By Ketki Saxena
Investing.com -- At 9:45 a.m in Toronto, the S&P/TSX Composite Index was at 19,599.89 points, up 0.74% shortly after the opening bell.
The Canadian index tracked global equities higher on optimism that the Federal Reserve will slow its path of policy tightening - particularly in the context of yesterday’s GDP data, a second quarterly contraction indicating the U.S. is now in a recession.
Analysts including at JP Morgan note that while a “mild” recession has been largely priced into the markets at this stage, investors continue to take direction from the Fed’s likely - and indicated - path in the face of a slowing economy.
North American equities were further supported by better-than-expected earnings this morning from Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) as the mega caps buoyed Wall Street, and investor sentiment about the state of retail spending in the context of soaring inflation and rising rates.
Commodities
Canada’s commodity-heavy Canadian index was also supported by strength in crude, and broad-based gains in industrial metals, including copper, considered a benchmark of economic sentiment as investors reacted to the slowing pace of rate hikes.
Crude was further supported by an announcement from OPEC+ sources that the group is likely to keep output unchanged as it struggles to meet existing production quotas. The bloc next meets on August 3 to discuss output.
Canadian Stocks
The big news on Bay Street street today includes less-than-stellar earnings from Enbridge (TSX:ENB), as earnings were hit by “non-cash, net unrealized derivative losses of C$850 million”. Enbridge reported earnings attributable to common shareholders of C$450 million, or 22 Canadian cents per share in Q2, compared to C$1.39 billion or 69 Canadian cents per share,
Enbridge also announced a C$5.1 billion in the joint construction and operation of the Woodfibre LNG project with Pacific Energy Corp, of which it will own a 30% ownership stake.
Canadian auto parts maker Magna International Inc today lower-than-expected quarterly profit as it struggled with rising commodity prices and energy costs. Magna also noted that its 6 plants in Russia remain largely idle, with production expected to remain halted until 2024. Magna reported EPS 83 cents per share, compared to analysts' estimates of 94 cents per share.
Other major earnings today include Canfor (TSX:CFP) corp, with EPS Expected at C$2.70 per share, and Imperial Oil Ltd, with EPS Expected at C$2.54 per share.
Today’s major analyst upgrades and downgrades include:
- AltaGas (TSX:ALA) Ltd: CIBC (TSX:CM) raises the target price to C$33 from C$32, citing the company’s strong quarterly results, operating momentum and solid hedge book.
- Canadian Pacific Railway Ltd: Stephens raises target price to $78 from $73, after the company reported second-quarter adjusted EPS that was slightly above estimates and as commentary around the Kansas City Southern (NYSE:KSU) merger becomes more positive.
- TC Energy (TSX:TRP) Corp: CIBC cuts rating to neutral from outperformer and target price to C$74 from C$76, saying comparable earnings outperformed estimates, but were tempered by a bigger equity requirement for Coastal GasLink, requiring reactivation of the DRIP.
In Canadian Economics
Statistics Canada reported today that Canadian real GDP remained unchanged in May, following April’s 0.3% expansion.
Advance information indicates that real GDP increased 0.1% in June, which on a cumulative basis for the quarter, indicates that the Canadian economy grew 1.1% in the quarter of 2022.
The advance information for June, and second-quarter data, will be updated on August 31 with the official release.