Equities
Canada’s main stock index started down Thursday amid weaker global risk sentiment with materials and financial stocks under pressure. On Wall Street, losses extended into the second day at the opening bell as traders await results from tech giants Apple and Amazon after the close.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 91.8 points, or 0.45 per cent, at 20,126.41.
In the U.S., the Dow Jones Industrial Average fell 87.96 points, or 0.25 per cent, at the open to 35,194.56.
The S&P 500 opened lower by 19.12 points, or 0.42 per cent, at 4,494.27, while the Nasdaq Composite dropped 73.69 points, or 0.53 per cent, to 13,899.76 at the opening bell.
On Wednesday, earnings again move to the forefront with Wall Street awaiting Amazon and Apple results after the close of trading. Analysts are expecting slowing iPhone sales to weigh on Apple’s revenue in the most recent quarter. Amazon’s quarterly revenue is seen rising, helped by improved advertising and e-commerce business.
“Equity traders are using this [week’s] surge in yields and some nervousness ahead of Apple and Amazon’s earnings as an opportunity to lock in some profits,” OANDA senior analyst Ed Moya said in a note.
“Next 48 hours will be key for risk appetite as earnings and the NFP [U.S. non-farm payrolls] report might sway markets in thinking we might need to see more Fed tightening.”
Earnings are also key for Canadian investors on Thursday, with BCE, Bombardier and SNC-Lavalin among the companies reporting this morning. Magna International and Enbridge report after the close of trading.
The Globe’s Temur Durrani reports that Shopify Inc. topped revenue expectations but widened its net loss in the second quarter. After Wednesday’s closing bell, the Ottawa-based company reported quarterly revenue was up by nearly 31 per cent to US$1.7-billion, compared with US$1.3-billion the year prior; whereas analysts on average had anticipated US$1.62-billion. However, Shopify saw a net loss of US$1.3-billion or US$1.02 per share in the quarter ended June 30, 2023, higher than the expected 46 US cents per share.
Overseas, the pan-European STOXX 600 was down 0.65 per cent in late morning trading. Britain’s FTSE 100 slid 0.70 per cent. Early Thursday, the Bank of England raised its key rate by a quarter point to a 15-year high and indicated that rates would remain elevated for some time.
Germany’s DAX and France’s CAC 40 slid 0.65 per cent and 0.71 per cent, respectively.
In Asia, Japan’s Nikkei finished down 1.68 per cent. Hong Kong’s Hang Seng lost 0.49 per cent.
Commodities
Crude prices steadied after posting early losses as negative sentiment in the broader market offsets signs of solid demand.
The day range on Brent was US$82.36 to US$83.68 in the early premarket period. The range on West Texas Intermediate was US$ 78.69 to US$79.96. Both benchmarks lost about 2 per cent on Wednesday.
“A strong dollar is getting in oil’s way, but that should only lead to limited downside given how good both the supply and demand fundamentals have become,” OANDA’s Ed Moya said.
“The bullish signs include U.S. crude exports are rising and crude oil and distillate demand is rising. The bearish signs are that gasoline demand seems to have peaked as higher prices at the pump.”
Traders are now looking ahead to Friday’s OPEC+ meeting. Members of the group are widely expected to keep current production curbs in place. Reuters reported Thursday, citing the state news agency SPA, that Saudi Arabia will extend a voluntary oil output cut of one million barrels per day for another month to include September.
Also underpinning prices are signs of solid demand. The U.S. Energy Information Administration reported yesterday that weekly crude inventories fell by 17 million barrels last week. Reuters reports that was the biggest drop according to records dating back to 1982.
In other commodities, gold prices traded near their lowest levels in three weeks.
Spot gold was little changed at US$1,936.07 per ounce by early Thursday morning, having hit its lowest since July 11. U.S. gold futures fell 0.2 per cent to US$1,971.90.
Currencies
The Canadian dollar was weaker while its U.S. counterpart traded near a four-week high after a positive reading on private hiring in the U.S. economy.
The day range on the loonie was 74.74 US cents to 75 US cents in the early premarket period. The Canadian dollar had fallen more than 1 per cent against the greenback over the past five days by early Thursday morning.
“A generally firm USD, rising US bond yields and weak equities are a perfect short-term storm for the CAD which finds itself under a little more pressure this morning,” Shaun Osborne, chief FX strategist with Scotiabank, said.
