Author: Consultant

U.S. stocks ended lower on Tuesday after mixed earnings from Morgan Stanley and Goldman Sachs pressured banks, and as sell-offs in Boeing and Apple weighed on the S&P 500. The TSX also gave back some recent gains, as a drop in commodity prices pressured resource shares and domestic inflation data tempered hopes for an early interest rate cut by the Bank of Canada.

Morgan Stanley tumbled 4.2% to a more than one-month low after it posted a lower quarterly profit, while Goldman Sachs’ stock ended 0.7% higher after it reported a 51% rise in profit.

The S&P 500 banks index dipped 1.2% to an over one-month low after other major U.S. banks reported lower profits on Friday.

Spirit Airlines slumped 47% after a federal judge blocked JetBlue Airways’ planned US$3.8 billion acquisition of the ultra-low cost carrier, agreeing with the U.S. Department of Justice the deal would hurt consumers.

Apple dropped 1.2% after offering rare discounts on its iPhones in China in response to stiff competition there, days after being overtaken by Microsoft as the world’s most valuable firm.

Boeing slumped almost 8% to a two-month low after the Federal Aviation Administration extended the grounding of its 737 MAX 9 airplanes indefinitely and Wells Fargo downgraded the stock to “equal weight” from “overweight.”

Federal Reserve Governor Christopher Waller dampened sentiment by saying there should be no rush to cut interest rates even though he was more confident of inflation being on track to meet the Fed’s 2% target.

Traders pared expectations that the Fed might begin its rate cuts in March, with U.S. Treasury yields also rising. Fed funds futures traders were pricing for over 150 basis points in rate cuts this year, but assigned about a 60% chance of a rate cut in March after Waller’s speech, down from about 70% earlier. Two-year U.S. yields, which generally tend to more closely reflect monetary policy expectations, were at about 4.228%, up from 4.138% on Friday.

“Certainly valuations are extended, but I think what is happening today is more of a broader consolidation of markets around that idea that investors had gotten a little too optimistic about how willing the Fed would be to ease rates,” said Ross Mayfield, an investment strategy analyst at Baird.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 113.79 points, or 0.5%, to 20,948.09. Last week, it notched a 20-month high at 21,074.91.

Canada’s annual inflation rate rose to 3.4% in December. That was expected but an acceleration in underlying price pressures spooked some investors.

Money markets see a one-in-three chance that the Bank of Canada will shift to rate cuts in March, down from nearly 50% before the data, but stuck with bets for the first cut in April.

The TSX energy sector fell 3.1% as the price of oil settled 0.4% lower at US$72.40 a barrel.

The price of gold also declined, falling 1.3%, while the materials group, which includes precious and base metals miners and fertilizer companies, lost 2.3%.

The move lower for commodity prices came as the U.S. dollar jumped to its highest level in a month against a basket of major currencies.

Barrick Gold slumped 8.8% after the company reported preliminary gold output of 4.05 million ounces in the financial year 2023, below its forecast and analysts’ estimates of 4.16 million ounces.

The TSX consumer staples sector provided some ballast, gaining 0.5%.

Following strong December gains, the S&P 500 has been near its January 2022 record high close for the past several sessions. It is now down about 1% from that record high.

Wall Street rose last week as investors continued to bet on an early start to the Fed’s monetary-policy-easing cycle, despite a lack of supporting voices among policymakers and mixed inflation data.

UBS Global Research boosted its 2024 year-end target for the S&P 500 to 5,150 points, representing a more than 8% upside from current levels.

Of the 11 S&P 500 sector indexes, 10 declined, led by a 2.4% drop in energy, followed by a 1.2% loss in materials. The technology index rose 0.4%.

The S&P 500 declined 0.37% to end the session at 4,765.98 points.

The Nasdaq declined 0.19% to 14,944.35 points, while Dow Jones Industrial Average declined 0.62% to 37,361.12 points.

