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Canada’s national real estate association has downgraded its outlook for home sales and prices in 2023 for the second time this year as higher borrowing costs deepen the slowdown in the country’s housing market.

The number of home resales fell 1.9 per cent in September over August after removing seasonal influences, with activity dropping in the country’s two most expensive markets of Toronto and Vancouver, according to the Canadian Real Estate Association. It was the third straight month of declines and came as the number of sales listings continued to increase nationally, rising by 6 per cent month over month.

The home price index, which removes the highest priced transactions, was $753,900 in September. That was 0.3 per cent lower than August and the first decrease since March when buyers rushed to make their purchases amid a lull in interest-rate hikes. The market has since slowed with Bank of Canada’s interest-rate hikes in June and July, as well as its message that rates will stay elevated until inflation slows.

“The summer rate hikes also rekindled uncertainty that more were still to come,” CREA said in a release.

That uncertainty along with the months-long slump in activity led the association to revise its forecast down. It now expects 449,614 home resales this year, a 10-per-cent decrease over 2022, and the average price to settle at $680,686, a 3-per-cent decline from the previous year. Overall, the latest forecast is 3 per cent lower than the July outlook.

September is typically a time of the year when sales activity picks up. But CREA said prospective buyers are waiting for more evidence that interest rates will not go higher than the current 5 per cent.

“Expect a quieter than normal winter with all eyes on the Bank of Canada,” association senior economist Shaun Cathcart said in a news release. The central bank has two remaining scheduled interest-rate announcements at the end of October and early December.

Although more homeowners are putting their properties up for sale, Mr. Cathcart said the volume of new listings is only now back at normal levels compared with spring when they were at a 20-year low. “The market is not being flooded with supply,” he said.

Mortgage borrowers have been under increasing stress with the 475-basis-point spike in interest rates over the past 18 months. Three of Canada’s largest lenders have disclosed that about 20 per cent of their residential mortgage borrowers – representing nearly $130-billion in loans – are seeing their balances grow as their monthly payments no longer cover all the interest they owe.

The increase in new listings could be a sign that homeowners are unable to make higher mortgage payments and are forced to sell their properties. But Mr. Cathcart said if these were forced sales, there would typically be more sales along with price drops. “Instead, prices are holding firm almost everywhere and sales are slowing,” he said.

Published: 10/12/2023 6:12 AM ET

Gold prices rose on Thursday to test the $1,900 mark as the dollar and Treasury yields continued to fall on dovish Fed commentary.

Spot gold rose 0.4 percent to $1,881.12 per ounce, while U.S. gold futures were up 0.3 percent at $1,893.60.

The dollar held close to a two-week low after Boston Fed president Susan Collins said Wednesday that rates are at or near their peak, though further tightening could be warranted depending on incoming information.

Her Atlanta counterpart Raphael Bostic said the U.S. central bank need not raise borrowing costs any further and he sees no recession ahead.

U.S. Fed Governor Christopher Waller said the Fed can watch and see if further hikes are needed.

On Wednesday, the Fed’s September meeting minutes echoed the recent message of data dependence, with around two-thirds of Fed members predicting one more rate hike before the end of 2023.

Investors now await U.S. weekly jobless claims figures and the consumer price inflation report later in the day for further direction.

According to a Bloomberg survey, U.S. CPI is forecast to have slowed to an annual rate of 3.6 percent in September from 3.7 percent the previous month.

There is some upside risk after September’s U.S. producer inflation figures came in much stronger than expected

Published: 10/11/2023 5:52 PM ET

The Canadian market ended on a strong note on Wednesday, led by gains in communications, consumer discretionary and financials sectors.

Several stocks from real estate, utilities, consumer staples and materials sectors too posted impressive gains.

The benchmark S&P/TSX Composite Index ended with a gain of 162.64 points or 0.83% at 19,663.84, gaining for a fourth straight session.

The market gained amid another drop in bond yields on hopes the tightening cycle by the Federal Reserve is nearing its end.

Spin Master Corp (TOY.TO) climbed 6%. The company said it has agreed to buy U.S.-based toy maker Melissa & Doug for $950 million in cash.

Cogeco Communications (CCA.TO) surged nearly 5%. CGI Inc (GIB.A.TO), Alimentations Couche-Tard (ATD.TO), Canadian Tire Corporation (CTC.TO), Franco-Nevada Corporation (FNV.TO) and BRP Inc (DOO.TO) gained 2 to 2.5%.

