Author: Consultant

The Canadian dollar CADUSD +0.14%increase weakened against its U.S. counterpart on Wednesday, pulling back from an earlier one-week high, as the greenback notched broad-based gains and escalating Russia-Ukraine tensions led to investors turning more risk averse.

The loonie was trading 0.3 per cent lower at 1.3990 to the U.S. dollar, or 71.48 U.S. cents, after two consecutive days of gains. The currency touched its strongest intraday level since Nov. 13 at 1.3948.

“USD-CAD resumed its uptrend after a 2-day pause,” said Michael Goshko, senior market analyst at Convera Canada ULC. “The news Ukraine fired Storm Shadow missiles into Russia saw the market switch from risk-on to risk-off.”

Wall Street stocks fell after a report Ukraine fired long-range British Storm Shadow missiles into Russian territory and the safe-haven U.S. dollar climbed against a basket of major currencies, restarting its post-election rally.

The price of oil, one of Canada’s major exports, gave back its earlier gains to trade 0.5 per cent lower at $69.06 a barrel.

Investors have reduced bets on another outsized interest rate cut by the Bank of Canada after domestic data on Tuesday showed inflation climbing more than expected to 2 per cent.

Canadian retail sales data for September, due on Friday, could offer additional clues on the BoC policy outlook. Economists expect an increase of 0.4 per cent from August.

Canadian bond yields rose across the curve, tracking moves in U.S. Treasuries. The 10-year was up 1.5 basis points at 3.350 per cent, after earlier touching its highest level since July 24 at 3.390 per cent.

C$5-billion of the 3.25 per cent December 2034 bond was sold at auction at an average yield of 3.368 per cent.

• Should inflation flare up again, Fed Chair Jerome Powell and his colleagues could tap the brakes on their efforts to lower interest rates. That in turn could infuriate President-elect Donald Trump.
• Futures traders have been waffling in recent days on their expectations for what the Fed will do next.
• “All roads lead to tensions between the White House and the Fed,” said Joseph Brusuelas, chief economist at RSM.

https://www.cnbc.com/2024/11/21/trump-and-fed-chair-powell-could-be-set-on-a-collision-course-over-rates.html

The Dow Jones Industrial Average and the S&P 500 rose Thursday as investors poured into cyclical stocks poised to benefit from an accelerating economy and rotated out of technology shares such as Nvidia, which just reported quarterly earnings.

The Dow Jones Industrial Average gained 604 points, or 1.4%. The S&P added 0.7%, while the tech-heavy Nasdaq Composite edged up 0.3%.

“This is the week where everyone is rethinking the Trump trade,” said Mark Malek, chief investment officer at Siebert. “People are taking it a little more seriously. It’s not enough to just say ‘we think the sector is going to do well’ — you have to have some answers.”

Some of Thursday’s winners included bank stocks like Goldman Sachs, industrials giant Caterpillar and retailer Home Depot. The Russell 2000 Index, viewed as a barometer for small companies and beneficiary of a possible boost to the economy from President-elect Donald Trump, added more than 1.8%.

Investors assessed results for AI-chip juggernaut Nvidia, which was up 190% this year into the results. Shares seesawed even after the company reported better-than-expected third-quarter earnings and issued strong guidance. Some traders attributed the losses to slowing revenue growth from previous quarters, or concerns that the chipmaker didn’t exceed the most optimistic guidance estimate. The stock was last down about 1.4%.

https://www.cnbc.com/2024/11/20/stock-market-today-live-updates.html

The number of Americans filing new applications for unemployment benefits fell to a seven-month low last week, suggesting that job growth likely rebounded in November after abruptly slowing last month amid hurricanes and strikes.

It is, however, taking longer for the unemployed to find new work. The report from the Labor Department on Thursday also showed unemployment rolls swelling to levels last seen in late 2021. Labor market slack keeps the door open for a third interest rate cut from the Federal Reserve next month, despite a recent lack of progress lowering inflation to its 2 per cent target.

“There is no sign of incipient recession in these figures,” said Carl Weinberg, chief economist at High Frequency Economics. “The labor market is softening but not imploding.”