Advanced Micro Devices jumped 8.3% after Barclays analysts raised their price targets for AMD and several other chipmakers, saying they would benefit from growth in artificial intelligence. Larger rival Nvidia climbed about 3% and hit a record high.

Declining stocks outnumbered rising ones within the S&P 500 by a 2.6-to-one ratio. The S&P 500 posted 23 new highs and two new lows; the Nasdaq recorded 63 new highs and 182 new lows.

Volume on U.S. exchanges was relatively heavy, with 13.0 billion shares traded, compared to an average of 12.1 billion shares over the previous 20 sessions.

Reuters, Globe staff

Canada’s annual inflation rate rose to 3.4 per cent in December, up from 3.1 per cent in November, Statistics Canada said Tuesday – matching financial analysts’ expectations.

The Bank of Canada is broadly expected to continue to hold its key interest rate at five per cent at its next decision on Jan. 24. However, the timing of the first interest rate cut is expected to be driven by how fast inflation falls and how sharply the economy softens this year.

The January 2024 inflation report will be released on February 20.

Markets react to the latest inflation data

Markets were taken a little off guard with the higher-than-expected core readings of inflation, with the Canadian dollar immediately rising to 74.30 cents US, up about a tenth of a cent and the two-year government of Canada bond yield bumping up an additional couple basis points. At 8:42 a.m. ET, Canada’s two-year bond yield was fetching 3.873 per cent, up about 9 basis points for the session and widening its spread against the equivalent U.S. note. Implied interest-rate probabilities in swaps markets saw modest moves as well, but nothing that meaningfully changes what traders see ahead for moves this year in the Bank of Canada overnight rate. Markets are pricing in about a 30 per cent chance of a cut in the BoC overnight rate at its March meeting, rising to 73 per cent odds by April. Prior to today’s inflation release, those probabilities stood at 40 per cent and 87 per cent, respectively.

Regardless, money markets remain convinced we’ll see the bank start cutting rates in the first half of this year, with 99 per cent odds of at least a quarter point cut by June. Nearly 125 basis points of cuts are currently priced into markets by the end of this year.

Canada’s main stock index fell on Tuesday, led by losses in the resource sectors, while investors were disappointed that core inflation rose more than expected in December ahead of next week’s interest rate decision by the Bank of Canada.

At 10:39 a.m. ET, the TSX/S&P composite index was down 82.00 points, or 0.39%, at 20,979.45 after falling as low as 20,842.98 earlier in the trading day.

Energy shares were the top losers on the index, falling 1.7%, while materials were down 1.4% as prices of most base metals dropped on a stronger U.S. dollar and concerns over future demand after top consumer China skipped an expected rate cut.

Data on Tuesday showed Canada’s annual inflation rate rose to 3.4% in Dec. from 3.1% in Nov., driven mainly by higher gasoline prices last month.

While the headline numbers were in line with expectations, the sticky core measures show that overall inflation is likely to come down slowly.

“CPI has come down quite a bit from the peaks. It’s going to get a little bit more difficult to get it back to the 2% range. But my forecast is that the Bank of Canada is still likely to cut interest rates”, Mike Archibald, vice president and portfolio manager at AGF Investments, told Reuters.

“My assumption is that it will happen, likely sometime in the second quarter, but we have to continue to watch the data.”

Money markets now see a 34% chance that the BoC would start cutting interest rates in March, down from nearly 50% before the figures were released, but still see a high chance of a 25-basis-point reduction in April.

Among individual stocks, Barrick Gold slumped 4.6% after the company reported preliminary gold output of 4.05 million ounces in the financial year 2023, below its forecast and analysts’ estimates of 4.16 mln ounces.

First Quantum Minerals fell 3.4% after the Canadian miner said it plans to conserve capital after it was forced to halt production at its Cobre Panama copper mine.

