February 2, 2023
- Rogers Communications Inc., Canada’s largest wireless provider, reported fourth-quarter profit that topped analysts’ estimates as an increase in subscribers boosted revenue in its largest unit. Profit excluding some items was C$1.09 a share. Analysts estimated 98 cents, on average. The company’s wireless unit, its most important business, added a net of 193,000 postpaid subscribers. The division recorded revenue of C$2.58 billion, exceeding analysts’ projections for C$2.5 billion. Rogers is in the final stages of trying to finish its C$20 billion takeover of Shaw Communications Inc. The companies pushed the deadline to close to Feb. 17 while they await a final ruling from Industry Minister Francois-Philippe Champagne.
- Canada Goose Holdings Inc. reported revenue and earnings that fell far short of analysts’ estimates after Covid-19 outbreaks hurt sales in China in December, the company’s busiest month. The Canadian manufacturer of high-end parkas and apparel cut its guidance for the current fiscal year, saying margins and profit will be significantly lower than expected. The company is seeing “slowing momentum in North America against a challenging macro-economic environment.” For fiscal 2023, it’s now expecting adjusted profit of no more than C$1.03 a share. Previously, it was expecting to earn C$1.31 to C$1.62 per share.
- BCE Inc. reported its fourth-quarter profit fell compared with a year ago and in its outlook for 2023 said it expected its adjusted earnings per share for the full year will be down compared with 2022. However, the company raised its quarterly dividend to 96.75 cents per share from 92 cents per share. BCE says its net earnings attributable to common shareholders amounted to $528 million or 58 cents per diluted share in its fourth quarter, down from $625 million or 69 cents per diluted share a year earlier. Total operating revenue was $6.44 billion, up from $6.21 billion in the fourth quarter of 2021. On an adjusted basis, BCE says it earned 71 cents per share in its latest quarter, down from 76 cents per share a year earlier.
- European stocks gained for the first time in four days as investors cheered signals from the Federal Reserve that inflation pressures were easing, with attention now turning to the European Central Bank’s policy decision later in the day. The Stoxx 600 was up 0.9% as of 9:03 a.m. in London, bringing total gains since a September low to more than 19%, on the brink of a technical bull market. The gauge is catching up with moves in US stocks as the Fed slowed the pace of its rate hikes. Still, Chair Jerome Powell said policy makers expect to deliver a “couple” more increases before putting their aggressive tightening campaign on hold. Europe’s stock benchmark has kicked off 2023 with one of its best ever starts to a year amid lower natural gas prices, cooling inflation and a resilient economic growth outlook. Goldman Sachs Group Inc. strategists said regional equities now have the potential to extend their outperformance against US peers, also helped by cheaper valuations.
- US equity futures climbed, building on Wall Street’s advance after Federal Reserve Chair Jerome Powell said policy makers had made progress in the battle against inflation, raising hopes the central bank is nearing the end of its rate-hike cycle. Contracts on the S&P 500 and Nasdaq 100 rose, with the latter outperforming after the tech-heavy gauge surged 2.2% to a four-month high Wednesday. Meta Platforms Inc. soared as much as 20% in US premarket trading after the social-media giant’s earnings and buyback news. Pinterest Inc., Alphabet Inc. and Amazon.com Inc. gained in the slipstream. Powell’s comment Wednesday that the “disinflation process has started” suggested that the aggressive tightening cycle is starting to reduce the pace of price growth, even as he warned of a “couple” more hikes to come. Positioning in US swaps markets assumes the Fed is getting closer to cutting rates as traders bet that economic conditions are likely to keep it from the additional rate increases that policy makers still anticipate.
- Oil steadied above a three-week low, as traders digested the Federal Reserve’s latest meeting for the outlook on interest rates and weighed the potential for better demand in China. West Texas Intermediate traded near $76.50 a barrel after losing 3.1% in the previous session following another build in US stockpiles. European stock and US equity futures rose after Fed Chair Jerome Powell signaled that the central bank has made progress in its battle against inflation. Crude has traded in a range of about $10 a barrel so far this year, as traders weigh the prospect of a recovery in Chinese consumption against worries over near-term fundamentals. The nearest portion of the WTI futures curve is pointing to oversupply, while sanctions on Russian supply are yet to create the price spikes that many had feared.
- Gold rose to a nine-month high after comments from the Federal Reserve suggested its aggressive cycle of rate hikes is coming to an end. Fed Chair Jerome Powell said policy makers expect to deliver a “couple” more interest-rate increases before putting their tightening campaign on hold as the central bank raised its key rate by a quarter point in a widely expected move. The dollar and Treasury yields extended declines on Thursday, pushing gold higher. The precious metal has rallied for three straight months through January, the longest such sequence since the middle of 2020, largely on signs the Fed was getting less hawkish. The non-interest bearing asset typically benefits from lower rates.