Initial claims for state unemployment benefits dropped 6,000 to a seasonally adjusted 213,000 for the week ended Nov. 16, the lowest reading since April. Economists polled by Reuters had forecast 220,000 claims for the latest week.

The data included the Veterans Day holiday, which could have injected some volatility. Unadjusted claims decreased 17,750 to 213,035 last week. Filings in California dropped 4,657, almost reversing the prior week’s 5,906 jump. The state offered no comment for that increase.

There were also notable declines in applications in New Jersey, Ohio, Georgia, Texas and Indiana. Filings had surged in New Jersey and Texas in the prior week, blamed on layoffs in the educational services industry as well as the healthcare and social assistance sector.

Though overall claims soared in early October amid disruptions caused by Hurricanes Helene and Milton as well as strikes by factory workers at Boeing and another aerospace company, layoffs have remained low. That is softening the hit on the labor market from sluggish hiring.

The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of November’s employment report. Claims fell considerably between the October and November survey weeks.

The dollar was little changed against a basket of currencies. Stocks on Wall Street were poised to open higher.

Government data on Tuesday confirmed that Helene, Milton and the aerospace strikes had accounted for much of the sharp slowdown in job growth in October.

The state employment and unemployment report also showed the labor market steadily slowing. Economists estimated that the strikes and storms probably subtracted between 100,000 and 125,000 jobs from payrolls last month. Nonfarm payrolls increased by a scant 12,000 jobs in October, the smallest gain since December 2020, after rising by 223,000 in September.

The Boeing strike ended early this month after workers accepted a new contract, while rebuilding is underway in the areas devastated by the hurricanes. That creates a base of at least 100,000 jobs for November’s payrolls.

Data next week on unemployment rolls could offer more clarity on the state of the labor market in November.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 36,000 to a seasonally adjusted 1.908 million during the week ending Nov. 9, the claims report showed. The so-called continuing claims have been boosted by Boeing-related furloughs and the hurricanes.

The employment report for November could determine if the Fed cuts rates again in December. The U.S. central bank trimmed rates by 25 basis points earlier this month, lowering its benchmark overnight interest rate to the 4.50 per cent-4.75 per cent range.

The Fed embarked on its policy easing cycle with an unusually large half-percentage-point rate cut in September, its first reduction in borrowing costs since 2020. It hiked rates by 525 basis points in 2022 and 2023 to curb a surge in inflation.

Canada’s main stock index notched a record high on Thursday amid gains led by energy shares, while investors assessed AI bellwether Nvidia’s upbeat quarterly results that dictated overall market sentiment.

At 10:59 a.m. ET, the S&P/TSX composite index was up 240.73 points, or 0.96%, at 25,277.19

“I think investors are just looking for excuses to keep up their enthusiasm for the market,” said Michael Sprung, president at Sprung Investment Management, adding stretched valuations do not “seem to be bothering investors too much at the moment.”

The TSX energy sector gained 1.4% on Thursday as oil prices climbed after Russia and Ukraine launched missiles at each other, fueling concerns of supply disruption from the region.

Geopolitical uncertainties have left investors unsettled after Russia fired what appeared to be an intercontinental ballistic missile in retaliation against Ukraine firing U.S. and British missiles earlier this week.

The technology sector advanced 1.1%, boosted by a 4% jump in electronics firm Celestica’s shares.

In contrast, the capped communications sector was the biggest drag, down 0.9%.

Investors also parsed economic data including U.S. weekly jobless claims that unexpectedly fell last week, suggesting job growth likely rebounded in November after abruptly slowing last month amid hurricanes and strikes.

Canada’s producer prices rose 1.2% in October from September on higher prices for primary non-ferrous metal products.

On the corporate front, Manulife Financial said it will reinsure $5.4-billion of its reserves as it looks to transfer some risk from its portfolio and free up capital for stock buybacks. Its shares rose 1.4%.

U.S. stock indexes are drifting up and down Thursday after market superstar Nvidia and another round of companies said they’re making fatter profits than expected.