Wall Street’s main indexes fell on Tuesday, as banks came under pressure after mixed earnings from Goldman Sachs and Morgan Stanley kept investors cautious about the health of capital markets and dealmaking, while declines in Tesla and Apple also weighed.

Tesla shed 2.2%, steering a 1% drop in the S&P 500 consumer discretionary sector, after CEO Elon Musk said he would be uncomfortable growing the automaker to be a leader in artificial intelligence and robotics without having at least 25% voting control of the company.

Apple fell 2.4% after offering rare discounts on its iPhones in China on competition pressures, just days after it was overtaken by Microsoft as the world’s most valuable firm.

On the fourth-quarter earnings front, Goldman Sachs reported a 51% rise in profit, as its traders capitalized on a nascent market recovery and its asset and wealth business revenue rose. However, Morgan Stanley’s profit declined, while revenue surpassed expectations on a rebound in dealmaking activity. Their shares were down 0.8% and 3.4%, respectively.

“Morgan Stanley, Goldman Sachs tend to service the wealthier high-net-worth clients, and have much less loan loss reserves,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.

“Overall, I think the banks (results) came in pretty good shape and the banking sector is pretty well-capitalized at this point.”

Wells Fargo, Bank of America, Citigroup and JPMorgan Chase dropped between 1.6% and 2.7% after reporting lower profits on Friday.

The broader banks index slid to an over one-month low on Tuesday.

Wall Street finished the previous week higher as investors continue to price in an around 70% chance of the Federal Reserve delivering a 25-basis-point rate cut in March – despite mixed inflation data and a lack of supporting voices among policymakers for a quick start to monetary policy easing.

UBS Global Research boosted its 2024 year-end target for the S&P 500 on Tuesday to 5,150, representing a nearly 8% upside from current levels.

Despite briefly surpassing its previous record closing high last week, the benchmark index has faced resistance to breaching its highest intra-day level, hit in January 2022.

Investors will parse Fed Board Governor Christopher Waller’s remarks during the day, after Atlanta Fed President Raphael Bostic warned about cutting rates too soon.

The Dow Jones Industrial Average was down 226.52 points, or 0.60%, at 37,366.46, the S&P 500 was down 26.82 points, or 0.56%, at 4,757.01, and the Nasdaq Composite was down 89.39 points, or 0.60%, at 14,883.37.

Dow-component Boeing declined 4.7%, as the Federal Aviation Administration extended the grounding of its 737 MAX 9 airplanes indefinitely and brokerage Wells Fargo downgraded the stock to “equal weight” from “overweight.”

Applied Digital slumped 22.3% after the data-center services provider posted downbeat second-quarter revenue.

Reuters

 Published: 1/15/2024 5:16 AM ET | 

Oil prices traded lower on Monday after surging more than 2 percent in the previous week to touch their highest intraday levels this year after the United States and Britain carried out the strikes on the Houthi forces in Yemen in retaliation for attacks by the Iran-backed group on shipping in the Red Sea.

Benchmark Brent crude futures slipped 0.7 percent $77.76 a barrel, while WTI crude futures were down 0.7 percent at $72.22.

Investors are not seeing any impact on supply despite increased tensions in the Middle East.

In the Southern Red Sea on Sunday, a U.S. fighter aircraft skilfully thwarted an anti-ship missile directed at an American Navy vessel in the Southern Red Sea on Sunday.

The Houthi group threatened a “strong and effective response”, potentially escalating the situation which has seen several shipping operators suspend routes through the Red Sea.

It’s a busy week for markets, with a slew of U.S. and Chinese data and corporate earnings likely to garner investor attention.

After officials last week attempted to temper any expectation of a looming rate cut, investors now look ahead to U.S. reports on retail sales, industrial production, import and export prices, housing starts and consumer sentiment along with a speech by Federal Reserve Governor Christopher Waller this week for further direction.

 Published: 1/15/2024 4:38 PM ET | 

The Canadian market ended on a firm note on Monday, as stocks shrugged off a slightly weak start and moved higher in cautious trade.

