Equities
Canada’s main stock index opened higher Tuesday after a tamer-than-expected reading on inflation. On Wall Street, key indexes started lower with uncertainty over the timing of possible rate cuts weighing as traders await the minutes of the Federal Reserve’s latest meeting later this week.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 16.4 points, or 0.08 per cent, at 21,272.01.
The Dow Jones Industrial Average fell 51.73 points, or 0.13 per cent, at the open to 38,576.26.
The S&P 500 opened lower by 16.25 points, or 0.32 per cent, at 4,989.32, while the Nasdaq Composite dropped 95.81 points, or 0.61 per cent, to 15,679.84 at the opening bell.
On Tuesday, Canadian investors got a tamer-than-expected reading on price pressures in the first month of the year. Statistics Canada said the annual rate of inflation eased to 2.9 per cent in January. Economists had been expecting the number to come in closer to 3.3 per cent. The latest reading marks a return for the annual rate of inflation to the Bank of Canada’s 1-to-3-per-cent target range.
Adjusted for seasonality, consumer prices fell 0.1 per cent in January from December – the first monthly decline since the spring of 2020, The Globe’s Matt Lundy reports this morning. Two of the Bank of Canada’s (BoC) three core measures of underlying inflation also declined. CPI-median slowed to 3.3 per cent, lowest since November 2021, while CPI-trim decreased to 3.4 per cent, lowest since July 2021.
“Overall, it appears that the sluggishness in consumer demand is finally impacting pricing in areas of more discretionary spending,” CIBC senior economists Andrew Grantham said.
“That is a positive sign for the Bank of Canada, and will have financial markets pulling forward expectations for a first interest rate cut today, which we see being delivered in June.”
On Wall Street, markets aware awaiting the minutes of the Fed’s last meeting, due at 2 p.m. ET on Wednesday.
In the U.S., retail earnings will be in focus with industry giants Walmart and Home Depot both releasing results before the start of trading.
Home Depot forecast annual sales below Wall Street estimates ahead of the opening bell. The retailer forecast comparable sales to decline about 1 per cent for fiscal 2024, while analysts were expecting an increase of 0.06 per cent, according to LSEG data.
Meanwhile, Reuters reported that Walmart forecast fiscal 2025 sales largely above Wall Street expectations on Tuesday and said it would buy smart-TV maker Vizio for US$2.3-billion. Walmart said it would offer US$11.50 for each Vizio share, a premium of 20.7 per cent to Vizio’s last close of US$9.53. Walmart shares were up nearly 6 per cent just after the opening bell in New York.
Elsewhere, Capital One shares were down in early trading on news that the U.S. bank plans to acquire credit-card issuer Discover Financial in an all-stock deal valued at US$35.3-billion. Discover shares jumped roughly 11 per cent just after Tuesday’s opening bell. The transaction would form the sixth-biggest U.S. bank by assets. The deal is expected to face intense regulatory scrutiny.
Overseas, the pan-European STOXX 600 was up 0.02 per cent in morning trading. Britain’s FTSE 100 rose 0.21 per cent. Germany’s DAX was off 0.10 per cent while France’s CAC 40 gained 0.29 per cent.
In Asia, Japan’s Nikkei slid 0.28 per cent. Hong Kong’s Hang Seng rose 0.57 per cent.
Commodities
Crude prices were weaker, but still not far from recent three-week highs as traders continue to monitor geopolitical tensions and the situation in the Red Sea.
The day range on Brent was US$82.82 to US$83.63 in the early premarket period. The range on West Texas Intermediate was US$78.66 to US$79.75.
“Overall, geopolitical tensions, supply-demand dynamics, and conflicting forecasts from oil think tanks have contributed to volatility in the oil markets, with investors closely monitoring developments for potential impacts on prices and market sentiment,” Stephen Innes, managing partner with SPI Asset Management, said.
Reuters reports Iran-aligned Houthis continued their attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait, with at least four more vessels hit by drone and missile strikes since Friday.
In other commodities, spot gold was up 0.3 per cent at US$2,022.80 per ounce by early Tuesday morning. U.S. gold futures rose 0.5 per cent at US$2,034.70 per ounce.
Currencies
The Canadian dollar was fairly steady while its U.S. counterpart dipped against a group of world currencies as markets await the minutes from the latest Federal Reserve meeting, due later in the week.
The day range on the loonie was 74 US cents to 74.15 US cents in the early premarket period. The Canadian dollar was up about 0.54 per cent against the greenback over the past five days.
On world markets, the U.S. dollar index fell 0.14 per cent to 104.15.
The euro rose 0.18 per cent to US$1.08. Britain’s pound added 0.11 per cent to US$1.2609.
In bonds, the yield on the U.S. 10-year note was lower at 4.277 per cent ahead of the North American opening bell.
More company news
Loblaw Companies said on Tuesday it expects to invest over $2-billion this year to create more than 7,500 jobs. While the investment is in line with last year’s, the retailer plans to create roughly 1,500 more jobs in 2024. Loblaw plans to use the investment to improve its store network by renovating more than 700 stores and building more than 40 others. The retail chain in November beat third-quarter profit estimates on steady demand for essentials amid surging food prices in the country.
Economic news
(8:30 a.m. ET) Canadian CPI for January.
(10 a.m. ET) U.S. leading indicator for January.
With Reuters and The Canadian Press
Terry Weber