MTY Food Group Inc (MTY.TO) ended 3.7% down despite reporting higher earnings. The company reported third-quarter net income of $38.9 million or $1.59 per diluted share, compared to $22.4 million, or $0.92 per diluted share in the third quarter of the previous financial year.

Lithium Americas Corp (LAC.TO) ended nearly 8% down. Stelco Holdings (STLC.TO), Tecsys (TCS.TO), Parex Resources (PXT.TO) and Bausch + Lomb (BLCO.TO) ended lower by 3.3 to 3.9%.

On the economic front, data from Statistics Canada showed the total value of building permits in Canada rose by 3.4% from a month earlier to $11.9 billion in August 2023, rebounding from an upwardly revised 3.8% drop in the prior month

Oil prices rose about 1 per cent on Thursday, reversing earlier falls, on expectations that U.S. interest rates had peaked, but a lower demand growth forecast for next year from the International Energy Agency and higher U.S. inventories limited further gains.

Brent futures rose $1.01, or 1.20 per cent, to $86.83 a barrel at 0952 GMT, while U.S. West Texas Intermediate crude gained 73 cents, or 0.90 per cent, to $84.22 a barrel.

World shares rose and the dollar and bond market borrowing costs held steady ahead of U.S. inflation data and European Central Bank meeting minutes that will add to the hotly-contested debate on where interest rates are heading.

Lower U.S. bond yields are stoking risk appetite, which in turn is supporting equities and oil, UBS analyst Giovanni Staunovo said.

“Both the Saudi energy minister Prince Abdulaziz and Russia’s deputy prime minister Novak reiterating their ongoing collaboration to balance oil markets are helping,” he added.

Saudi Energy Minister Prince Abdulaziz bin Salman said in a Russian TV interview that it was necessary to be “pro-active” on bringing stability to the oil market, which had recently been hit by concerns that the Israel-Hamas war could disrupt supplies from the Middle East.

Russian Deputy Prime Minister Alexander Novak also reassured markets, saying the current oil price factored in the Middle East conflict and showed that the risk from it was not high.

Meanwhile, the IEA lowered its oil demand growth forecast for 2024, suggesting harsher global economic conditions and progress on energy efficiency will weigh on consumption.

The agency now sees 2024 demand growth at 880,000 barrels per day (bpd), compared with its previous forecast of 1 million bpd.

However, it raised its 2023 demand forecast to 2.3 million bpd from a forecast of 2.2 million.

U.S. data which showed a big build in crude and gasoline inventories tempered the rally.

U.S. crude oil stockpiles swelled by about 12.9 million barrels, according to market sources citing American Petroleum Institute figures on Wednesday.

This was much higher than the 500,000-barrel gain expected by analysts in a Reuters poll.

Gasoline inventories also rose by 3.6 million barrels, the data showed, a stark contrast from the 800,000-barrel drop expected by analysts and continued to stoke worries of slowing fuel demand in the U.S.

Markets will be awaiting further inventory data cues from the U.S. Energy Information Administration (EIA) due later in the day at 1500 GMT.

Exxon Mobil Corp.’s XOM-N -3.59%decrease acquisition of Pioneer Natural Resources PXD-N +1.44%increase in a US$59.5-billion megadeal is being seen by some as a major vote of confidence in fossil fuels that also bodes well for the Canadian oil patch.

The U.S. multinational oil giant announced the all-stock deal Wednesday, its largest buyout since acquiring Mobil two decades ago and a move that will create a colossal hydraulic fracturing (fracking) operator in West Texas.

Observers have framed the deal as Exxon doubling down on fossil fuels at a time when the world is seeking to transition to lower-carbon energy sources in order to slow the pace of climate change.

Dan Tsubouchi, Calgary-based principal and chief market strategist with SAF Group, said in an interview that Exxon is clearly confident that global demand for oil will remain strong in at least the immediate future.

“They’re spending US$60-billion today,” Tsubouchi said. “They wouldn’t do that if they didn’t see at least a 10-to-15-year window for oil.”

That “stronger for longer” outlook is due to a variety of factors, Tsubouchi said, including the fact that many of the technologies necessary for the energy transition – including hydrogen development, sustainable aviation fuel and more – have been slower to roll out than advocates may have hoped.

That combined with the war in Ukraine has led to global energy security concerns, spiking prices and leaving oil and gas companies flush with cash.

Exxon itself posted unprecedented profits last year of US$55.7-billion, breezing past its previous record of US$45.22-billion in 2008 when oil prices hit record highs.