Shares from utilities, energy, healthcare, communications and consumer staples sectors posted gains, contributing to the market’s uptick.

With the U.S. market closed for Martin Luther King Jr. Day, and Canadian inflation data due later in the week, the mood remained cautious.

The benchmark S&P/TSX Composite Index, which dropped to 20,932.47 earlier in the session, ended with a gain of 71.66 points or 0.34% at 21,061.88.

Healthcare stocks Tilray Inc (TLRY.TO) and Chartwell Retirement Residences (CSH.UN.TO) gained 3.5% and 1.35%, respectively. Sienna Senior Living Inc (SIA.TO) advanced nearly 1%.

In the utilities sector, Capital Power Corp (CPX.TO) gained 3.25%. Brookfield Renewable Partners (BEP.UN.TO), Transalta Corp (TA.TO) and Northland Power (NPI.TO) moved up 2 to 2.5%.

Energy stocks Athabasca Oil Corp (ATH.TO), MEG Energy (MEG.TO) and Arc Resources (ARX.TO) gained 4.8%, 3.2% and 2.9%, respectively.

By RTTNews Staff Writer   ✉  | Published: 1/15/2024 4:38 PM ET | 

The Canadian market ended on a firm note on Monday, as stocks shrugged off a slightly weak start and moved higher in cautious trade.

Shares from utilities, energy, healthcare, communications and consumer staples sectors posted gains, contributing to the market’s uptick.

With the U.S. market closed for Martin Luther King Jr. Day, and Canadian inflation data due later in the week, the mood remained cautious.

The benchmark S&P/TSX Composite Index, which dropped to 20,932.47 earlier in the session, ended with a gain of 71.66 points or 0.34% at 21,061.88.

Healthcare stocks Tilray Inc (TLRY.TO) and Chartwell Retirement Residences (CSH.UN.TO) gained 3.5% and 1.35%, respectively. Sienna Senior Living Inc (SIA.TO) advanced nearly 1%.

In the utilities sector, Capital Power Corp (CPX.TO) gained 3.25%. Brookfield Renewable Partners (BEP.UN.TO), Transalta Corp (TA.TO) and Northland Power (NPI.TO) moved up 2 to 2.5%.

Energy stocks Athabasca Oil Corp (ATH.TO), MEG Energy (MEG.TO) and Arc Resources (ARX.TO) gained 4.8%, 3.2% and 2.9%, respectively.

read moreRTTNews2yTop Biotech IPOs Of 2021 That Soared As Much As500%Top Biotech IPOs Of 2021 That Soared As Much As 500%-Share Story FacebookLinkedInTwitterTelegramWhatsAppCopyAboutLogin

Communications shares Telus Corp (T.TO) and BCE Inc (BCE.TO) ended higher by 1.35% and 1.2%, respectively.

Consumer staples stocks Saputo Inc (SAP.TO) and Loblaw Co (L.TO) climbed about 1.6% and 1.5%, respectively. Empire Company (EMP.TO) gained 1%.

On the economic front, data from Statistics Canada showed Canada’s manufacturing sales rose by 1.2% from a month earlier to C$ 71.7 billion in November, matching the preliminary estimate, after seeing a 2.9% drop in October. On a yearly basis, total sales were down 0.8% in November.

Wholesale sales in Canada increased 0.9% (m-o-m) to C$82.5 billion in November, rebounding from a 0.5% decline in the previous month.

A separate data from Statistics Canada showed car registrations in Canada decreased to 143,723 units in November from 151,144 units in October.

Published: 1/12/2024 2:40 PM ET | 

Gold prices rose sharply on Friday amid an escalation in geopolitical tensions after the United States and the United Kingdom launched air strikes against military targets in Houthi-controlled areas of Yemen.

The rebel militants were using the areas to attack commercial vessels in one of the world’s most vital waterways.

