Equities
Canada’s main stock index fell at Tuesday’s opening bell with tech shares under pressure. On Wall Street, key indexes were also deep in the red after a disappointing reading on U.S. inflation fuelled uncertainty about the timing of potential rate cuts.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 345.24 points, or 1.64 per cent, at 20,722.06.
In the U.S., the Dow Jones Industrial Average fell 98.21 points, or 0.25 per cent, at the open to 38,699.17.
The S&P 500 opened lower by 53.90 points, or 1.07 per cent, at 4,967.94, while the Nasdaq Composite dropped 343.67 points, or 2.16 per cent, to 15,598.88 at the opening bell.
Ahead of the start of trading, markets got a higher-than-forecast reading on price pressures in the U.S. economy. New figures showed the annual rate of U.S. inflation eased to 3.1 per cent in January, from 3.4 per cent a month earlier. However, the latest number was above the 2.9 per cent analysts had been expecting. On a monthly basis, the consumer price index rose 0.3 per cent, also ahead of the 0.2-per-cent increase markets had been forecasting.
Core inflation, excluding food and energy costs, rose 0.4 per cent on a monthly basis in January. Analysts had been looking for a 0.3-per-cent increase. The annual rate of core inflation came in at 3.7-per-cent, also above forecasts.
“There won’t be high fives at the FOMC’s data briefing on today’s release,” CIBC economist Ali Jaffrey said. “We expect the Fed will be more comfortable easing in the second half of this year.”
In Canada, markets get more earnings, with results from Shopify and Tim Hortons parent Restaurant Brands International before the start of trading. Results are also due from Hydro One and Intact Financial. On Wall Street, Coca-Cola and Hasbro report.
Restaurant Brands International beat analysts’ revenue forecasts in the most recent quarter. The company, which also operates Burger King, posted total revenue rose to US$1.82-billion in the fourth quarter from US$1.69-billion a year earlier, compared with analysts’ average estimate of US$1.81 billion, according to LSEG IBES data. Shares were down more than 3 per cent in early trading in Toronto.
Shopify, meanwhile, reported total revenue of US$2.14-billion for the three months to December, compared with analysts’ average estimate of US$2.08-billion, according to LSEG data. However, Shopify shares were down roughly 7 per cent in Toronto just after the start of trading.
Elsewhere, The Globe’s Alexandra Posadzki reports this morning that Rogers Communications Inc. president of residential operations Zoran Stakic has left the company, triggering a series of changes in the telecom giant’s leadership ranks. Mr. Stakic, a former Shaw Communications Inc. executive, joined Rogers Communications Inc. during its takeover of its Calgary-based rival.
Overseas, the pan-European STOXX 600 was down 0.26 per cent in morning trading. Britain’s FTSE 100 slid 0.07 per cent. Germany’s DAX lost 0.64 per cent while France’s CAC 40 fell 0.35 per cent.
In Asia, Japan’s Nikkei jumped 2.89 per cent, briefly touching the 38,000 level during intraday trading. Markets in Hong Kong were closed.
Commodities
Crude prices were higher early Tuesday with markets awaiting U.S. inventory data later in the day as heightened tensions in the Middle East continue to drive sentiment.
The day range on Brent was US$81.96 to US$82.73 in the early premarket period. The day range on West Texas Intermediate was US$76.87 to US$77.68.
“Note that rising oil prices are a double-edged sword,” Swissquote analyst Ipek Ozkardeskaya said in a note.
“Good growth is positive for oil prices, but higher oil prices are not good for easing inflation. Hence, any U-turn in inflation would get the major central banks to further tighten their purses’ strings, hit growth prospects and hammer a potential oil rally.”
Reuters reports that the conflict in the Middle East has kept prices elevated, as the U.S. and Jordan maintained pressure for a Gaza Strip ceasefire. Senior mediators were to resume work on Tuesday on an Israel-Hamas truce agreement.
Meanwhile, the American Petroleum Institute is scheduled to release its weekly inventory report later in the session. More official government numbers will follow on Wednesday morning. Analysts are expecting to see a rise in U.S. crude stocks of about 2.6 million barrels last week.
Markets also got OPEC’s monthly market report Tuesday. The International Energy Agency’s report for the month is due on Thursday. OPEC said it expects world oil demand will rise by 2.25 million barrels a day in 2024 and by 1.85 million barrels a day in 2025. Both forecasts were unchanged from last month.
In other commodities, spot gold was up 0.2 per cent to US$2,023.89 per ounce by early Tuesday morning, after briefly slipping to a more than two-week low of US$2,011.72 on Monday. U.S. gold futures also ticked up 0.2 per cent to US$2,037.50.
Currencies
The Canadian dollar was little changed while its U.S. counterpart was mostly steady against a basked of world currencies.
The day range on the loonie was 74.26 US cents to 74.37 US cents in the early premarket period.
The U.S. dollar index, which weighs the greenback against a group of currencies, was little changed at 104.16 ahead of the release of the latest U.S. inflation data.
The euro was up 0.02 per cent at US$1.0775. Britain’s pound rose 0.33 per cent to US$1.2669.
In bonds, the yield on the U.S. 10-year note was slightly higher at 4.181 per cent in the predawn period.
More company news
Hasbro reported a steeper-than-expected drop in holiday-quarter sales and profit on Tuesday, as a persistent demand weakness in the toy industry weighed on sales of the company’s digital and board games. Sluggish demand from a pullback in leisure spending and cautious inventory planning by retailers like Walmart and Target hurt Hasbro’s sales in the past year. For the full year 2024, the company expects revenue in its core Wizards of the Coast segment to be down 3% to 5%, owing to weakness in digital gaming. -Reuters
Coca-Cola beat Wall Street expectations for fourth-quarter revenue on Tuesday, as the beverage maker benefited from higher product prices and buoyant demand for its namesake drink and juices. The company’s net revenue rose to US$10.95-billion in the quarter compared with US$10.20-billion a year earlier, while analysts estimated US$10.68-billion, according to LSEG data. -Reuters
Hydro One Ltd. reported $181-million in fourth-quarter net income attributable to common shareholders as its revenue edged higher compared with a year earlier. The power utility says the profit amounted to 30 cents per diluted share for the quarter ended Dec. 31. The result compared with a profit of $178-million or 30 cents per diluted share a year earlier. Revenue totalled $1.98-billion, up from $1.86-billion in the fourth quarter of 2022, while revenue net of purchased power totalled $989-million, up from $967-million. -The Canadian Press
Economic news
(8:30 a.m. ET) U.S. CPI for January.
With Reuters and The Canadian Press