Editor’s note: I will be retiring after today and will no longer be writing Before the Bell. Please visit Globe Investor for continuing market coverage.
Equities
Canada’s main stock index was largely treading water at Tuesday’s opening bell as investors digest the first quarterly from the country’s biggest lenders. Key indexes on Wall Street were also little changed at the opening bell with traders awaiting economic data through the week.
At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 3.28 points, or 0.02%, at 21,321.03.
In the U.S., the Dow Jones Industrial Average rose 18.67 points, or 0.05 per cent, at the open to 39,087.90.
The S&P 500 opened higher by 5.07 points, or 0.10 per cent, at 5,074.60, while the Nasdaq Composite gained 37.73 points, or 0.24 per cent, to 16,013.98 at the opening bell.
“Momentum in European and U.S. stocks that drove indices to record highs last week has definitely slowed, but it does not signal that the rally is dead, instead we think that this is a function of month-end rebalancing,” XTB research director Kathleen Brooks said.
In Canada, investors get the start of first-quarter bank earnings this morning, with results from Bank of Montreal and Bank of Nova Scotia.
Scotiabank reported profit for the three months ended Jan. 31 was $2.2-billion or $1.68 per share. Last year, the bank had reported a profit of $1.76-billion or $1.35 per share. The Globe’s Stefanie Marotta reports this morning that, adjusted to exclude certain items, the bank said it earned $1.69 per share. That edged out the $1.61 per share analysts expected, according to Refinitiv. Scotiabank shares were up more than 3 per cent shortly after the open in Toronto.
Meanwhile, Bank of Montreal said, adjusted to exclude certain items, it earned $2.56 per share in the first quarter. That fell below the $3.02 per share analysts expected, according to Refinitiv. BMO shares were down about 4 per cent shortly after the start of trading.
Canada’s other big banks follow through the rest of the week. Analysts are expecting a tougher reporting period for the country’s big lenders with larger losses from commercial real estate loans forecast for the first quarter.
On Wall Street, retailers Macy’s and Lowe’s both report ahead of the North American opening bell. On the economic side, U.S. investors also got durable goods orders data this morning.
The U.S. Commerce Department said orders for durable goods fell 6.1 per cent last month. Economists polled by Reuters had been looking for a decline of 4.5 per cent.
Overseas, the pan-European STOXX 600 was up 0.04 per cent near midday. Britain’s FTSE 100 advanced 0.04 per cent. Germany’s DAX and France’s CAC 40 gained 0.67 per cent and 0.19 per cent, respectively.
In Asia, Japan’s Nikkei closed up 0.01 per cent. Hong Kong’s Hang Seng gained 0.94 per cent.
Commodities
Crude prices edged higher in early trading as uncertainty over transport in the Red Sea and expectations that the OPEC+ group will extend current production curbs underpin sentiment.
The day range on Brent was US$82.32 to US$82.94 in the early premarket period. The range on West Texas Intermediate was US$77.38 to US$77.95.
Stephen Innes, managing partner with SPI Asset Management, says prices have drawn support recently from expectations of an extension of the current OPEC+ output cuts into the second quarter.
“The anticipated rollover of 2.2 million barrels per day in production cuts is aimed at stabilizing the physical oil market amidst growing production levels outside the coalition of 22 members,” he said.
“Despite ongoing concerns about global oil demand trailing production growth, the market remains skeptical that OPEC+ will risk undoing the current curbs, which could precipitate a significant decline in oil prices.”
Meanwhile, Reuters reports U.S. Central Command said on Monday that the Houthis had unsuccessfully fired a missile at the U.S. flagged oil tanker Torm Thor in the Gulf of Aden on Feb. 24. Freight rates and transit times have increased as the situation remains volatile in the region.
In other commodities, gold prices rose, helped by a softer U.S. dollar as traders await key U.S. inflation figures later in the week. Spot gold was up 0.4 per cent at US$2,038.19 per ounce, by early Tuesday morning. U.S. gold futures rose 0.5 per cent to US$2,047.90 per ounce.
Currencies
The Canadian dollar was slightly firmer while its U.S. counterpart struggled for direction against a group of world currencies ahead of key inflation data in the days ahead.
The day range on the loonie was 73.97 US cents to 74.14 US cents ahead of the North American opening bell. The dollar was down 1.86 per cent against the greenback for the year to date as of early Tuesday morning.
“The Canadian dollar continues to drift somewhat aimlessly within a well-established trading range,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“There is a very modest bid for risk this morning but oil prices are lower and commodity prices generally look soft.”
The U.S. dollar index, which weighs the greenback against a group of currencies, was down 0.07 per cent at 103.75
The euro gained slipped 0.08 per cent to US$1.0845. Britain’s pound lost 0.09 per cent to US$1.2673.
In bonds, the yield on the U.S. 10-year note was lower at 4.27 per cent in the predawn period.
More company news
Exxon Mobil Corp said on Monday it may preempt Chevron Corp’s acquisition of a 30% stake in a giant Guyana oil block, the centerpiece of its deal for Hess Corp. The companies are in talks on Exxon’s claim it has a right to first refusal of any sale of the Stabroek block, a giant field off the coast of Guyana that contains at least 11 billion barrels of oil. The dispute between the top U.S. oil producers could end Chevron’s US$53-billion deal for Hess, Chevron warned in a securities filing. If the deal falls part, Hess could be liable for a US$1.7-billion breakup fee. -Reuters
Lowe’s Cos forecast annual sales and profit below Wall Street estimates on Tuesday, in signs that a recovery would take longer than expected as consumer spending on home-improvement projects remained under pressure. Shares of the company were up 2 per cent in volatile premarket trading as it reported a smaller-than-expected decline of 6.2 per cent in fourth-quarter comparable sales. Higher prices of essentials have squeezed household budgets across the U.S., prompting many to allocate fewer dollars to large-scale home remodeling and instead take up only necessary maintenance projects. -Reuters
Macy’s forecast annual sales largely below market expectations on Tuesday on weak demand for its apparel and shoes, and said it would close 150 stores through 2026 as part of its new turnaround plan. The retailer did not provide details on the location of stores set to close or how many employees will be laid off. It also plans to monetize $600 million-$750 million of assets over the next three years. The move comes as sluggish sales has landed the upscale retailer in the crosshairs of activist shareholders and attracted potential bidders. -Reuters
Economic news
(8:30 a.m. ET) U.S. durable orders for January.
(8:30 a.m. ET) U.S. core orders for January.
(9 a.m. ET) U.S. CoreLogic Case-Shiller Home Price Index (20 city) for December.
(9 a.m. ET) U.S. FHFA House Price Index for December.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index.
With Reuters and The Canadian Press
Terry Weber