The producer price inflation data, and the drop in yields of the US 10-year Treasury Note contributed as well to the surge in bullion prices.

Investors also digested mixed comments from Federal Reserve officials on the possibility of rate cuts this year.

Gold futures for February ended higher by $32.40 at $2,051.60 an ounce.

Silver futures for March ended up $0.624 at $23.329 an ounce, while Copper futures for March settled at $3.7405 per pound, down $0.0360 from the previous close.

“Gold was boosted by the PPI data and the US 10-year yields tumbling well below 4%, while the 2-year hit an 8-month low. The yellow metal has been struggling over the last couple of weeks and the jobs report and CPI data did little to revitalize it. The PPI appears to have done just that though, although it still has some way to go to reach the new highs reached in early December,” says Craig Erlam, Senior Market Analyst at OANDA, UK & EMEA.

Data from the Labor Department showed the producer price index for final demand slipped by 0.1% in December, matching a revised dip in November. Economists had expected producer prices to inch up by 0.1% compared to the unchanged reading originally reported for the previous month.

Meanwhile, the report said the annual rate of producer price growth accelerated to 1% in December from a downwardly revised 0.8% in November. The annual rate of producer price growth was expected to speed up to 1.3% from the 0.9% originally reported for the previous month.

Monday January 15

U.S. markets closed (Martin Luther King Jr. Day)

Japan machine tool orders

Euro zone industrial production and trade surplus

(8:30 a.m. ET) Canadian manufacturing sales and orders for November. Estimates are month-over-month increases of 1.0 per cent and 1.1 per cent, respectively.

(8:30 a.m. ET) Canadian wholesale trade for November. Estimate is up 0.8 per cent from November.

(9 a.m. ET) Canadian existing home sales for December. Estimate is a year-over-year rise of 5.5 per cent with average prices up 5.0 per cent.

(9 a.m. ET) Canada’s MLS Home Price Index for December. Estimate is a gain of 1.0 per cent from the same period a year ago.

(10:30 a.m. ET) Bank of Canada’s Business Outlook Survey and Survey of Consumer Expectations for Q4.

—

Tuesday January 16

Euro zone 3-year inflation expectations

Germany CPI

(8:15 a.m. ET) Canadian housing starts for December. Estimate is an annualized rate increase of 17.6 per cent.

(8:30 a.m. ET) Canadian CPI for December. The Street is projecting a decline of 0.3 per cent from November but a rise of 3.4 per cent year-over-year.

Earnings include: Goldman Sachs Group Inc.; Morgan Stanley; PNC Financial Services Group Inc.

—

Wednesday January 17

China real GDP, industrial production, retail sales and fixed asset investment

Euro zone and U.K. CPI

(8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for December. Estimates are month-over-month declines of 1.0 per cent and 2.5 per cent, respectively.

(8:30 a.m. ET) Canadian international securities transactions for November.

(8:30 a.m. ET) U.S. retail sales for December. The Street is estimating an increase of 0.4 per cent from November (or 0.2 per cent excluding automobiles_

(8:30 a.m. ET) U.S. import prices for December. Consensus is a drop of 0.6 per cent from November and a 2.1-per-cent year-over-year slide.

(9:15 a.m. ET) U.S. industrial production for December. The consensus is a decline of 0.1 per cent from November with capacity utilization rising 0.1 per cent to 78.8 per cent.

(10 a.m. ET) U.S. NAHB Housing Index for January.

(10 a.m. ET) U.S. business inventories for November.

(2 p.m. ET) U.S. Beige Book is released.

Earnings include: Alcoa Corp.; Charles Schwab Corp.; Discover Financial Services; Kinder Morgan Inc.; Prologis Inc.; U.S. Bancorp.

—

Thursday January 18

Japan core machine orders and industrial production

(8:30 a.m. ET) Canadian construction investment for November.

(8:30 a.m. ET) U.S. initial jobless claims for week of Jan. 13. Estimate is 207,000, up 5,000 from the previous week.