The S&P 500 was 0.2% lower after flipping between modest gains and losses. The Dow Jones Industrial Average rose 126 points, or 0.3%, and the Nasdaq composite fell 1%. The moves were part of a busy day for financial markets worldwide, as bitcoin briefly broke above $98,000 and crude oil prices continued to rise.

Nvidia was a big reason for the stock market’s meandering after yet again topping analysts’ estimates for profit and revenue. It also gave a forecast for revenue in the current quarter that topped most analysts’ expectations thanks to voracious demand for its chips used in artificial-intelligence technology.

Its stock initially sank in afterhours trading late on Wednesday after Nvidia released its results, which some investors said might be because the market was looking for its revenue forecast to top expectations by even more. But its stock then recovered in premarket trading Thursday, and Wedbush analyst Dan Ives said it was another “flawless” profit report provided by Nvidia and CEO Jensen Huang, whom Ives calls “the Godfather of AI.”

How Nvidia’s stock performs has tremendous impact on indexes because it’s quickly grown into Wall Street’s most valuable company at nearly $3.6 trillion. That means a 1% move for it packs more weight on the S&P 500 than the same move for any other stock.

Nvidia’s stock on Thursday quickly went from an early jump of 4.8% on Thursday to a loss of 1.6%, making it one of the heaviest weights on the S&P 500.

The frenzy around AI is sweeping up other stocks, and Snowflake jumped 29.7% after reporting stronger results for the latest quarter than analysts expected. The company, whose platform helps customers get a better view of all their silos of data and use AI, also reported stronger revenue growth than expected.

BJ’S Wholesale Club rose 7.2% after likewise delivering a bigger profit than expected. That may help calm worries about how resilient U.S. shoppers can remain, given high prices across the economy and still-high interest rates. A day earlier, Target tumbled after reporting sluggish sales in the latest quarter and giving a dour forecast for the holiday shopping season. It followed Walmart, which gave a much more encouraging outlook.

Helping to drag on Wall Street was Google’s parent company, Alphabet. It fell 6.6% after U.S. regulators asked a judge to break up the tech giant by forcing it to sell its industry-leading Chrome web browser. In a 23-page document filed late Wednesday, the U.S. Department of Justice called for sweeping punishments that would include restrictions preventing Android from favoring its own search engine.

Regulators stopped short of demanding Google sell Android but left the door open to it if the company’s oversight committee continues to see evidence of misconduct.

Drops for other Big Tech stocks also weighed on the market, including slides of 0.9% for Apple, 2% for Amazon and 2.7% for Meta Platforms.

In stock markets abroad, shares of India’s Adani Enterprises plunged 22.6% Thursday after the U.S. charged founder Gautam Adani, 62, in a federal indictment with securities fraud and conspiracy to commit securities and wire fraud. The businessman and one of the world’s richest people is accused of duping investors by concealing that his company’s huge solar energy project on the subcontinent was being facilitated by an alleged bribery scheme.

Indexes elsewhere in Asia and Europe were mixed.

In the crypto market, bitcoin is trading around $96,000 after eclipsing $98,000 for the first time. It’s more than doubled so far this year, and its climb has accelerated since Election Day. President-elect Donald Trump has pledged to make the country “the crypto capital of the planet” and create a “strategic reserve” of bitcoin.

Bitcoin and related investments, of course, have a notorious history of big swings in price in both directions. MicroStrategy, a company that’s been raising cash expressly to buy bitcoin, saw an early gain of 14.6% for its stock on Thursday quickly disappear. It was most recently down 5%.

In the oil market, a barrel of benchmark U.S. crude rose 1.7% to bring its gain up to 4.3% for the week. Brent crude, the international standard, climbed 1.4%. Oil has been rising amid escalations in the Russia-Ukraine war.

In the bond market, Treasury yields were easing a bit following some mixed reports on the U.S. economy. The yield on the 10-year Treasury edged down to 4.39% from 4.41% late Wednesday.

One report said fewer U.S. workers applied for unemployment benefits last week in the latest signal that the job market remains solid. Another report, though, said manufacturing in the mid-Atlantic region unexpectedly shrank. Sales of previously occupied homes, meanwhile, strengthened last month by more than expected.