- Copper jumped as part of a risk-on rally after Federal Reserve Chair Jerome Powell highlighted the central bank’s progress in quelling inflation, which dragged the US dollar lower. While the Fed raised rates and Powell warned of more rises to come, investors focused on his perceived dovish comments — including a reference to a “gratifying” turn to disinflation. The bank’s campaign to squeeze price pressures in the US economy was a major headwind for metals in 2022. Metals including copper have made a strong start to the new year as optimism centered on a rebound in Chinese demand as Covid Zero was ditched, with the overall LMEX Index up about 8%. Investors are also tracking threats to supplies from Peru amid a wave of unrest that’s shuttered key mines.
- The Bank of England raised interest rates a half point, saying more increases will be needed if signs of an inflationary spiral persist. Seven of the UK central bank’s nine-member Monetary Policy Committee endorsed the hike to 4%, while two voted for no change. The majority said strong pay growth and an ongoing shortage of workers were feeding price pressures in the economy. The decision marked the 10th increase since the BOE started hiking in December 2021, bringing the key rate to its highest since 2008. UK bonds trimmed earlier gains after the decision, with the yield on 10-year gilts down seven basis points at 3.23%. The pound trimmed earlier losses against the US dollar to trade around $1.2345. Money market bets imply a peak rate of 4.5% by the middle of the year, compared with around 4.4% prior to the rate decision.
- Bitcoin hit the highest since August as investors interpreted Federal Reserve Chair Jerome Powell’s comments about progress on inflation as a sign that a less harsh monetary policy backdrop lies ahead. The largest token rose as much as 2.4% and was trading at $24,020 as of 9:35 a.m. in Singapore amid wider crypto gains, including a 3% climb in second-ranked Ether. A gauge of the top 100 digital assets has added 37% this year. A range of investments from stocks to bonds and crypto pushed higher after Powell said the disinflationary process is underway. He didn’t push back aggressively on a rally in global markets this year that’s loosened financial conditions, which can make it harder to temper price pressures.
- US hiring likely continued to moderate at the start of the year, though still-solid wage growth, an unemployment rate near historical lows and high vacancies are seen stiffening the Federal Reserve’s resolve to keep rates elevated for some time. Friday’s jobs report is expected to show payrolls rose by 190,000 in January. Economists also estimate that average hourly earnings rose 0.3% for a second month and the unemployment rate slightly ticked up from a five-decade low. While the payrolls gain would be the smallest advance in just over two years, it illustrates resilient labor demand that favors a soft landing for the economy as long as inflation keeps slowing
- Gautam Adani’s businesses have lost $108 billion in a week, one of the biggest wipeouts in India’s history, after an explosive report by short-seller Hindenburg Research forced him to pull a stock sale at the 11th hour and led some lenders to reject his securities as collateral for client trades. Adani, who last year became the world’s second-richest man with a $147 billion fortune, has seen his own personal wealth plummet by around $57 billion since Hindenburg accused his companies of fraud to inflate revenue and stock prices. After drawing money from the Middle East and other Indian billionaires to shore up a $2.4 billion share sale, he then abruptly pulled it late Wednesday. The tumult has become a national issue with lawmakers disrupting parliament to demand answers from Prime Minister Narendra Modi’s government, given how closely Adani’s interests from ports to energy are intertwined with the nation’s growth plans. The big worry looming over the conglomerate is that lenders and other counterparties start to pare their exposure, while contagion fears spread to other parts of the markets.
- A spectacular turnaround in Meta Platforms Inc.’s stock is bringing back flashes of Big Tech heydays. The Facebook owner’s recovery in market value since a November low is set to surpass $200 billion when US trading opens. The shares surged as much as 20% in premarket trading after Chief Executive Officer Mark Zuckerberg pledged Wednesday to make the social media company leaner. Analysts welcomed the move, with some hiking price targets by more than $70 after the earnings report. Thursday’s gains come almost a year to the day since Meta posted the worst one-day crash in stock market history. The advance will add to Meta’s 72% rebound since Nov. 3, cementing its place as the best-performing stock on the S&P 500 Index in the last three months.
- Aides for US President Joe Biden and Indian Prime Minister Narendra Modi are discussing a possible state visit to Washington later this year, according to people familiar with the discussions. The two nations are still discussing details including possible dates for the meeting. So far, Biden has only hosted French President Emmanuel Macron for a state visit, which customarily includes extended bilateral meetings along with a formal dinner. The discussion comes as India plans to host the Group of 20 leaders’ summit in New Delhi in September. While the White House has not yet confirmed Biden’s plans, the US president customarily attends the meeting.
