Equities
Key indexes on both sides of the border saw a subdued start Tuesday with traders looking ahead to big tech results after the close and tomorrow’s rate announcement from the U.S. Federal Reserve.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 31.84 points, or 0.15%, at 21,168.22.
In the U.S., the Dow Jones Industrial Average fell 35.22 points, or 0.09 per cent, at the open to 38,298.23. The S&P 500 opened lower by 2.04 points, or 0.04 per cent, at 4,925.89, while the Nasdaq Composite dropped 23.97 points, or 0.15 per cent, to 15,604.08 at the opening bell.
Earnings continue to be in focus with Microsoft MSFT-Q and Google-parent Alphabet GOOG-Q releasing quarterly results after the close of trading. Other big tech names including Amazon, Meta and Apple report later in the week. So far roughly a quarter of S&P 500 companies have released results.
“Today represents the biggest day of fourth quarter earnings thus far, with Microsoft hoping to maintain its new crown as a US$3-trillion business,” Joshua Mahony, chief market analyst with Scope Markets, said.
“Coming in the wake of yesterday’s bumper earnings and outlook from Super Micro computers (SMCI), there is a renewed feeling of optimism around the potential size and longevity of this AI boom....Microsoft shareholders will hope that the company’s early investment into AI continues to pay dividends, with record revenues of US$61-billion expected.”
In Canada, investors got results from grocer Metro Inc. CP Rail reports after the close.
The Globe’s Susan Krashinsky Robertson reports this morning that Metro’s net earnings fell by 1.1 per cent to $228.5-million. Earnings per share grew slightly to 99 cents per share in the quarter, compared to 97 cents per share in the same quarter the previous year. The Montreal-based retailer, which owns grocery banners as well as the Jean Coutu drugstore chain, reported sales rose by 6.5 per cent in the quarter, to nearly $5-billion. Metro MRU-T shares were slightly lower just after the opening bell in Toronto.
On the economic side, the U.S. Federal Reserve begins its two-day meeting today. The central bank makes its next interest rate decision tomorrow afternoon and is widely expected to keep borrowing costs steady.
Overseas, the pan-European STOXX 600 was up 0.17 per cent in by afternoon. Britain’s FTSE 100 rose 0.53 per cent. Germany’s DAX gained 0.12 per cent and France’s CAC 40 was up 0.45 per cent, respectively. Preliminary estimates released Tuesday by Eurostat showed the euro-zone economy was flat in the final three months of 2023, narrowly avoiding a technical recession. A technical recession is defined as two consecutive quarters of negative growth. Economists had forecast a decline in growth of 0.1 per cent for the three-month period.
In Asia, Japan’s Nikkei ended up 0.11 per cent. Hong Kong’s Hang Seng was down 2.32 per cent amid the fallout from a court-ordered liquidation of property developer Evergrande.
Commodities
Crude prices wavered in early trading with geopolitical tensions continuing to underpin sentiment.
The day range on Brent was US$81.93 to US$82.87 in the early premarket period. The range on West Texas Intermediate was US$76.41 to US$77.30. Both benchmarks lost about US$1 a barrel on Monday amid concerns about the Chinese economy after a court ordered the liquidation of troubled property developer Evergrande.
Early Tuesday, prices drew support from continued concerns about the crisis in the Middle East. Reuters reports that Washington has vowed to take “all necessary actions” to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, the first U.S. military deaths since the Israel-Gaza war began.
“Crude oil remains upbeat after last week’s positive price breakout above the US$75-per-barrel and the rising tensions in the Red Sea region as everyone is now expecting the U.S. response to the latest attacks,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
Later Tuesday, markets will get weekly U.S. inventory figures from the American Petroleum Institute. More official U.S. government figures will follow on Wednesday morning.
In other commodities, gold traded in a narrow range ahead of tomorrow’s Fed policy announcement.
Spot gold was largely steady at US$2,034.67 per ounce by early Tuesday morning. U.S. gold futures rose 0.4 per cent to US$2,033.50.
Currencies
The Canadian dollar was up slightly while its U.S. counterpart saw modest declines against a group of world currencies ahead of tomorrow’s Fed decision.
The day range on the loonie was 74.47 US cents to 74.63 US cents in the predawn period. The dollar was up 0.43 per cent over the past five days against the greenback as of early Tuesday morning.
“Positive risk appetite is supporting the Canadian dollar while narrower U.S./Canada spreads, particularly in the 5-year and 10-year sectors of the curve, are adding to Canadian dollar tailwinds,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Given those factors, the outcome of the Fed policy meeting tomorrow will determine whether CAD gains have any staying power or not.”
The U.S. dollar index slid 0.09 per cent to 103.52. The index is up more than 2 per cent for the year to date.
The euro was off 0.02 per cent at US$1.0832. The euro is down about 2 per cent so far in January. Britain’s pound slid 0.23 per cent to US$1.2682.
In bonds, the yield on the U.S. 10-year note lower at 4.059 per cent.
More company news
General Motors on Tuesday reported lower pre-tax profit for the fourth quarter but gave investors an upbeat outlook for 2024 and signaled more capital could be returned to shareholders. “Consensus is growing that the U.S. economy, the job market and auto sales will continue to be resilient,” GM Chief Executive Mary Barra told investors in a letter. GM is pinning hopes on strong demand for its combustion trucks and SUVs in North America, cost-cutting and increasing sales of its new generation of electric vehicles after 2023 deliveries fell short of earlier plans. GM expects overall EV sales will rise this year to 10% of the U.S. market from 7% in 2023. -Reuters
United Parcel Service forecast annual revenue below Wall Street estimates on Tuesday, as the world’s biggest package delivery firm faces sluggish domestic and international ecommerce demand. The company expects full-year 2024 revenue to be in the range of US$92.0-billion to US$94.5-billion, below analysts’ estimates of $95.57 billion, according to LSEG data. The company’s shares were down 5% before the bell. -Reuters
Economic news
(9 a.m. ET) U.S. S&P CoreLogic Case-Schiller Home Price Index (20 city) for November.
(9 a.m. ET) U.S. FHFA House Price Index for November.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for January.
(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for December.
Also: U.S. Fed meeting begins
With Reuters and The Canadian Press
Terry Weber