(8:30 a.m. ET) U.S. housing starts for December. Consensus is an annualized rate decline of 8.7 per cent.

(8:30 a.m. ET) U.S. building permits for December. The Street expects a rise of 0.9 per cent on an annualized rate basis.

(8:30 a.m. ET) U.S. Philadelphia Fed Index for January.

Earnings include: Fastenal Co.; M&T Bank Corp.; PPG Industries Inc.; Richelieu Hardware Ltd.; Taiwan Semiconductor Manufacturing; Truist Financial Corp.

—

Friday January 19

Japan CPI

Germany PPI

(8:30 a.m. ET) Canadian retail sales for November. The Street is expected a flat month-over-month.

(8:30 a.m. ET) Canadian household and mortgage credit for November.

(8:30 a.m. ET) Canada’s new housing price index for December. Estimate is unchanged from November and down 0.9 per cent year-over-year.

(10 a.m. ET) U.S. existing home sales for December. Consensus is an annualized rate rise of 0.3 per cent.

(10 a.m. ET) U.S. University of Michigan consumer sentiment index for January (preliminary reading).

Earnings include: Fifth Third Bancorp.; Schlumberger NV; Travelers Companies Inc.

Suncor Energy Inc. says its upstream production in the fourth quarter was 808,000 barrels per day, the second highest quarter in the company’s history.

The Calgary-based company says the performance for the last three months of the year resulted in annual average upstream production of 746,000 bbls/d for 2023.

Suncor says net synthetic crude oil production was 476,000 bbls/d and net non-upgraded bitumen production was 282,000 bbls/d resulting in total oilsands production of 758,000 bbls/d for the quarter.

Total production from its exploration and production operations was 50,000 bbls/d in the fourth quarter including production from the ramp up at Terra Nova.

Suncor says its downstream operations posted average refining utilization of 97 per cent in the fourth quarter.

The company is scheduled to release its fourth-quarter financial and operating results on Feb. 21.

This report by The Canadian Press was first published Jan. 3, 2024.

February Nymex natural gas (NGG24) on Friday closed +0.216 (+6.97%).

Nat-gas prices on Friday rallied sharply and are just below Tuesday’s 2-month high.  NatGasWeather predicts that an arctic air mass will “advance aggressively across the U.S. this weekend and next week,” bringing cold weather across the northern part of the U.S. and the South, including Texas, thus boosting heating demand for nat-gas.  

Lower-48 state dry gas production Friday was 102.7 bcf/day (+2.0% y/y), according to BNEF.  Lower-48 state gas demand Friday was 102.8 bcf/day (+18.6% y/y), according to BNEF.  LNG net flows to U.S. LNG export terminals Frirday were 15.1 bcf/day (+1.2% w/w), according to BNEF.

The U.S. Climate Prediction Center said there is a greater than 55% chance the current El Nino weather pattern will remain strong in the Northern Hemisphere through March, keeping temperatures above average and weighing on nat-gas prices.  AccuWeather said El Nino will limit snowfall across Canada this season in addition to causing above-normal temperatures across North America.

An increase in U.S. electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended January 6 rose +9.0% y/y to 79,691 GWh (gigawatt hours), although cumulative U.S. electricity output in the 52-week period ending January 6 fell -1.2% y/y to 4,082,730 GWh.

Thursday’s weekly EIA report was bullish for nat-gas prices as nat-gas inventories for the week ended January 5 fell -140 bcf, a larger draw than expectations of -121 bcf and well above the 5-year average draw of -89 bcf.  As of January 5, nat-gas inventories were up +15.0% y/y and were +11.6% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 84% full as of January 7, above the 5-year seasonal average of 71% full for this time of year.

Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ending January 12 fell -1 rig to 117 rigs, just above the 2-year low of 113 rigs posted September 8.  Active rigs have fallen back since climbing to a 4-1/2 year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).