May 25, 2023
The Daily Chase: Loan loss provisions weigh on bank earnings; Nvidia forecasts upbeat outlook
First Look With Surveillance: AI Rally, Deal Optimism
It's the busiest day on the big banks earnings calendar, with the likes of RBC, TD Bank and CIBC all reporting earnings before the opening bells. It's a mixed bag – you've got an adjusted earnings per share beat out of CIBC ($1.70 vs an estimate of $1.63) and misses over at RBC ($2.65 vs est $2.80) and TD ($1.94 vs est $2.08.) If we're looking for something thematic here, it's the growth in loan loss provisions, something that's been a trend this quarter. All three banks set aside more cash to cover potentially sour loans in the quarter, reflecting concerns over the macroeconomic outlook. As for positives, worth noting both CIBC and RBC did increase their dividends by about two per cent apiece.
NVIDIA SPIKES AFTER UPBEAT FORECAST
Shares of Nvidia are surging in the premarket – up as much as 26 per cent – after the chipmaker delivered an upbeat outlook driven by its view of demand from the AI industry. The company's sales in the three months ending in July should be around US$11 billion, well beyond the US$7 billion or so analysts had forecast. That's helping buoy sentiment in the broader markets, lifting futures on the Nasdaq and the S&P 500 this morning.
ALBERTA WILDFIRES EASE
Some welcome news coming from out west, where it looks like the wildfire situation is improving. Alberta reported 56 active wildfires as of early Thursday, down from the 67 fires burning late Tuesday, as cooler temperatures and some welcome rain helped drive back the blazes. That's helping to ease concerns about the potential impact to energy production in the province after the unseasonably-early start to fire season shut in some gas production in the energy heartland.
OTHER NOTABLE STORIES
- Canada and Saudi Arabia are normalizing diplomatic relations, nearly five years after ties frayed due to human rights concerns.
- Shares of Best Buy are rising in the premarket, up about five per cent, after the company topped quarterly profit expectations.
- Notable data: Survey of Employment, Payrolls and Hours, U.S. Initial Jobless Claims, U.S. Real GDP, U.S. Pending Home Sales
- Notable earnings: CIBC, Royal Bank of Canada, TD Bank, Best Buy, Dollar Tree, Costco, The Gap, Lions Gate Entertainment
- McDonald's AGM