Traders on both sides of the border are now awaiting Friday’s July jobs reports for further signals about the state of the Canadian and U.S. economies. Data released Wednesday showed a bigger-than-expected increase in U.S. private payrolls in July, bringing focus back to the path ahead for U.S. interest rates.
The U.S. dollar index, which measures the currency against six major peers, rose as high as 102.84, the highest level in four weeks. It was last up 0.1% at 102.73, extending Wednesday’s 0.5-per-cent gain, according to figures from Reuters.
Britain’s pound fell 0.1 per cent to US$1.27 ahead of the Bank of England’s rate announcement. On Wednesday sterling hit a four week low of US$1.2680.
In bonds, the yield on the U.S. 10-year note was up at 4.145 per cent in the predawn period.
More company news
Bombardier Inc on Thursday reported higher quarterly revenue and a profit compared with a loss a year ago, helped by demand for pricier business jets despite supply chain pressures. The Montreal-headquartered business jet maker reported a second-quarter profit of US$10-million from continuing operations, compared with a loss of US$109-million. Quarterly revenue rose 8 per cent to US$1.68-billion on deliveries of 29 jets. On a per share basis, adjusted profit was 72 US cents, compared with a loss of 48 US cents a year earlier. -Reuters
BCE Inc. says its net earnings tumbled almost 40 per cent in its most recent quarter as it began laying off 1,300 workers. The Montreal-based telecommunications company’s net earnings for the second quarter amounted to $397-million or 37 cents per common share compared with $654-million or 66 cents per common share a year ago. Analysts on average had expected an adjusted profit of 77 cents per share for the period ended June 30, according to estimates compiled by financial markets data firm Refinitiv. Adjusted net earnings totalled $722-million compared with $791-million a year prior. Operating revenue ticked up to $6.06-billion from $5.86-billion a year earlier. -The Canadian Press
Canadian Natural Resources Ltd on Thursday posted a second-quarter profit that more than halved, as lower energy prices and drop in oil production squeezed the country’s largest oil and gas producer. The company reported a net income of $1.5-billion, or $1.32 per share, for the quarter, down from $3.5-billion, or $3 per share, a year earlier. -Reuters
Canada Goose Holdings beat Wall Street estimates for quarterly revenue on Thursday, bolstered by strong demand for its high-end parkas in China, as the key luxury market recovered from a pandemic-driven lull. The Toronto, Ontario-based company’s revenue rose to $84.8-million in the first quarter of its fiscal year, from $69.9-million a year earlier. Analysts on average had expected revenue of $75.4-million, according to Refinitiv data. -Reuters
Maple Leaf Foods Inc. says it lost $53.7-million in its most recent quarter as it grappled with inflation and other market headwinds. The Mississauga, Ont.- based food company’s net loss for the second quarter amounted to 44 cents per basic share compared with a net loss of $54.6-million or 44 cents per basic share a year earlier. Adjusted earnings for the period ended June 30 were $45.9-million compared with $23.6-million in the second quarter of last year. Sales in the quarter totalled $1.26-billion, up from $1.19-billion a year prior. -The Canadian Press
Qualcomm forecast fourth-quarter revenue below market expectations on Wednesday as consumer spending on gadgets like smartphones remained stubbornly weak amid slowing global economic growth. Demand for consumer electronics has also been hampered by a slower-than-expected economic recovery in China. Smartphone shipments in the world’s second largest economy were down 5% in the June quarter, according to Canalys data. Qualcomm said its forecast also takes into account the impact of the macroeconomic headwinds, weaker global handset units and channel inventory drawdown. -Reuters
Nutrien, the world’s biggest fertilizer producer, said on Wednesday it would pause its potash production ramp-up plans indefinitely and halt work on its clean ammonia project at Geismar, Louisiana. U.S.-listed shares fell in premarket trading as the company cited market conditions for stopping efforts to bolster potash output to 18 million tonnes. Potash prices have eased following the resumption of shipments from major supplier Belarus, whose exports were largely frozen last year due to western sanctions after Russia’s invasion of Ukraine. -Reuters
Economic news
Bank of England policy announcement.
830 am ET: U.S. jobless claims for last week.
830 am ET: U.S. second quarter productivity and unit labour costs.
945 am ET: S&P Global Services/Composite PMI for July
10 am ET: U.S. factory orders for June.
10 am ET: U.S. ISM Services PMI
With Reuters and The Canadian Press