Author: Consultant

 Published: 5/10/2024

After opening higher and holding in positive territory till late morning, Canadian stocks retreated on Friday to eventually end the day’s session on a weak note.

Investors largely made their moves, reacting to quarterly earnings reports.

The benchmark S&P/TSX Composite Index, which climbed to a record intra-day high of 22,470.27 in early trades, ended the day with a loss of 66.90 points or 0.3% at 22,308.93, slightly off the session’s low of 22,298.67. The index gained about 1.7% in the week.

Docebo Inc (DCBO.TO) tanked 23.3%. Shopify Inc (SHOP.TO) ended 5.6% down. BlackBerry (BB.TO) ended lower by 3.4%. Constellation Software (CSU.TO), Quarterhill (QTRH.TO) and Lightspeed Commerce (LSPD.TO) also ended sharply lower.

Energy stock Baytex Energy (BTE.TO) ended down 8%. Precision Drilling Corporation (PD.TO), Tourmaline Oil Corp (TOU.TO), Vermilion Energy (VET.TO), Parex Resources (PXT.TO), MEG Energy (MEG.TO), Paramount Resources (POU.TO) and Canadian Natural Resources (CNQ.TO) also ended sharply lower.

Consumer staples shares Jamieson Wellness (JWEL.TO) and Metro Inc (MRU.TO) gained 4.2% and 1.9%, respectively.

Data from Statistics Canada showed employment in Canada rose by 90,400 jobs in April 2024, the most in 15 months, following a 2,200 decrease in March.

The unemployment rate in Canada was at 6.1% in April of 2024, unchanged from the two-year high recorded in the previous month.

Average Hourly Earnings in Canada increased by C$1.64 from the previous year to C$35.77 in April 2024, following a 5% increase in March, a separate data from Statistics Canada showed.

Technology and energy stocks are among the notable losers. Consumer staples, healthcare and consumer discretionary stocks are finding some support.

Algonquin Power & Utilities Corp. (AQN.TO) declined sharply after reporting a first quarter net loss to shareholders of $89.1 million compared to profit of $270.1 million, last year. Loss per share was $0.13 compared to profit of $0.39.

Enbridge Inc (ENB.TO) gained 1%. The company reported adjusted earnings of $2.0 billion or $0.92 per common share, for the first quarter of 2024, an increase of 8% per share, compared with $1.7 billion or $0.85 per common share in 2023.

Onex Corporation (ONEX.TO) drifted down 4.7%. The company reported a net profit of US$10 million for the first-quarter of this year, compared to net loss of $232 million in the year-ago quarter.

Crescent Point Energy (CPG.TO) ended down by 0.8% after reporting a net loss of $411.7 million for the quarter ended March 31, 2024 , compared to net profit of $216.7 million a year ago.

CI Financial Corp (CIX.TO) tanked more than 12%. The company reported adjusted net income of $132.8 million for the first quarter of 2024, compared to $136.8 million in the first quarter of 2023.

Enbridge Inc. reported its first-quarter profit fell compared with a year ago as it recorded a non-cash, net unrealized derivative fair value loss as well as costs related to job cuts announced in February.

The pipeline company says its profit attributable to common shareholders amounted to $1.42 billion or 67 cents per share for the quarter ended March 31.

The result was down from a profit of $1.73 billion or 86 cents per share in the same quarter last year.

On an adjusted basis, Enbridge says it earned 92 cents per share in its latest quarter, up from an adjusted profit of 85 cents per share in the first quarter of 2023.

Analysts on average had expected a profit of 81 cents per share for the quarter, according to LSEG Data & Analytics.

Enbridge chief executive Greg Ebel says strong operational performance and execution drove record financial results in the quarter.

This report by The Canadian Press was first published May 10, 2024.

The Canadian labour market rebounded in April by adding a whopping number of new positions, a result that potentially muddies the picture as the Bank of Canada considers whether to lower interest rates in June.

The economy added roughly 90,000 jobs in April after a slight decline in March, Statistics Canada said Friday in a report. Financial analysts were expecting a gain of 20,000 positions. It was the strongest month of job creation since January, 2023.

