edged up 0.06 per cent to US$1.2542.
In bonds, the yield on the U.S. 10-year note was little changed at 4.152 per cent ahead of the North American opening bell.
More company news
Precision Drilling Corp. says it earned $146.7-million in its latest quarter, up from a profit of $3.5-million a year earlier, as its revenue edged lower. The company says the profit amounted to $9.81 per diluted share for the quarter ended Dec. 31, up from 27 cents per diluted share in the last three months of 2022. Revenue for the company’s fourth quarter totalled $506.9-million, down from $510.5-million a year earlier. Precision Drilling says its adjusted earnings before interest, taxes, depreciation and amortization was $151.2-million in its latest quarter, up from $91.1-million a year earlier. -The Canadian Press
The state of Colorado is fining Suncor Energy Inc. US$10.5-million for air pollution violations. In a news release, the Colorado Department of Public Health and Environment says the fine concerning Suncor’s Commerce City refinery is for violations from July 2019 through June 2021. The department also says the Calgary-based energy company must double the number of air-pollution monitors compared with the refinery’s original monitoring plan. -The Canadian Press
Spotify on Tuesday reported fourth-quarter monthly active users and subscribers ahead of expectations as it grew in all regions, and said revenue and profitability trends looked favorable this year. The music streaming company has ventured into podcasts and audiobooks as it seeks to grow its user base to 1 billion by 2030. It has also raised prices for its subscribers and laid off thousands of employees to boost profits and increase efficiency. The number of monthly active users rose by 23% to 602 million in the fourth quarter, beating Spotify’s guidance and analysts’ forecasts of 601.33 million. -Reuters
Economic news
(8:30 a.m. ET) Canadian building permits for December.
(10 a.m. ET) U.S. Global Supply Chain Pressure Index for January.
(12:45 p.m. ET) Bank of Canada governor Tiff Macklem speaks at the Montreal Council on Foreign Reserves.
With Reuters and The Canadian Press
Terry Weber