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Shares of TC Energy TRP-T -5.12%decrease fell nearly 5 per cent on Friday after the Keystone pipeline operator said it would spin off its liquids business to focus on transporting natural gas.

The spinoff, combined with TC’s announcement on Monday that it will sell a 40 per cent stake in its Columbia Gas Transmission and Columbia Gulf Transmission pipelines, will help TC reduce its high debt levels.

But TD Securities downgraded TC to “hold” from “buy,” saying it was skeptical the spinoff would create value.

“We see execution risk introducing uncertainty and potentially distracting (TC) from its existing strategic priorities,” TD analyst Linda Ezergailis said in a note.

Shares in Toronto plunged 4.4 per cent to C$45.21, touching a seven-year low.

“There’s blood in the water, the stock has already been going down on the back of the Columbia transaction, so I think there’s some (selling) piling on,” said Ryan Bushell, president of Newhaven Asset Management, a TC shareholder.

Bushell said TC’s new focus after the spinoff on natural gas and power is attractive to him, however, given the expansion of liquefied natural gas export capacity in the United States and increasing electrification.

Once the liquids business has spun off by late 2024, subject to a shareholder vote, it will raise C$8-billion in debt to repay debt at TC.

TC CEO Francois Poirier said TC needed to sell another C$3-billion in assets during the next 18 months to reach its 4.75 times debt to EBITDA target. TC had 5.4 times debt to EBITDA last year and is aiming to reduce that to 5 times this year.

The TC share sell-off reflects a re-rating after the company made the Columbia deal at a lower price than some expected, and now plans a spinoff carrying more debt compared to EBITDA than some U.S. peers, said Brandon Thimer, equity analyst at First Avenue Investment Counsel, a TC shareholder.

Poirier said the breakup into two listed companies allows them to pursue more opportunities for growth that exceed the ability of one company to do.

“It’s been a busy week but an extremely transformative one,” Poirier said.

National Bank of Canada upgraded its rating of TC to “outperform” from “sector perform.”

TC’s Keystone pipeline in December spilled more than 14,000 barrels of oil in Kansas. The liquids business spans over 3,000 miles of infrastructure, which transports Canadian crude to U.S. refineries.

Morningstar analyst Stephen Ellis said that the 2021 cancellation of TC’s proposed Keystone expansion, following U.S. President Joe Biden revoking a key permit, may have played a role in the company deciding to spin off its oil business.

The European Central Bank raised interest rates for the ninth consecutive time on Thursday and kept the door open to further tightening as stubborn inflation and a growing risk of a recession pull policy-makers in opposing directions.

Fighting off a historic surge in prices, the ECB has now lifted borrowing costs by a combined 425 basis points since last July, worried that excessive price growth could be perpetuated via wage rises as the jobs market remains exceptionally tight.

With Thursday’s 25 basis point move, the ECB’s deposit rate stands at 3.75 per cent, its highest level since a similar level set in 2000, before euro banknotes and coins had even been put into circulation. The main refinancing rate was set at 4.25 per cent.

“Future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2 per cent medium-term target,” the ECB said in a statement.

But the ECB’s statement dropped a reference to rates having to be “brought” to a level that cuts inflation quickly enough, a nuanced change that could be seen as a signal that further increases are not a given.

This will leave investors guessing whether another rate hike is coming or if July marks the end of the ECB’s fastest-ever tightening spree.

It is nevertheless increasingly clear that an end to rate increases is fast approaching, with policy-makers debating whether one more small move is needed before rates are kept steady for what some of them think will be a long time.

“The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction,” the ECB added.

The ECB’s problem is that inflation is coming down too slowly and could take until 2025 to fall back to 2 per cent, as a price surge initially driven by energy has seeped into the broader economy via large markups and is fuelling the cost of services.

While overall inflation is now just half its October peak, harder-to-break underlying price growth is hovering near historic highs and may have even accelerated this month.

The labour market is also exceptionally tight, with record-low unemployment raising the risk that wages will rise quickly in the years ahead as unions use their increased bargaining power to recoup real incomes lost to inflation.

That is why many investors and analysts are looking for the ECB to pull the trigger again in September and stop only if autumn wage data delivers relief.

But the mood is clearly changing as the economy of the 20-country euro zone slows. While markets had fully priced in another rate hike just a few weeks ago, a growing number of investors are betting that Thursday’s move will be the last.

More tightening would however be consistent with comments from a host of policy-makers, including ECB board member Isabel Schnabel, that raising rates too far would still be less costly than not lifting them high enough.

On Wednesday, the U.S. Federal Reserve raised borrowing costs and kept the door open to further tightening, though Fed Chair Jerome Powell gave few hints about September, a stance the ECB is likely to copy.