“Demand for oil is not going away as quickly as people assumed,” Tsubouchi said, adding that in the wake of the Exxon-Pioneer merger, he wouldn’t be surprised to see an uptick in merger and acquisition activity north of the border.

In particular, he said such deal-making might occur in the Montney region of northeast B.C. and northwest Alberta, where horizontal fracking technology similar to what Exxon will be using in the Permian opens up opportunities for companies to increase production in a relatively cost-efficient manner.

Tsubouchi said oil sands bulls could also be looking to increase production in the coming years, though he said that will likely be accomplished through incremental add-ons to existing facilities – not through the whole-scale construction of a new oil sands mine.

“These companies aren’t going to go into something like the megaprojects of the past,” he said.

“But they will look at short-cycle projects where they can take advantage of a 10-15 year window, just like Exxon has.”

Canadian oil and gas executives have been vocal recently about they what they see as an increasingly rosy outlook for fossil fuels.

Last week, Enbridge CEO Greg Ebel spoke to the Toronto Region Board of Trade about why he thinks a Canadian liquefied natural gas (LNG) industry could be part of the solution for the global energy crisis.

And Suncor Energy Inc.’s SU-T -0.39%decrease chief executive Rich Kruger told analysts on a conference call earlier this year that while lower emissions energy is important, the way for Suncor to win in today’s business environment is to focus on its core oil sands assets.

“Outwardly, the oil bulls are growing,” said Duncan Kenyon of Investors for Paris Compliance, which takes financial positions in Canadian companies in an effort to hold them accountable to their net-zero emissions promises.

“It’s obviously great times for them right now and there are short-term gains to be had.”

But Kenyon said the very fact that companies are favouring short-cycle, disciplined growth over big-spend, long-cycle projects shows there is still a lot of uncertainty in the industry about the pace and scale of the coming energy transition and how the oil industry will be affected.

“I think the industry and investors in this sector are really struggling to understand what’s happening and how to prepare for these emerging risks,” he said.

“And these are emerging risks that have the potential to flip-flop the energy system on its head, and fossil fuels end up on the bottom.”

With files from The Associated Press.

U.S. and Canadian major stock indexes closed higher after a choppy session Wednesday, with the release of minutes from the U.S. Federal Reserve’s last meeting showing caution among policy makers that helped fuel investor hopes that rates would stay steady.

The Fed pointed to uncertainties around the economy, oil prices and financial markets as supporting “the case for proceeding carefully in determining the extent of additional policy firming that may be appropriate,” according to the minutes released on Wednesday from the Sept. 19-20 meeting.

Trading was choppy with indexes starting off the session with gains before turning lower ahead of the minutes and then regaining lost ground.

Along with recent moves in interest rates and dovish comments from Fed officials in the last few days, Angelo Kourkafas, senior investment strategist at Edward Jones, said the minutes appeared encouraging for investors.

“Today’s release highlights the risk of over-tightening, and knowing what has happened over the past three weeks with interest rates, that provides some comfort to investors that we’re not going to see another rate hike,” said Kourkafas.

But he noted that the Fed’s next decisions will take into account the U.S. consumer price reading for September, due out on Thursday as the Fed’s “data dependence hasn’t gone away.”

Earlier on Wednesday, data showed that U.S. producer prices increased more than expected in September amid higher costs for energy products, but underlying inflation pressures at the factory gate continued to moderate.

Earlier, Fed Governor Michelle Bowman repeated her view that the U.S. central bank will probably need to tighten monetary policy further, while Fed Governor Christopher Waller said the central bank is in a position to watch and see what happens with interest rates.

Yields on benchmark 10-year notes fell to roughly two-week lows as investors flocked to safe haven bets as the war in the Middle East raged after a deadly weekend attack by Hamas on Israel killed hundreds.

Israel continued to pound Gaza with retaliatory air strikes, killing hundreds of Palestinians, including women and children. Israel formed an emergency unity government on Wednesday and its army said it killed three Hamas militants.

The S&P/TSX composite index ended up 162.64 points, or 0.8%, at 19,663.84, its highest closing level since Sept. 25. It was the fifth session in a row the Canadian benchmark closed higher. Both U.S. and Canadian bond yields eased for the most part, which supported dividend-heavy sectors. Financials rose 1.2% and Telecoms 1.8%. Real estate gained 1.4% and utilities ended 1.8% higher.

Shares of Rubik’s Cube-owner Spin Master rose nearly 6% after the company said it will buy U.S.-based toy-maker Melissa & Doug for $950 million in cash.

