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Canada’s main stock index rose at the open on Tuesday, helped by gains in technology stocks. On Wall Street, key indexes were also positive in morning trade ahead of tomorrow’s Federal Reserve interest rate decision.
At 9:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite was up 33.52 points, or 0.16%, at 20,605.63.
The Dow Jones Industrial Average rose 86.47 points, or 0.26%, to open at 33,803.56.
The S&P 500 opened higher by 3.08 points, or 0.08%, to 4,020.85, while the Nasdaq Composite gained 4.76 points, or 0.04%, to 11,398.58 at the open.
On Tuesday, US markets received quarterly earnings from McDonald’s, General Motors, Caterpillar and Pfizer. Snapshots of reports after closing.
Shares of GM jumped more than 9 percent in early New York trading after the automaker posted adjusted earnings per share of $2.12 in the fourth quarter, beating analysts’ estimates of $1.69. Quarterly revenue came in at $43.11 billion, also beating market expectations.
In Canada, Imperial Oil reported this morning, while Canadian Pacific Railway posted results after the close of trade.
Calgary-based Imperial Oil reported higher fourth-quarter profit, helped by higher prices and tight supply. Imperial reported net income of $1.7 billion, or $2.86 per share, for the three months ended Dec. 31, up from $813 million, or $1.18 per share, a year earlier.
On the economic front, Canadian investors received November gross domestic product data from Statistics Canada ahead of the start of trading. Statscan said the economy grew 0.1% in the quarter, in line with market forecasts. The agency’s advance estimate also suggested that real gross domestic product grew at an annual rate of 1.6 per cent in the fourth quarter, above the Bank of Canada’s forecast of 1.3 per cent.
“This report is unlikely to make the BoC rethink its recent pause,” TD senior economist James Orlando said. “The economy has not yet absorbed the impact of past rate hikes. While we are seeing the beginnings of this, there is more to come, with GDP and employment growth set to stall in the coming months.”
Elsewhere, The Globe’s Niall McGee reports this morning that Lithium Americas Corp . has entered into a $650 million financing and supply agreement with General Motors, paving the way for the Canadian lithium development company to build the Thacker Pass lithium mine in Nevada. The equity financing is contingent on Vancouver-based Lithium Americas receiving legal approval to build the mine.
Overseas, the pan-European STOXX 600 was down 0.68% by midday. Britain’s FTSE 100 was down 0.73 percent. Germany’s DAX and France’s CAC 40 were down 0.46% and 0.37% respectively. New data released on Tuesday showed that GDP in the eurozone increased by 0.1% in the fourth quarter. Markets had expected a contraction of 0.1 percent.
In Asia, Japan’s Nikkei closed down 0.39%. Hong Kong’s Hang Seng lost 1.03 percent.
Goods
Crude oil prices were weaker as markets remained cautious ahead of the Fed’s interest rate decision on Wednesday and traders weighed oil outflows from Russia.
Brent had a daily range of $85.73 to $85.25 in the early pre-market period. West Texas Intermediate ranged from $76.63 to $78.14.
“Oil prices remain low despite Asia’s unquenchable thirst for all things oil,” Stephen Innes, managing partner at SPI Asset Management, said in a note.
“The problem for the oil bull is that the thirst is being quenched by Russian barrels at a discount.”
Reuters reports that Russia’s oil cargoes from its Ust-Luga port are expected to rise in early February, despite Western sanctions imposed over the invasion of Ukraine.
Additionally, traders remain cautious on the Federal Reserve’s midweek policy announcement and Thursday’s interest rate decision by the European Central Bank. Concerns remain that rising interest rates will slow economic growth and weigh on global demand.
However, the International Monetary Fund (IMF) raised its forecast for global growth slightly in 2023 due to “surprisingly resilient” demand in the United States and Europe, easing energy costs and the reopening of China’s economy after Beijing abandoned strict measures against COVID-19 restrictions, according to Reuters.
Gold prices hit a one-week low as the US dollar strengthened ahead of tomorrow’s Fed decision.
Spot gold was down 0.8 percent at $1,906.51 an ounce by early Tuesday morning, its lowest level since Jan. 19. Still, gold is up more than 4% on the month and remains on target for its third consecutive monthly gain.