But rapidly fading economic prospects should temper any hawkishness and ECB President Christine Lagarde is likely to take a cautious tone in her 1245 GMT news conference after a string of data in recent days suggesting that higher rates are already weighing on growth.

Indicators of business, investor and consumer sentiment and bank lending surveys point to a continued deterioration after the euro zone skirted a recession last winter.

And with manufacturing in a deep recession and a previously resilient services sector showing signs of softening despite what is likely to be a superb summer holiday season, it is hard to see where any rebound would come from.

Such weakness, exacerbated by a loss of purchasing power after inflation eroded real incomes, could push down price pressures faster than some expect, leaving less work for the central bank to do.

This is a key reason why the balance of expectations has started to shift away from another rate hike, with economists increasingly focusing on how long rates will stay high.

The U.S. economy grew faster than expected in the second quarter as labour market resilience underpinned consumer spending, while businesses boosted investment in equipment, potentially keeping a much-feared recession at bay.

Gross domestic product increased at a 2.4 per cent annualized rate last quarter, the Commerce Department in its advance estimate of second-quarter GDP on Thursday. The economy grew at a 2.0 per cent pace in the January-March quarter. Economists polled by Reuters had forecast GDP rising at a 1.8 per cent rate.

Outside the housing market and manufacturing, the economy has largely weathered the 525 basis points in interest rate hikes from the Federal Reserve since March 2022 as the U.S. central bank battled inflation.

Economists have since late 2022 been forecasting a downturn, but with price pressures retreating, some now believe that the soft-landing scenario for the economy envisaged by the Fed is feasible. The central bank on Wednesday raised its policy rate by 25 basis points to a 5.25 per cent-5.50 per cent range.

The economy is being anchored by the labour market, whose continued tightness was underscored by a separate report from the Labor Department on Thursday showing initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 221,000 for the week ended July 22.

Companies are hoarding workers after struggling to find labour during the COVID-19 pandemic. Employment in the leisure and hospitality sector remains below pre-pandemic levels.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, dropped 59,000 to 1.690 million during the week ending July 15. Despite high profile layoffs in technology and finance sectors in 2022 and early this year, the so-called continuing claims remain low by historical standards.

This suggests that some laid off workers are quickly finding employment. The continuing claims data covered the week that the government surveyed households for July’s unemployment rate. Continuing claims fell between the June and July survey periods.

At 3.6 per cent in June, the jobless rate was not too far from multi-decade lows.

But some economists remain convinced that a recession is on the horizon, arguing that higher borrowing costs will eventually make it harder for consumers to fund their spending with debt.

They also noted that banks were tightening credit and excess savings accumulated during the pandemic continued to be run down. Slowing job growth was seen curbing wage gains.

Canadian miner Teck Resources Ltd TECK-B-T -3.22%decrease missed profit estimates for second-quarter profit on Thursday and lowered its annual copper production outlook due to delays at a project in Chile.

The Quebrada Blanca Phase 2 project (QB2) in the South American country is one of the largest undeveloped copper resources in the world, and Teck had previously said it expected to achieve full production rates by the end of 2023.

Teck, the target of a takeover bid by Swiss commodity giant Glencore, also reported the death of an employee at QB2 during the second-quarter.

The company said it now expects annual copper production of 330,000 tonnes to 375,000 tonnes, down from its previous estimate of 390,000 tonnes to 445,000 tonnes.

For the reported quarter, realized prices for steelmaking coal and copper fell 41 per cent and 11 per cent respectively, denting profit.

Fears of slowing growth, particularly in top consumer China, has hurt copper prices. The average copper price fell about 11 per cent to $3.85 per pound in the April-June quarter, according to CFRA Research.

Quarterly copper production fell about 11 per cent to 64,000 tonnes, while production of steelmaking coal rose 9.4 per cent to 5.8 million tonnes.

Glencore in June offered to buy Teck’s steelmaking coal business as a stand-alone unit, after the Canadian miner twice rebuffed its $22.5-billion offer to combine the two.

Teck’s coal mines are among the few left in the world, which makes the company attractive to Glencore as it seeks to combine them with its own thermal coal business.

Teck said last month that it had received several proposals for its coal business.

On an adjusted basis, Vancouver-based Teck posted a profit of C$1.22 per share for the three months ended June 30, missing analysts’ average estimate of C$1.25 per share, according to Refinitiv IBES data.

The U.S. Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday, citing still elevated inflation as a rationale for what is now the highest U.S. central bank policy rate since 2007.

The hike, the Fed’s 11th in its last 12 meetings, set the benchmark overnight interest rate in the 5.25%-5.50% range, a level last seen just prior to the 2007 housing market crash and which has not been consistently exceeded on an effective basis for about 22 years.

“The (Federal Open Market) Committee will continue to assess additional information and its implications for monetary policy,” the Fed said in language that was little changed from its June statement and left the central bank’s policy options open as it searches for a stopping point to the current tightening cycle.

