Equities
Canada’s main stock index saw a steady start Thursday morning with commodities-linked shares offering support. On Wall Street, the Nasdaq and S&P 500 started in the red as Tesla and Nasdaq both slid in early trading on the back of their latest earnings.
At 9:38 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 5.58 points, or 0.03 per cent, at 20,496.75.
In the U.S., the Dow Jones Industrial Average rose 30.77 points, or 0.09 per cent, at the open to 35,091.98.
The S&P 500 opened lower by 11.34 points, or 0.25 per cent, at 4,554.38, while the Nasdaq Composite dropped 84.72 points, or 0.59 per cent, to 14,273.29 at the opening bell.
Shortly after the opening bell, Netflix shares fell roughly 8 per cent after the streaming giant added 5.9 million new customers in the latest quarter but also reported revenue below market forecasts. The company also issued a weaker-than-expected forecast for revenue in the third quarter.
Quarterly revenue rose 2.7 per cent from a year earlier to US$8.2-billion, shy of analyst forecasts of US$8.3-billion. The company estimated third-quarter revenue would hit US$8.5-billion. Wall Street had been forecasting US$8.7-billion, Reuters reported.
Meanwhile, Tesla stock was down nearly 5 per cent early Thursday morning after the auto maker’s quarterly margins matched Wall Street forecasts but CEO Elon Musk signalled there may be continued price cuts as the company prioritizes sales over profit.
“For both there was good and less good news,” Swissquote senior analyst Ipek Ozkardeskaya said in a note. “Tesla’s price cuts that boosted sales and got the company to sell almost half a million cars less quarter, also squeezed its profit margins for the 3rd straight quarter to 9.6 per cent.”
Netflix, she said, added more than double the number of new subscribers that analysts had been expecting, suggesting banning password sharing prompted people to subscribe.
“Note that Netflix had its second best quarter since the heart of the pandemic, yet, its sales and revenue fell short of expectations due to price cuts in some markets and the unfavourable exchange rate, while Q3 forecast disappointed,” she said.
Wall Street gets results Thursday morning from Johnson & Johnson and American Airlines.
On Bay Street, Alberta-based trucking and logistics company Mullen Group Ltd. reported lower second-quarter profit amid weaker freight volumes.
The company says it earned $36.5-million or 39 cents per diluted share for the quarter ended June 30, compared with a profit of $42.7-million or 43 cents per diluted share in the same quarter last year. On an adjusted basis, Mullen Group says it earned 38 cents per share in its latest quarter, down from an adjusted profit of 47 cents in the same quarter last year, The Canadian Press reported. Analysts on average had expected an adjusted profit of 32 cents per share, according to estimates compiled by financial markets data firm Refinitiv.
In Canada, labour issues also continue to make headlines.
The Globe’s Brent Jang reports the union representing 7,400 B.C. port workers has rescinded its strike notice for this weekend, averting another work stoppage even as Prime Minister Justin Trudeau’s office directed federal ministers to pursue all available options to ensure cargo will move steadily. Union leaders issued a 72-hour strike notice scheduled to take effect on Saturday, only to later withdraw that notice, union president Rob Ashton and the BC Maritime Employers Association (BCMEA) said in separate statements late Wednesday.
Overseas, the pan-European STOXX 600 was up 0.15 per cent by midday. Britain’s FTSE 100 added 0.63 per cent. Germany’s DAX and France’s CAC 40 rose 0.21 per cent and 0.35 per cent, respectively.
In Asia, Japan’s Nikkei finished down 1.23 per cent. Hong Kong’s Hang Seng slid 0.13 per cent.
Commodities
Crude prices edged up although traders remained cautious in the wake of a weaker-than-expected drawdown in weekly U.S. inventories and supply uncertainty.
The day range on Brent was US$79.27 to US$79.86 in the early premarket period. The range on West Texas Intermediate was US$75.17 to US$75.66.
