Trade Minister Mary Ng and U.S. counterpart Katherine Tai say they are forging closer trade ties between their two countries, in spite of lingering irritants.
Tai is in Ottawa for a two-day visit to Canada — her first since becoming President Joe Biden’s trade representative a year ago.
Tai says while the two countries clearly have trade differences, their interests are closely aligned in the context of competing with the rest of the world.
She also says Biden’s Buy American doctrine represents a federal procurement policy that shouldn’t be seen as a barrier to international trade.
Ng says she’s looking forward to showing her counterpart a GM facility Friday in Markham, Ont., where they will see integrated Canada-U.S. supply chains in action.
The pair are expected to meet with union leaders later today, as well as the owners of small and medium-sized businesses Friday in Toronto.
Stocks and bonds tumble on fear Fed may need bigger rate hike to tame inflation
Stocks suffered one of their biggest days of losses Thursday since the start of the pandemic, an abrupt reversal from sharp gains one day earlier, in a viscous selloff that illustrated the unease among investors that central banks will be able to move quickly on combating inflation without igniting a recession.
The selling encompassed more than equities, leaving even balanced portfolios bruised. Bond prices fell as yields – which move inversely – reached new multi-year highs. Bitcoin lost nearly 10 per cent of its value. And the U.S. dollar hit a 20-year high among major currencies, which left most commodities struggling to gain much traction given that a stronger greenback makes them more expensive to buy globally.
The U.S. Federal Reserve on Wednesday raised interest rates by half a percentage point as expected, but in a move that wasn’t as widely anticipated, Federal Reserve Chair Jerome Powell explicitly ruled out a more aggressive hike of 75 basis points in a coming meeting.
Traders in credit markets on Thursday, however, didn’t seem too convinced. They raised their bets on a 75 basis-point hike at the Fed’s June meeting.
Futures on the federal funds rate, which is one mechanism used an indication of where traders see monetary policy heading, priced in a roughly 75 per cent chance of a three quarters of a percentage point tightening by the Fed at next month’s policy meeting. Rate futures have also factored in more than 200 basis points of cumulative hikes for 2022.
“Yesterday’s sharp rally was not rooted in reality and today’s dramatic selloff is a reversal of that misplaced exuberance,” said Ben Kirby, co-head of investments at Thornburg Investment Management.
The benchmark S&P 500 fell 3.6 per cent, marking its biggest loss in nearly two years, a day after it posted its biggest gain since May 2020. The Nasdaq slumped 5 per cent, its worst drop since June 2020. The losses by the Dow – at just over 1,000 points – and the other indexes offset the gains from a day earlier.
“Concerns focus on whether the Fed will have to become even more hawkish to bring demand down — and that would involve slowing the economy more than they now project,” said Quincy Krosby, chief equity strategist for LPL Financial. “And today’s market action is questioning whether `soft-ish’ is plausible.”
Canada’s main stock index unwound most of a two-day rally and fell 2.3 per cent, its biggest daily decline since Nov. 30, 2021. The selloff across sectors was broad, and particularly felt in the technology arena, as Shopify lost another 14 per cent of its value after the e-commerce giant reported its slowest quarterly revenue growth in about seven years and delivered a big miss on profit.
Bombardier Inc shares declined 8.3 per cent even as the business jet maker reported a smaller quarterly adjusted loss.
Canadian bond yields, meanwhile, closely tracked a move higher in U.S. Treasuries on Thursday.
The Canadian 10-year government bond reached an 11-year high of 3.069 per cent. The yield on 10-year U.S. Treasury notes was up 13.9 basis points to 3.054 per cent after crossing above 3.1 per cent for the first time since November 2018.
The fight against inflation is global. The Bank of England on Thursday raised its benchmark interest rate to the highest level in 13 years, its fourth rate hike since December as U.K. inflation runs at 30-year highs. The Bank of Canada raised its policy rate by 50 basis points in April to 1 per cent, and signalled that another half-point rate hike is on the table for its upcoming meeting in June.
Data shows the long end of the U.S. Treasury market – bonds with the greatest durations – has suffered the most deeply negative returns this year going back to at least 1928, said Joseph LaVorgna, chief economist for the Americas at Natixis in New York.
“I’m surprised by the price action in the Treasury market because this has been an extraordinary historic move,” he said. “This is a pretty big move on top of an already significant move. It’s due to rising real yields,” LaVorgna said. Real yields take into account the impact of inflation.