Despite those gains, the unemployment rate held steady at 6.1 per cent, because the country’s population is growing at a feverish pace. The jobless rate has risen by more than a percentage point since the summer of 2022.

The results suggest employers are willing and able to take on more workers, despite the financial pressures resulting from higher interest rates.

Friday’s report was the final Labour Force Survey before the Bank of Canada’s next rate decision on June 5. Analysts are roughly split over whether the central bank will cut rates then, or wait until late July to make the first move.

“Today’s showy headline jobs increase will give the Bank of Canada some pause, since it reinforces the point that the economy is clearly not rolling over,” Bank of Montreal chief economist Doug Porter said in a client note. “Still, the reality is that economic slack is still rising,” he added, pointing to a higher number of unemployed people.

In April, employers mostly added part-time positions, which rose by about 50,000. The private sector accounted for most of the employment growth, although there were strong gains in the public sector, as well.

The total number of hours worked across the economy jumped by 0.8 per cent in April, which portends well for growth in the second quarter.

Still, there are ample signs of a weakening economy. As of April, there were 1.3 million unemployed people in Canada, an increase of 256,000 or 23.7 per cent from a year earlier.

The Bank of Canada will be encouraged that wage growth – an upside risk for inflation – is calming down. Average hourly wages grew at an annual pace of 4.7 per cent in April, down from 5.1 per cent in March.

After Friday’s report, investors pared back their bets for an imminent rate cut. Markets are now pricing in a roughly 50-50 chance that the Bank of Canada trims its policy rate by a quarter-point next month, according to Refinitiv Eikon data. In recent days, those odds were higher than 70 per cent.

Over a series of moves, the Bank of Canada hiked its benchmark interest rate to 5 per cent from pandemic lows of 0.25 per cent, a process that started in early 2022. Through higher interest rates, the central bank is trying to curb demand and bring inflation back to its 2-per-cent target.

Tighter monetary policy is having wide-ranging effects on the economy, including higher debt-servicing costs for governments and households. Many homeowners are facing the prospect of sharply higher payments when they renew their mortgages in the coming years, the extent of which depends on the path of interest rates.

Whether the Bank of Canada cuts rates in June or July, it is likely to do so before the Federal Reserve. The U.S. economy is frequently posting strong results, and thus investors don’t expect the Fed to cut before November. This divergent path for interest rates would put downward pressure on the Canadian dollar – a helpful scenario for exporters, but adding to costs for imported goods.

Statscan will release its next inflation report on May 21. Annual consumer price index growth has slowed to just under 3 per cent. Bank of Canada officials have said they’re encouraged by this progress, but want to ensure they don’t cut rates too early and cause prices to flare up again.

“The unemployment rate has risen more in Canada than in most other advanced economies in the wake of higher interest rates, and wage growth is showing further signs of moderating,” Nathan Janzen, assistant chief economist at Royal Bank of Canada, said in a client note.

“Labour markets have softened enough to lower inflation risks going forward and justify a pivot to interest rate cuts from the Bank of Canada – but the bottom also still hasn’t fallen out in a way that is forcing the central bank to act urgently.”

Brookfield Corp. reported distributable earnings of US$1.22 billion for the first quarter, up from $1.16 billion in the same quarter last year, as weakness in its asset management arm was offset by strength across the other parts of its business.

The Toronto-based alternative asset investment firm, which keeps its books in U.S. dollars, says the result amounted to 77 cents US in distributable earnings per share for the quarter ended March 31, up from 72 cents per share in the first quarter of 2023.

Brookfield president Nick Goodman says the company delivered strong financial results in the first quarter and expects the positive momentum across its asset management, wealth solutions and operating businesses to drive continued strength over the course of 2024.

The company says it has a record US$150 billion in deployable capital for new investments.

Revenue for the quarter totalled US$22.91 billion, down from US$23.30 billion in the first quarter of 2023.