Reuters and The Associated Press

Grocery retailer Metro Inc.MRU-T -0.32%decrease plans to open more discount stores next year, as Canadian shoppers hit hard by inflation continue to look for value.

The Montreal-based retailer on Wednesday announced plans for 12 new stores in 2025, including some locations that will be converted from full-priced banners. Metro owns discount chains Food Basics and Super C.

Metro is facing greater competition in the discount space, as rival Loblaw Cos. Ltd. has been opening more locations, and converting a number of its Provigo stores in Quebec to the lower-priced Maxi banner.

“We see good opportunities, in discount mostly, in both provinces,” president and chief executive officer Eric La Flèche said during a conference call to discuss the company’s fourth-quarter earnings. “… Food Basics in Ontario is is doing really well, has been on a very good run for a few years, capturing share. And we see more opportunities. Same with Super C.”

Mr. La Flèche said that customer counts are up at all of Metro’s banners, and that the retailer is gaining market share. But a shift in shopping behaviours has been persistent, as people continue to opt for store-brand products, and customers are buying on promotions more frequently.

Grocery prices have continued to be a pain point for many Canadians’ budgets. While food inflation has slowed compared to the double-digit increases seen in 2022 and 2023, consumers are still facing significantly higher prices than they were just a couple of years ago. And in recent months, grocery prices have been rising faster than overall inflation. On Tuesday, Statistics Canada reported the price of food bought in stores rose by 2.7 per cent in October, compared with the same month one year ago. That was higher than the growth in the Consumer Price Index, which was up 2 per cent.

Metro reported on Wednesday that its own internal measure of food basket inflation was higher than Statistics Canada’s CPI measure, which was 1.7 per cent during the fourth quarter ended Sept. 28. The company’s internal metric is based on prices for a basket of goods frequently purchased at its stores, and is not directly comparable with CPI. Last week, competitor Loblaw Cos. Ltd. also reported its internal food inflation measures were higher than CPI in its third quarter, which ended Oct. 5. Neither company discloses those internal figures.

People are also seeking value through the use of loyalty programs. This fall, Metro terminated its partnership with Air Miles in order to expand its own MOI loyalty program to Ontario. Since the launch of the program in late October, more than 1-million people have signed up, Mr. La Flèche said.

Metro reported that sales grew across its store network in the quarter ended Sept. 28. Same-store sales – an important metric that tracks sales growth not caused by new store openings – grew by 2.2 per cent at Metro’s grocery stores, and by 5.7 per cent at its pharmacies, including the Jean Coutu drugstore chain.

Metro executives had previously said that higher-than-usual expenses related to investments in its supply chain would weigh on profits this fiscal year. That has included transitions to new automated distribution centres in Quebec and Ontario, which are now complete. Executives said on Wednesday that they expect the company to return to earnings growth in 2025.

Metro reported net earnings fell by 1 per cent to $219.9-million in the quarter ended Sept. 28. Earnings per share grew slightly to 98 cents per share in the quarter, compared with 96 cents per share in the same period the previous year, when the company had more shares outstanding.

Over all, Metro reported its sales fell 2.6 per cent in the fourth quarter because of a calendar shift: this year’s quarter spanned a 12-week period, while the same quarter in the previous year included 13 weeks. Total sales were $4.9-billion, up 5.7 per cent when compared to a similar 12-week period. The growth came both from higher sales at the company’s stores, as well as the fact that it compared to a period in the previous year when Metro faced lost profits and added costs from a five-week strike that shuttered 27 stores in Ontario.

Online sales grew by 27.6 per cent, when compared on a 12-week basis with the prior year.

For the full year, sales grew by 2.4 per cent to $21.2-billion. As with the fourth quarter, full-year results were affected by the year having one less week compared to fiscal 2023; when compared on a 52-week basis with the prior year, sales were up 4.4 per cent.

Net earnings for the year fell to $931.7-million or $4.11 per share, compared to $1-billion or $4.35 per share in the prior year. The results included a loss on impairments of assets relating to the decision to end the Air Miles partnership. Not including that one-time loss and other adjustments, adjusted net earnings were $972.9-million or $4.30 per share, a decline of 3.3 per cent overall and flat on a per-share basis.

