Equities
Canada’s main stock index started on the backfoot Thursday with communications shares under pressure while traders await tomorrow’s January jobs report. On Wall Street, key indexes saw a muted start with the S&P 500 trading just below the 5,000 mark.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 41.49 points, or 0.2 per cent, at 20,927.69.
In the U.S., the Dow Jones Industrial Average rose 42.09 points, or 0.1 per cent, at the open to 38,719.45.
The S&P 500 opened higher by 1.44 points, or 0.03 per cent, at 4,9993.62, while the Nasdaq Composite gained 3.82 points, or 0.02 per cent, to 15,760.45 at the opening bell.
“That [the 5,000 level for the S&P 500] is a powerful psychological milestone, mind you, and it could trigger some profit taking due to the overbought market conditions and bubbling valuations,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.
“But the S&P 500′s rally is backed by the anticipation of upcoming rate cuts and robust earnings. And sentiment in both yields and earnings remains supportive.”
Earnings continue to be a key driver for markets.
Kathleen Brooks, research director at XTB, said corporate results have improved as the current reporting season has progressed, with FactSet now indicating year-over-year earnings growth of 1.6 per cent, compared with a decline of 1.8 per cent on Jan. 19.
“At the start of earnings season, a spate of poor reports from U.S. banks had weighed on earnings growth, however, now that the 10 other sectors have mostly reported earnings, the picture has brightened,” she said.
“The increase in earnings year-over-year has been led by the tech sector, energy, healthcare and consumer discretionary sectors, which suggests that positive earnings growth can be attributed to a number of sectors.”
In Canada, investors will get results from BCE and Bombardier this morning. Cineplex, Aurora Cannabis and TFI International are also scheduled to release earnings before the start of trading.
The Globe’s Alexandra Posadzki reports this morning that BCE Inc. will reduce its work force by 9 per cent, or 4,800 positions, in 2024, its largest workforce restructuring initiative in nearly 30 years. The announcement came as the telecom giant reported its latest quarterly results. BCE shares were down more than 3 per cent just after the opening bell in Toronto.
On Wall Street, shares of Walt Disney Co. were up more than 6 per cent in premarket trading after the entertainment giant topped earnings forecasts in the latest quarter and hiked its forecast. For the most recent quarter, Disney posted earnings of US$1.22 per share, excluding certain items, ahead of analysts’ consensus forecast of 99 US cents per share.
Disney’s board of directors also authorized a US$3-billion share repurchase program for the current fiscal year, and declared a dividend of 45 US cents a share, payable on July 25 to shareholders of record on July 8. That represents a 50-per-cent increase from the dividend paid in January, Reuters reported.
Overseas, the pan-European STOXX was up 0.28 per cent by afternoon. Britain’s FTSE 100 advanced 0.13 per cent. Germany’s DAX and France’s CAC 40 were up 0.58 per cent and 0.95 per cent, respectively.
In Asia, Japan’s Nikkei jumped 2.06 per cent, hitting its highest level in more than three decades. Hong Kong’s Hang Seng slid 1.27 per cent.
Commodities
Crude prices edged higher in early trading, supported by continued geopolitical tensions and a weekly drop in U.S. fuel stocks.
The day range on Brent was US$79.03 to US$79.66 in the early premarket period. The range on West Texas Intermediate was US$73.56 to US$74.28.
Sentiment was helped by new U.S. inventory figures showing a decline in fuel stocks.
“Gasoline inventory in the United States experienced a drawdown of 3.146 million barrels to 250.988 million barrels during the week ended February 2, according to the Energy Information Administration,” Stephen Innes, managing partner with SPI Asset Management, said.
“This drawdown, the first since mid-December, was attributed to higher demand and reduced production.”
Meanwhile, global geopolitical tensions also continue to underpin prices.
Reuters reports that Israeli Prime Minister Benjamin Netanyahu rejected Hamas’ latest offer for a ceasefire and return of hostages held in the Gaza Strip, but U.S. Secretary of State Antony Blinken said there was still room for negotiation toward an agreement.
In other commodities, spot gold was steady at US$2,032.21 per ounce by early Thursday morning. U.S. gold futures edged 0.2-per-cent lower to US$2,047.80 per ounce.
Currencies
The Canadian dollar was little changed while its U.S. counterpart took a breather, but continued to trade not far from the 12-week high seen earlier in the week.
The day range on the loonie was 74.23 US cents to 74.36 US cents in the early premarket period. The Canadian dollar was down about 0.57 per cent against the greenback over the last five days.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, slid 0.02 per cent to 104.03. On Monday, the index hit 104.60, the highest level since the middle of November.
The euro was up 0.08 per cent to US$1.0783. Britain’s pound added 0.05 per cent to US$1.2633.
In bonds, the yield on the U.S. 10-year note was slightly higher at 4.108 per cent ahead of the North American opening bell.
Company news
Bombardier forecast better-than-expected 2024 revenue on Thursday, as the Canadian company expects to deliver higher number of aircraft on the back of sustained demand for private flying. Business jet makers have gained in the last two years as the wealthy switched to private flying during the pandemic, allowing companies such as Bombardier to increase prices. The Montreal-based company expects full-year revenue of $8.4 billion to $8.6 billion, compared with analysts’ expectations of $8.27 billion, as per LSEG data. -Reuters
Cineplex Inc. reported a fourth-quarter loss $9-million compared with a profit of $10.2-million a year earlier as its revenue edged higher. The movie theatre company says the loss amounted to 14 cents per diluted share for the quarter ended Dec. 31 compared with a profit of 16 cents per diluted share a year earlier. Revenue for the quarter totalled $315.1-million, up from $309.9-million in the last three months of 2022. The increase in revenue came as theatre attendance rose to 9.6 million patrons compared with 9.2 million a year earlier. -The Canadian Press
Google launched its AI chatbot in Canada after a delay tied to the company’s standoff with Ottawa over online news. The web search giant expanded the rollout of its chatbot, now called Gemini, to Canada along with an iOS app and a fleet of generative AI tools set to launch soon. Gemini was previously called Bard. The announcement comes months after the company excluded Canadian users from its chatbot’s “biggest expansion” – to more than 230 countries and in more than 40 languages – in July. Canadians can now access Gemini in both English and Quebecois French. -Daniel Reale-Chin/The Globe and Mail
Economic news
(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 3.
(10 a.m. ET) U.S. wholesale trade for December.
With Reuters and The Canadian Press
Terry Weber