FX.co ★ Bay Street Likely To Open On Mixed Note

Canadian stocks are projected to show a mixed performance in early trading on Thursday as investors respond to earnings reports from major banks and digest the latest economic data from both the U.S. and Canada.

### Banking Sector Updates

Royal Bank of Canada (Ticker: RY.TO) reported a net income of $4.0 billion for the quarter ending on April 30, 2024, marking a 7% increase, or $270 million, from the previous year. Similarly, the Canadian Imperial Bank of Commerce (Ticker: CM.TO) posted an adjusted net income of $1,718 million for Q2, up from $1,628 million the previous year.

In contrast, Canopy Growth Corporation (Ticker: WEED.TO) reported a significant fourth-quarter net loss of C$92.3 million, or C$1.03 per share, a notable improvement from the previous year's loss of C$640.1 million, or C$12.83 per share.

### Economic Indicators

The Canadian Federation of Independent Business reported an increase in the country’s business barometer, which measures the 12-month forward expectations for business performance. The index rose to 56.4 in May, up from an upwardly revised 47.6 in April.

Revised data from the U.S. Commerce Department revealed that U.S. economic growth decelerated more than initially estimated in Q1 2024. The GDP growth rate was adjusted down to 1.3% from the previously reported 1.6%. Additionally, the Labor Department disclosed a modest increase in first-time unemployment claims for the week ending May 25.

### Market Reactions

Canadian equities dropped on Wednesday amid concerns that the Federal Reserve might maintain elevated interest rates for a prolonged period if U.S. inflation exceeds expectations. The downturn was broad-based, with substantial losses in the financials, utilities, materials, and energy sectors. Several stocks in the consumer discretionary, real estate, communications, and industrials sectors also suffered significant declines.

The benchmark S&P/TSX Composite Index opened with a near 100-point deficit at 22,170.16—its highest point for the day—and closed with a loss of 367.07 points, or 1.65%, at 21,897.98, narrowly above the day's low.

### Global Market Insights

Asian stocks experienced a sharp decline on Thursday as both the U.S. dollar and bond yields surged, driven by expectations that global interest rates will remain elevated for an extended period. Traders in Europe are slightly more optimistic, pushing European stocks higher after two days of declines linked to inflation and interest-rate worries.

### Key Economic Data from Europe

Eurostat data indicated that the eurozone's seasonally adjusted unemployment rate fell from 6.5% to 6.4% in April, ahead of the anticipated 6.5%. Furthermore, the euro area economic sentiment indicator increased from 95.6 to 96.0 in May, meeting expectations.

### Commodity Markets

In commodities, West Texas Intermediate (WTI) Crude oil futures fell by $0.37, or 0.47%, to $78.86 per barrel. Gold futures rose by $21.00, or 0.9%, to $2,362.20 per ounce, while silver futures experienced a decline of $0.913, or 2.82%, to $31.460 per ounce.

Overall, the markets appear to be navigating a complex landscape of earnings, economic data, and global economic signals in the wake of potential shifts in monetary policy.