U.S. gold futures were down 0.9% at $1,922.00.
“Gold’s main kryptonite is if the Fed can’t control inflation and has to tighten much more than markets expect,” said OANDA’s Ed Moya.
“Gold could enter the ‘danger zone’ if we get a few hotter-than-expected inflation reports and a stable [U.S. non-farm payrolls] a report suggesting wage pressures will be here for some time.
Currencies
The Canadian dollar edged lower while its U.S. counterpart advanced against a group of currencies, but still looked poised for its fourth straight monthly decline.
The loonie’s daily range was 74.30 US cents to 74.76 US cents in the early hours. The moon pared some early losses following the release of the latest GDP report.
“CAD gains are hard to come by but still easily allowed, it seems, even if the movement is driven mainly by external factors,” said Sean Osborne, chief currency strategist at Scotiabank, noting that risk aversion and a strong US dollar I weighed both moons this morning.
In global markets, the U.S. dollar index, which weights the currency against a group of peers, rose 0.31 percent to 102.56 early Tuesday morning.
However, the index fell by nearly 1% for the month. A January decline would mark the fourth straight month.
Elsewhere, the euro fell in early trade in Europe and was last down 0.41 percent at $1.081, according to Reuters data.
The British pound was down 0.29% at US$1.231, but was on track for its fourth monthly gain. The yen gained 0.1% to 130.34 per US dollar and was set for its third monthly gain.
In bonds, the yield on the US 10-year note was lower than 3.531 percent in the pre-dawn session.
More company news
Caterpillar Inc on Tuesday reported a lower-than-expected quarterly profit as rising production costs related to materials and freight pressured the heavy machinery maker’s margins. Adjusted earnings for the quarter ended in December rose to $3.86 a share from $2.69 a year earlier. Analysts were expecting average earnings of $4.02 per share, according to data from Refinitiv IBES. –Reuters
Exxon Mobil Corp reported $59 billion in adjusted earnings for 2022, the company said Tuesday, taking in more than $6.7 million an hour last year and setting not only a company record but also an all-time high for the Western oil industry. Oil majors are expected to break their own annual records on high prices and rising demand, pushing their combined profits to nearly $200 billion. The scale has renewed criticism of the oil industry and prompted calls for more countries to tax companies’ windfall profits. Exxon’s results far exceeded the then-record $45.2 billion net profit reported in 2008, when oil hit $142 a barrel, 30 percent above last year’s average price. Deep spending cuts during the pandemic helped boost revenue from last year. – Reuters
Volkswagen intends to set up a battery cell factory in Ontario, business daily Handelsblatt reported on Tuesday, adding that the province had offered investment and other incentives. Five entries from this month are listed in the province’s lobby register for Volkswagen, including one that mentions CEO Oliver Blume by name, the report said, citing the documents. –Reuters
Pfizer Inc. forecast 2023 sales of its COVID-19 products of $21.5 billion, missing Wall Street expectations, hit by lower demand in international markets and slower uptake of booster vaccines. The U.S. drugmaker said it expected sales of $13.5 billion from the vaccine in 2023, below Refinitiv’s forecast of $14.39 billion, and projected $8 billion in sales of its antiviral pill, Paxlovid, below 10, $33 billion the Street expects. –Reuters
McDonald’s Corp beat Wall Street estimates for quarterly comparable sales on Tuesday, boosted by higher menu prices, increased restaurant traffic and earnings in most major markets. The burger chain’s global same-store sales rose 12.6 percent in the fourth quarter ended Dec. 31, compared with forecasts for an 8.6 percent rise, according to IBES data from Refinitiv. Sales in the UK, Germany and France rose despite fears of a recession in Europe. – Reuters
Economic news
(8:30 a.m. ET) Canadian Monthly Real GDP for November.
(8:30 a.m. ET) US Employment Cost Index for Q4.
(9 a.m. ET) S&P CoreLogic Case-Shiller Home Price Index (20 City) for Nov.
(9 a.m. ET) FHFA US Home Price Index.
(9:45 a.m. ET) Chicago PMI for the US for January.
(10 a.m. ET) Conference Board US Consumer Confidence for January.
More: US Fed meeting begins.
With Reuters and the Canadian press
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