U.S. crude oil and gasoline inventories last week rose more than forecast, while distillate stockpiles posted a larger-than-expected draw, the Energy Information Administration said on Wednesday.

Crude inventories rose by 545,000 barrels to 430.3 million barrels in the week ended Nov. 15, the EIA said, compared with analysts’ expectations in a Reuters poll for a 138,000-barrel rise.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 140,000 barrels in the week, the EIA said.

Net U.S. crude imports rose last week by 237,000 barrels per day (bpd) to 3.3 million bpd, with imports to the Gulf Coast hitting 2 million bpd, the highest since July 2020, the EIA said.

“The report is modestly negative, with builds across key petroleum products,” said Giovanni Staunovo, an analyst with UBS. The build in crude stockpiles was only modest, he added.

Brent crude futures extended losses while U.S. crude edged higher after the larger-than-expected build.

Refinery crude runs fell by 281,000 bpd, the EIA said, while refinery utilization rates fell by 1.2 percentage points in the week.

Gasoline stocks rose by 2.1 million barrels in the week to 208.9 million barrels, the EIA said, compared with expectations for a 900,000-barrel build.

U.S. gasoline futures extended gains after the data was released.

Distillate stockpiles, which include diesel and heating oil, fell by 100,000 barrels in the week to 114.3 million barrels, versus expectations for a 20,000-barrel decline.

Midwest distillate fuel stockpiles fell last week to 25.3 million barrels, its lowest since November 2023, the EIA said.

U.S. heating oil futures, last down 0.07 per cent, were unchanged after the data showed larger draw.

George Weston Ltd. WN-T -2.26%decrease reported a third-quarter profit attributable to common shareholders of $15-million compared with a profit of $610-million in the same quarter a year ago as it was hit by a large one-time charge.

The company, which owns a majority stake in Loblaw Companies Ltd. L-T -1.44%decrease and a large stake in Choice Properties Real Estate Investment Trust CHP-UN-T -0.36%decrease, says the profit amounted to eight cents per diluted share for the quarter ended Oct. 5.

The result was down from a profit of $4.41 per diluted share in the same quarter last year.

George Weston says the drop compared with a year ago was due to a $787-million fair value adjustment related to an increase in Choice Properties’ unit price.

On an adjusted basis, the company says it earned $3.57 per share, up from an adjusted profit of $3.36 per share in the same quarter last year.

Revenue for the quarter totalled $18.69-billion, up from $18.41-billion a year earlier.

TC Energy TRP-T said on Tuesday it expects 2025 core profit to be in the range of about $10.7-billion to $10.9-billion, higher than its 2024 forecast of $9.9-billion to $10.1-billion, due to rising demand for natural gas and electrification.

The U.S. Energy Information Administration, in its latest short term energy outlook report, saw the country’s gas consumption rising to a record 90 billion cubic feet per day (bcfd) in 2024.

The consumption is expected to ease to 89.6 bcfd in 2025, which will still be higher than the previous record of 89.1 bcfd in 2023.

It also announced four new growth projects for natural gas and nuclear power generation, which would total nearly $1.5-billion in capital expenditure.

“We don’t need to adopt projects of a very large scale anymore…we’ve got a whole backlog of projects we’re pursuing,” said TC Energy executives on the investor day call.

“We can deliver on our growth without going down that path.”

North America’s rising natural gas demand was driven by higher LNG exports, retiring coal plants and growing consumption in data centers associated with artificial intelligence operations, TC Energy had said in its third-quarter earnings call.

TC Energy intends to decrease its market exposure in its Mexican operations by late 2025 or 2026, once the Southeast Gateway pipeline begins transporting natural gas.

The pipeline will supply up to 1.3 billion cubic feet per day of natural gas to Mexico and is now projected to cost between $3.9-billion and $4.1-billion, a reduction from the initial estimate of $4.5-billion.

Earlier this year, the TC Energy had said it would sell a 5.34 per cent stake in the NGTL system and Foothills assets in western Canada to an Indigenous-owned investment partnership.

While talks are still ongoing, the company noted that the ownership structure could differ from initial plans, without providing further details.