Markets will remain volatile until there is a clear picture of Fed rate policy and its trajectory later this year, said Anthony Saglimbene, global market strategist at Ameriprise Financial.
Investors are “worried that when we get to the back half of this year, the Fed is going to be so aggressive with raising interest rates that they’re going to take the economy into a recession,” he said, adding “there’s an overall negative sentiment in the market.”
Worries about fast-paced rate increases at a time of China’s COVID-19 lockdowns and the war in Ukraine to slow surging inflation have heavily weighed on stock markets this year.
Energy markets remain volatile as the conflict in Ukraine continues and demand remains high amid tight supplies of oil. European governments are trying to replace energy supplies from Russia and are considering an embargo. OPEC and allied oil-producing countries decided Thursday to gradually increase the flows of crude they send to the world.
Higher oil and gas prices have been contributing to the uncertainties weighing on investors as they try to assess how inflation will ultimately impact businesses, consumer activity and overall economic growth.
On Thursday, U.S. West Texas Intermediate crude rose 45 cents, or 0.4 per cent, to settle at US$108.26. That was the highest close for WTI since March 25.
On Wall Street, technology megacaps slumped. Google-parent Alphabet Inc , Apple Inc, Microsoft Corp, Meta Platforms, Tesla Inc and Amazon.com all fell between 4.3% and 8.3%.
However, it was not just high-growth stocks, which have struggled in 2022 as the prospect of rate rises had investors questioning their future earnings potential. The selloff hit all areas of the market, as traders headed for the exits.
“Investors aren’t looking at fundamentals (such as earnings) right now, and this is more of a sentiment issue,” said Megan Horneman, chief investment officer at Verdence Capital Advisors.
Only 19 of the S&P 500′s constituents closed in positive territory, one of which was Twitter Inc, which ended 2.6% higher.
Elon Musk revealed on Thursday that Oracle’s co-founder Larry Ellison and Sequoia Capital were among investors that would back his takeover of the social media giant with $7.14 billion of financing.
All of the 11 major S&P sectors declined, with consumer discretionary leading the way with a 5.8% drop. The index was dragged by Etsy Inc and eBay Inc, down 16.8% and 11.7% respectively, after both forecast Q2 revenue would be below Wall Street’s estimates.
The technology sector was the next biggest loser, down 4.9%, with Intuit Inc among those weighing the heaviest. It slipped 8.5%, to its lowest finish in a year, a day after agreeing to pay a $141 million settlement centered on deception claims around its TurboTax product.
“You’re seeing those areas of the market which are purely discretionary, they are the ones getting hit today because everyone is anticipating that this is going to be a challenging period for consumers over the next several quarters,” said Horneman of Verdence Capital Advisors.
The CBOE Volatility index, also known as Wall Street’s fear gauge, climbed to 31.20 points.
The focus now shifts to the U.S. Labor Department’s closely watched monthly employment report on Friday for clues on labor market strength and its impact on monetary policy.
Volume on U.S. exchanges was 13.45 billion shares, compared with the 12.01 billion average for the full session over the last 20 trading days. The S&P 500 posted two new 52-week highs and 43 new lows; the Nasdaq Composite recorded 20 new highs and 446 new lows.
OPEC+ agrees to another modest production increase after EU outlines Russian oil ban
Oil producer group OPEC+ on Thursday agreed to rubber-stamp another small production increase for June, amid persistent concerns over weaker Chinese demand and shortly after the world’s largest trading bloc outlined proposals for new sanctions against Russian crude.
The influential energy alliance of OPEC and non-OPEC partners decided to raise production targets by 432,000 barrels per day for next month, sticking to an existing strategy of gradually unwinding record supply cuts.
OPEC+ will hold its next meeting on June 2.
Led by OPEC kingpin Saudi Arabia, the group swiftly agreed in late March to raise its output targets for May.
“OPEC+ is unlikely to supply additional oil into the market to resolve any market tightness, as they are very happy with prices remaining above $100/bb,” Ajay Parmar, senior oil market analyst at commodity intelligence service ICIS, said in a research note.
“Any substantial increase in additional supply from OPEC+ will threaten these high prices, and so instead, they are expected to continue with the slow claw-back of market share throughout 2022,” Parmar said.
The group’s latest meeting comes amid an unfolding supply crisis. The European Union on Wednesday announced plans to ban Russian oil imports within six months and refined products by the end of the year in its latest round of economic sanctions.
The bloc’s proposed measures reflect the widespread anger at Russian President Vladimir Putin’s unprovoked onslaught in Ukraine.