As it stated in June, the Fed said it would watch incoming data and study the impact of its rate hikes on the economy “in determining the extent of additional policy firming that may be appropriate” to reach its 2% inflation target.

Though inflation data since the Fed’s June 13-14 meeting has been weaker than expected, policy-makers have been reluctant to alter their hawkish stance until there is more progress in reducing price pressures.

Fed Chair Jerome Powell said any future policy decisions would be made on a meeting-by-meeting basis and that in the current environment, officials can only provide limited guidance about what’s next for monetary policy.

But he didn’t rule out action if it was deemed necessary.

“It is certainly possible that we would raise the (federal) funds rate again at the September meeting if the data warranted, and I would also say it’s possible that we would choose to hold steady at that meeting” if that was the right policy call, Powell said in a press conference after the release of the policy statement.

But Powell cautioned against expecting any near-term easing in rates. “We’ll be comfortable cutting rates when we’re comfortable cutting rates and that won’t be this year,” Powell said.

Yields on both the two- and 10-year Treasury notes moved down modestly from levels right before the release of the Fed’s policy statement, while U.S. stocks ended mixed. Futures markets showed bets on the path of Fed rate increases over the remainder of the year were little changed, seeing small odds of a rise in September.

“The forward guidance remains unchanged as the committee leaves the door open to further rate hikes if inflation does not continue to trend lower,” said Kathy Bostjancic, chief economist at Nationwide. “Our view is the Fed is likely done with rate hikes for this cycle since continued easing of inflation will passively lead to tighter policy as the Fed holds the nominal fed funds rate steady into 2024.”

‘Moderate growth’

Key measures of inflation remain more than double the Fed’s target, and the economy by many measures, including a low 3.6% unemployment rate, continues to outperform expectations given the rapid increase in interest rates.

Job gains remain “robust,” the Fed said, while it described the economy as growing at a “moderate” pace, a slight upgrade from the “modest” pace seen as of the June meeting. The U.S. government on Thursday is expected to report the economy grew at a 1.8% annual pace in the second quarter, according to economists polled by Reuters.

Powell said he’s still holding out hope the economy can achieve a ‘soft landing,’ a scenario in which inflation falls, unemployment remains relatively low and a recession is avoided.

“My base case is we’ll be able to achieve inflation moving back down to our target without the kind of really significant downturn that results in high levels of job losses,” he said, while noting that outlook is “a long way from assured.” He also noted that Fed staff economists are no longer predicting a recession as they have at recent meetings.

With about eight weeks until the next Fed meeting, a longer-than-usual interlude, continued moderation in the pace of price increases could make this the last rate hike in a process that began with a cautious quarter-percentage-point increase in March of 2022 before accelerating into the most rapid monetary tightening since the 1980s.

In the most recent economic projections from Fed policy-makers, 12 of 18 officials expected at least one more quarter-percentage-point increase would be needed by the end of this year.

https://www.newswire.ca/news-releases/agnico-eagle-reports-second-quarter-2023-results-record-quarterly-gold-production-and-solid-cost-performance-drive-strong-quarterly-earnings-and-operating-cash-flow-well-positioned-to-achieve-annual-production-and-cost-guidance-831444798.html

https://www.newswire.ca/news-releases/toromont-announces-results-for-the-second-quarter-of-2023-and-quarterly-dividend-830934841.html

Loblaw Companies Ltd. reported a profit available to common shareholders of $508 million for its second quarter, an increase of 31.3 per cent from the same period last year.

The parent company of Loblaws and Shoppers Drug Mart reported its profit amounted to $1.58 per diluted share for the quarter ended June 17, an increase from $1.16 per diluted share in the same quarter last year.

Revenue for the 12-week period totalled $13.7 billion, up from $12.8 billion a year earlier.

Food retail same-stores sales were up 6.1 per cent, while drug retail same-store sales increased by 5.7 per cent.

The company says food retail sales growth was driven by a continued consumer shift to discount stores.

On adjusted basis, Loblaw says it earned $1.94 per diluted share in its latest quarter, up from an adjusted profit of $1.69 per diluted share a year ago.

This report by The Canadian Press was first published July 26, 2023.

MONTREAL (AP) — MONTREAL (AP) — CGI Group Inc. (GIB) on Wednesday reported fiscal third-quarter net income of $309 million.

On a per-share basis, the Montreal-based company said it had net income of $1.30. Earnings, adjusted for non-recurring costs, came to $1.34 per share.

The results topped Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of $1.32 per share.

The information technology and business process services company posted revenue of $2.7 billion in the period, also exceeding Street forecasts. Three analysts surveyed by Zacks expected $2.69 billion.

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This story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on GIB at https://www.zacks.com/ap/GIB