- KKR & Co.’s non-binding offer for Telecom Italia SpA’s network would value the assets at about €20 billion ($22 billion) including debt, as the US private equity giant seeks a controlling stake of the unit, according to people familiar with the matter. KKR’s bid for the former Italian phone monopoly’s grid would involve taking over a significant amount of debt, which accounts for about half the value of the offer, the people said, asking not to be identified because the details aren’t public. Telecom Italia’s board of directors are scheduled to meet later on Thursday to start reviewing the offer and to appoint advisers, they said. A final review could take some weeks, the people added.
- Bristol Myers Squibb Co. forecast 2023 profits ahead of Wall Street’s estimates, citing new drug launches that could offset the loss of patent exclusivity as generic competition for blood-cancer treatment Revlimid is set to intensify. The drugmaker expects adjusted profit for the full year to be in a range of $7.95 to $8.25 per share, above the $7.93 expected by analysts. It sees sales growing 2% from last year’s $46.2 billion. Fourth-quarter sales of Revlimid were nearly $2.3 billion, far above the $1.8 billion estimate. The outlook for 2023 for the cancer treatment isn’t so rosy, however: Projected revenue of $6.5 billion is below the $7.1 billion estimate. The drug faces steep competition from lower-priced versions in the U.S. and Japan.
- It’s been less than three months since FTX collapsed in what US prosecutors called one of the biggest financial frauds in American history — and a former top executive is eager to get it behind him and move on to his next big thing. Yes, Brett Harrison acknowledges, he led FTX US, the crypto exchange’s American arm, and was one of its public faces before stepping down in September. But no, Harrison insists, he didn’t have a clue that Sam Bankman-Fried and his inner circle allegedly gambled away customers’ funds in the market. In fact, Harrison says he’s a victim just like more than a million other creditors lined up in bankruptcy court, frustrated that he too, may never get back any of the money he invested with the exchange. Now, the 34-year-old is stepping back into the spotlight to drum up interest in his new startup, a software company that aims to make it easier for big Wall Street firms to trade crypto. So far, he’s only managed to raise a pittance compared with the multibillion-dollar valuation FTX once commanded — $5 million from investors including Coinbase Ventures and Circle Ventures out of $10 million he had hoped to attract. But the fact he’s raised even that much speaks to the willingness of some in the crypto community to offer a fresh start — and it’s something, considering that venture-capital investments in crypto have fallen to the lowest level in almost two years.
- The pronounced 2023 rally in big tech stocks is staring down a key test as a trio of the industry’s biggest companies gear up to report earnings at a time of growing concern about growth. Apple Inc., Alphabet Inc., and Amazon.com Inc. announce results after the market close Thursday, in the biggest day of the season for megacaps. One possibly bullish indicator: Meta Platforms Inc. shares surged in premarket trading after the social-media giant pledged to be leaner, more efficient and more decisive. The three on Thursday’s calendar have a combined market value of $4.7 trillion, accounting for more than 12% of the S&P 500 Index and more than a quarter of the Nasdaq 100 Index. That means that if the three move in the same direction, the overall market is sure to follow.
- Russia’s offensive is intensifying with the approach of Feb. 24, the invasion’s one-year mark, President Volodymyr Zelenskiy said. It followed his comment earlier in the week that a new phase of the conflict “has started.” Top US and Ukrainian officials spoke by phone about the situation on the front lines and Russia’s possible next steps. Poland’s prime minister outlined to a German newspaper a potential plan by Russian to surround Ukraine on multiple fronts, including from Belarus in the north, where Kremlin troops have been amassing for weeks. European Commission President Ursula von der Leyen and a large delegation of commissioners are in Kyiv for meetings ahead of Friday’s EU-Ukraine summit. The talks included a potential tenth package of sanctions against Russia, Ukraine’s prime minister said.
- When Jerome Powell stepped up to the podium at 2:30 p.m., the Federal Reserve had just carried out its expected quarter-point interest-rate hike and markets had barely budged. Forty-five minutes later, when the chair stopped speaking, stocks and Treasuries had taken off — even though he said interest rates would likely end up higher than investors expected and he pushed back on cuts that markets had priced in for this year. What investors chose to hear as Powell’s message: a more upbeat outlook on inflation and his failure to forcefully push back on recent market rallies that have limited the effectiveness of central bank tightening.
*All sources from Bloomberg unless otherwise specified