“Oil was steadily rising over the past few weeks on expectations that Russia and the Saudis would keep this market tight,” OANDA senior analyst Ed Moya said.
“Russia’s refined cargoes are rising and appear to be heading towards a three-month high. The Kremlin might not be motivated to live up to their export pledge, especially considering Russian military efforts are intensifying.”
Meanwhile, U.S. crude inventories declined by 708,000 barrels last week to 457.4 million barrels, according to figures released by the U.S. Energy Information Administration on Wednesday. Analysts polled by Reuters had been looking for a decline of more than 2 million barrels for the week.
In other commodities, gold touched its best level in two months on the back of recent U.S. dollar weakness and growing expectations that the Federal Reserve is near the end of its rate-hike cycle.
Spot gold gained 0.2 per cent to US$1,981.44 per ounce by 0901 GMT, close to its highest since May 17 at $1,987.39. U.S. gold futures also rose 0.2 per cent to US$1,984.10 per ounce.
“Lower yields and a weaker [U.S.] dollar are continuing to boost its appeal on the back of some more promising inflation data and lower interest rate expectations,” OANDA senior analyst Craig Erlam said.
Currencies
The Canadian dollar was higher while its U.S. counterpart slid against a group of world currencies as markets weigh the likelihood of the end of rate hikes by the Fed in coming months.
The day range on the loonie was 75.91 US cents to 76.20 US cents in the predawn period. The Canadian dollar is down 0.12 per cent against the greenback over the past five days but up more than 3 per cent for the year to date.
There were no major Canadian economic releases due Thursday.
On world markets, the U.S. dollar index slipped 0.15 per cent to 100.10 early Thursday morning, but had regained some lost ground after last week’s more than 2-per-cent slump, according to figures from Reuters.
The euro rose 0.18 per cent to US$1.1220 ahead of next week’s rate decision by the European Central Bank.
In bonds, the yield on the U.S. 10-year note was higher at 3.784 per cent ahead of the North American opening bell.
More company news
Auto parts maker Magna International Inc said on Thursday it will invest US$790-million to build three new supplier facilities, two of which will be housed at Ford Motor Co’s BlueOval City campus in Tennessee. The development comes as suppliers race to meet requirements from automakers, who have been hustling to boost their electric vehicle output as demand for environmentally friendly vehicles surges. Magna’s facilities will support production of Ford’s second-generation electric truck, the Canadian company said in a statement. One facility at Ford’s campus will make battery enclosures for the truck and a second will make polyurethane foam and seats. -Reuters
Johnson & Johnson raised its 2023 profit forecast on Thursday, banking on the strength in its medical devices business and demand for its cancer drugs such as Darzalex. Shares of J&J, which recently spun off its consumer health unit to focus on drugs and medical devices, rose about 2% in premarket trading. J&J said it now expects to earn between US$10.70 and US$10.80 per share on an adjusted basis for 2023, compared with its prior forecast of US$10.60 and US$10.70. -Reuters
American Airlines raised its annual forecast for adjusted profit on Thursday, powered by strong demand for domestic and international travel despite fears of a looming economic slowdown. The company said it expects an adjusted profit of US$3.00 to US$3.75 per share for 2023 compared with its prior outlook of US$2.50 to US$3.50 per share. -Reuters
Gold miner Newmont missed Wall Street estimates for second-quarter profit on Thursday, hurt by lower production due to strikes in Mexico and Canadian wildfires and higher costs. On an adjusted basis, the company posted a net income of 33 US cents per share for the quarter ended June 30, compared with analysts’ average estimate of 44 US cents per share, according to Refinitiv data.
Economic news
(830 am ET) Canada household credit.
(830 am ET) U.S. initial jobless claims for previous week.
(830 am ET) Philadelphia Fed Index.
(10 am ET) U.S. existing home sales for June.
(10 am ET) U.S. leading indicator.
With Reuters and The Canadian Press