The materials group added 0.8% but energy was a laggard. It fell 0.1% as U.S. crude oil futures settled 2.9% lower at $83.49 a barrel after top OPEC producer Saudi Arabia pledged to help stabilize the market.

“Rates are in the driver’s seat,” said Angelo Kourkafas, senior investment strategist at Edward Jones. “We have seen rates pull back for three straight days and that has helped stocks.”

In New York, the Dow Jones industrial average was up 65.57 points at 33,804.87. The S&P 500 index was up 18.71 points at 4,376.95, while the Nasdaq composite was up 96.83 points at 13,659.68.

The U.S. energy index was dragged down during the session due to a slump in Exxon Mobil shares after the oil and gas producer agreed to buy rival Pioneer Natural Resources in an all-stock deal valued at $59.5 billion. Exxon closed down 3.5%.

Reuters, Globe staff

Militants infiltrated areas of southern Israel as rocket barrages launched from the Gaza Strip struck the region on Saturday in an attack the Islamist movement Hamas is taking responsibility for.

A senior Hamas military commander, Mohammad Deif, announced the start of the operation in which he called on Palestinians everywhere to attack the Israelis.

“This is the day of the greatest battle to end the last occupation on earth,” he said in a broadcast on Hamas media, saying that 5,000 rockets had been launched.

In a video message early Saturday morning, Israel Prime Minister Benjamin Netanyahu said, “Citizens of Israel, we are at war — not in an operation, not in rounds — at war.”

Rocket barrages strike southern Israel in operation claimed by Hamas, Netanyahu says Israel is ‘at war’ | Fox News

Canada’s economy more than tripled expectations by adding 63,800 jobs in September and wages continued to soar, data showed on Friday, upping the chances for another rate hike.

The jobless rate stayed at 5.5 per cent for a third consecutive month, Statistics Canada said. Analysts polled by Reuters had forecast a net gain of 20,000 jobs and for the unemployment rate to edge up to 5.6 per cent from 5.5 per cent in August.

The average hourly wage for permanent employees rose 5.3 per cent from September 2022, up from the 5.2 per cent annual rise in August.

“That employment report today really blew away market expectations. Wage growth is also beating market expectations,” said Michael Greenberg, a portfolio manager for Franklin Templeton Investment Solutions.

“Despite the aggressive rate hikes by the Bank of Canada, clearly demand remains strong and companies continue to hire. This suggests we could well see another rate hike in November or December,” Greenberg said.

The central bank, which has hiked rates 10 times in the past 18 months, has stressed that it will be hard to fully curb inflation if wages maintain their current patterns of rising between 4 per cent and 5 per cent annually.

The monthly, seasonally adjusted and annualized gain for average hourly wages on permanent employees was 8.3 per cent in September, said Derek Holt, vice president of capital markets economics at Scotiabank.

“Wages are just going off the charts,” Holt said. “With wage numbers like this and the fact that we haven’t had a soft patch on core inflation measures in Canada like they’ve had in the U.S., I would think we’re still in hike mode in October.”

Money markets increased bets for a rate increase later this month after the jobs figures were published. They now see about a 38 per cent chance for a hike later this month compared to a 28 per cent chance before the data.

The Canadian dollar edged 0.1 per cent lower to 1.3718 per greenback, or 72.90 U.S. cents, as U.S. job growth also beat expectations.

The Canadian 10-year yield was up 12 basis points at 4.255 per cent, trading near a 16-year high.

Canada’s labour market, supported by strong immigration, has been resilient even as the Bank of Canada raised its key overnight rate to a 22-year high of 5 per cent to cool the economy.

“The upward trend in employment continues to occur in the context of the highest rate of population growth since 1957,” Statscan said, noting that the population aged 15 and older increased by 82,000 in September.

The Bank of Canada make its next policy announcement and updates its economic forecasts on Oct. 25.

With September’s robust gains, the economy is averaging 30,000 monthly employment growth this year, up from 25,000 a month earlier.

Part-time employment growth, which has been outpacing a rise in full-time work this year, drove the gains in August with a net 48,000 positions added in the month, Statscan said.

Employment in the services sector increased by a net 74,300 jobs, mostly in educational services, and more than offset 10,500 positions lost in the goods sector.

• ADP reported that private job growth totaled just 89,000 for the month, down from an upwardly revised 180,000 in August and below the 160,000 estimate from Dow Jones.
• Job gains came almost exclusively from services, which contributed 81,000 to the total.
• The report comes a day after the Labor Department said job openings unexpectedly rose sharply in August.

ADP Jobs report: Private payrolls rose 89,000 in September, far below expectations (cnbc.com)