Brookfield says its first-quarter net income attributable to shareholders amounted to US$102 million or four cents US per diluted share, down from US$120 million or five cents US per diluted share in the same quarter last year.

This report by The Canadian Press was first published May 9, 2024.

Pembina Pipeline Corp. says it earned $439 million in the first quarter, up from $369 million a year earlier.

The Calgary-based company says its revenue for the quarter ended March 31 was $1.54 billion, down from $1.62 billion during the same quarter last year.

Diluted earnings per common share were 73 cents, up from 61 cents.

Pembina says it’s increasing its dividend for the second quarter by 3.4 per cent to 69 cents per common share.

On April 1, Pembina closed its $3.1-billion purchase of Enbridge Inc.’s stakes in the Alliance pipeline and Aux Sable gas processing facility.

It also updated its 2024 adjusted EBITDA guidance to between $4.05 billion and $4.30 billion, up from previous guidance of between $3.7 billion and $4.0 billion.

This report by The Canadian Press was first published May 9, 2024.

Sun Life Financial Inc. says it had a net income of $875 million in its first quarter, a two per cent decline from last year.

The insurer says profits were affected by its U.S. health division, including from reassessments following the lifting of the Public Health Emergency and higher morbidity claims.

The U.S. division saw a 20 per cent drop in underlying net income to US$141 million.

The Canadian division was down about two per cent to a net income of $310 million, as increased death payouts offset gains in business growth.

Sun Life says its Asia business had an income of $177 million, up 26 per cent as it saw good sales momentum in individual protection.

The insurer says its reported net income was $818 million, up one per cent from last year, while it raised its dividend by four per cent.

This report by The Canadian Press was first published May 9, 2024.

First Quarter Financial Highlights^1,2,3:

• GTV increased 115% year-over-year to $4.1 billion, which includes $2.3 billion from IAA.
• Total revenue increased 108% year-over-year to $1.1 billion, which includes $588.6 million from IAA.
  • Service revenue increased 147% year-over-year to $849.1 million, which includes $516.9 million from IAA.
  • Inventory sales revenue increased 28% year-over-year to $215.6 million, which includes $71.7 million from IAA.
• Net income (loss) available to common stockholders increased 384% year-over-year to $97.1 million.
• Diluted earnings (loss) per share available to common stockholders increased 289% to $0.53 per share.
• Diluted adjusted earnings per share available to common stockholders increased 58% year-over-year to $0.90 per share.
• Adjusted EBITDA increased 150% year-over-year to $331.0 million.

https://www.newswire.ca/news-releases/rb-global-reports-first-quarter-2024-results-800022493.html

Telus Corp. raised its quarterly dividend as it reported its first-quarter profit fell compared with a year ago.

The telecommunications company says it will now make a quarterly payment to shareholders of 38.91 cents per share, up from its previous rate of 37.61 cents per share.

The increased payment to shareholders came as Telus reported net income attributable to common shares of $127 million or nine cents per share.

The result was down from a profit of $217 million or 15 cents per share in the same quarter last year.

Operating revenues and other income for the quarter totalled $4.93 billion, down from $4.96 billion in the first quarter of 2023.

On an adjusted basis, Telus says it earned 26 cents per share in its latest quarter, down from an adjusted profit of 27 cents per share in the same quarter last year.

This report by The Canadian Press was first published May 9, 2024.

Canadian Tire Corp. Ltd. reported its first-quarter profit rose compared with a year ago as its revenue fell about five per cent.

The retailer says its net income attributable to shareholders totalled $76.8 million or $1.38 per diluted share for the quarter ended March 30.

The result was up from a profit of $7.8 million or 13 cents per diluted share in the same quarter last year when it was hit by costs related to a distribution centre fire.

Canadian Tire says its normalized profit amounted to $1.38 per diluted share in its latest quarter, up from a normalized profit of $1.00 per diluted share in the same quarter last year.

Revenue for the quarter totalled $3.52 billion, down from $3.71 billion in the same period last year.

Consolidated comparable sales fell 1.6 per cent.

This report by The Canadian Press was first published May 9, 2024.