Spin Master Raises 2022 Guidance After Q1 Sales Increase 34 Per Cent, Profits Surge
The Canadian Press – Canadian Press – Wed May 4, 5:02PM CDT TORONTO — Toymaker Spin Master Inc. is increasing its revenue guidance for 2022 after sales increased 34 per cent in its latest quarter, causing profits to surge more than tenfold.
The Toronto-based company, which reports in U.S. dollars, says it earned US$45.6 million or 43 cents per diluted share in the first quarter, up from US$3.2 million or three cents per share a year earlier.
Adjusted profits were US$57.5 million or 55 cents per share, up from US$8.4 million or eight cents per share in the first quarter of 2021.
Revenues for the three months ended March 31 were US$424.2 million, up from US$316.6 million in the prior-year quarter.
Toy revenues increased 37 per cent to US$350.9 million, digital games was up 49 per cent to US$51.1 million, while entertainment dropped 17 per cent to US$22.2 million.
Spin Master was expected to post 17 cents per share in adjusted earnings on US$368.6 million in revenues, according to financial data firm Refinitiv.
“Following our very strong performance in 2021, we are extremely pleased with the positive momentum we saw across all three of our creative centres in the first quarter of 2022,” stated CEO Max Rangel in a news release.
Spin Master now expects 2022 revenue to increase low double digits from 2021 excluding “PAW Patrol: The Movie,” up from its Feb. 28 forecast of mid- to high single digits.
This report by The Canadian Press was first published May 4, 2022.
Loblaw Reports Q1 Profit Up Nearly 40 Per Cent From Year Ago, Raises Dividend
BRAMPTON, Ont. — Loblaw Companies Ltd. raised its quarterly dividend as it reported its first-quarter profit rose nearly 40 per cent compared with a year ago.
The grocery and drug store retailer says it will now pay a quarterly dividend of 40.5 cents per share, up from 36.5 cents per share.
The increased payment to shareholders came as the company reported its profit available to common shareholders totalled $437 million or $1.30 per diluted share for the 12-week period ending March 26 compared with $313 million or 90 cents per diluted share a year earlier.
Revenue for the quarter totalled $12.26 billion, up from $11.87 billion in the same quarter last year.
Food retail same-store sales rose 2.1 per cent, while drug retail same-store sales grew 5.2 per cent, with pharmacy same-store sales up 6.8 per cent and front store same-store sales up 3.6 per cent.
On an adjusted basis, Loblaw says it earned $1.36 per diluted share, up from an adjusted profit of $1.13 per diluted share a year ago.
This report by The Canadian Press was first published May 4, 2022.
Canadian Natural Resources First-Quarter Profit More Than Doubles
CALGARY — Canadian Natural Resources Ltd. saw its first-quarter profit more than double compared with a year ago, helped by higher oil and natural gas prices.
The company said it earned $3.1 billion or $2.63 per diluted share for the quarter ended March 31, up from $1.38 billion or $1.16 per diluted share in the same quarter last year.
Product sales in the quarter totalled $12.13 billion, up from $7.02 billion in the first quarter of 2021.
Daily production, before royalties, averaged 1,280,180 barrels of oil equivalent per day in the quarter, up from 1,245,703 in the same quarter last year.
Adjusted net earnings from operations amounted to $2.86 per diluted share, up from $1.03 per diluted share in the first three months of 2021.
Analysts on average had expected an adjusted profit of $2.54 per share, according to financial markets data firm Refinitiv.
This report by The Canadian Press was first published May 5, 2022.
BCE Reports First-Quarter Profit Up More Than 30 Per Cent From Year Ago
TORONTO — BCE Inc. reported its first-quarter profit rose more than 30 per cent compared with a year ago as its revenue also moved higher.
BCE CEO Mirko Bibic said it was the first quarter since the start of the pandemic in which the company’s consolidated financial results surpassed pre-COVID levels.
The company said its profit attributable to common shareholders totalled $877 million or 96 cents per share for the quarter ended March 31, up from $642 million or 71 cents per share a year earlier.
Operating revenue totalled $5.85 billion, up from $5.71 billion in the first three months of 2021.
Wireless revenue rose to $2.21 billion compared with $2.1 billion a year ago, while wireline revenue slipped to $3.01 billion from $3.08 billion. Bell Media revenue totalled $825 million, up from $713 million in the same quarter last year.
On an adjusted basis, BCE said it earned 89 cents per share in its latest quarter, up from an adjusted profit of 78 cents per share a year earlier.
This report by The Canadian Press was first published May 5, 2022.
