Wall Street futures saw early gains fade Monday morning after regulators stepped in to avoid a possible banking crisis after the collapse of Silicon Valley Bank. European markets were weaker. TSX futures also turned negative.
In the early premarket period, Dow, S&P and Nasdaq futures had initially been higher but quickly slid after posting losses last week. TSX futures had also suggested a bounce at the opening bell only but lost altitude as the start to the trading day neared. Canada’s key stock index posted losses of more than 3 per cent last week.
Early Monday, all eyes were on the banking sector after the failure of the Santa Clara, California-based bank triggered contagion concerns. Early Monday, shares of U.S. regional bank First Republic were down more than 60 pre cent in premarket trading while shares of PacWest Bankcorp slumped more than 20 per cent.
“SVB’s flash crash raised questions that other similar local banks in the U.S. could also experience liquidity issues and may not be able to pay their depositors back, unless they also start selling their probably loss-making portfolios,” Swissquote senior analyst Ipek Ozkardeskaya said in a note.
“The contagion risk remains for small banks with highly rate-sensitive clients, but the U.S. authorities now step in to avoid contagion. They said that SVB depositors could access their money today,” she said.
However, she also noted that concern about the situation could convince the Federal Reserve to change its course on rate hikes. She said it’s now possible the U.S. central bank could pullback on an expected 50-basis-point increase this month or forgo an increase altogether.
Over the weekend, the Federal Reserve, Treasury and Federal Deposit Insurance Corp. announced in a joint statement that “depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.” The agencies also said that they would enact a similar program for Signature Bank, which the government disclosed was closed Sunday by its state chartering authority, according to Reuters.
In this country, Canada’s banking regulator took control of Silicon Valley Bank’s domestic operations on Sunday, as governments, along with tech sector CEOs, spent the weekend scrambling to limit the impact of a leading global technology financer’s sudden collapse, The Globe reports this morning.
In Britain, meanwhile, HSBC said on Monday it is acquiring the U.K’ subsidiary of Silicon Valley Bank for 1 pound. “This acquisition makes excellent strategic sense for our business in the UK,” HSBC CEO Noel Quinn said in a statement.
Elsewhere, Canadian investors will got household-debt-to-income figures from Statistics Canada.
The agency said, on a seasonally adjusted basis, the household credit market debt as a proportion of household disposable income improved to 180.5 per cent in the fourth quarter from 184.3 per cent in the third quarter, and was down from 184.5 per cent at the end of 2021. In other words, there was $1.81 in credit market debt for every dollar of household disposable income in the fourth quarter of 2022, Statscan said.
Overseas, the pan-European STOXX 600 was down 1.2 per cent in morning trading with bank stocks under pressure. Britain’s FTSE 100 slid 1.06 per cent. Germany’s DAX and France’s CAC 40 were off 1.15 per cent and 1.26 per cent, respectively.
In Asia, Japan’s Nikkei ended down 1.11 per cent. Hong Kong’s Hang Seng rose 1.95 per cent on gains in technology stocks.
Commodities
Crude prices fell in early trading, underpinned by optimism over China’s recover and a softer U.S. dollar but offset by continued worries about the road ahead for U.S. interest rates.
The day range on Brent was US$82.25 to US$83.48 in the early premarket period. The range on West Texas Intermediate was US$76.14 to US$77.47.
“It’s like the battle of surging activity data in the East meets macro malaise in the West”, Stephen Innes, managing partner of SPI Asset Management, said.
“From an oil trader’s perspective, the U.S. dollar should pull back as traders give up on a re-acceleration of Fed hikes; this, in turn, clears a path for more robust Chinese fundamentals to dominate commodity trading,” Mr. Innes said.
Reuters reported that comments over the weekend from Saudi Aramco CEO Amin Nasser on crude demand from China also offered some support.
“If you considered China opening up and a pick up in jet fuels and very limited spare capacity, we are talking 2 million barrels, so as I said we are cautiously optimistic in the short to midterm and the market will remain tightly balanced,” he said.
In other commodities, gold prices rose as investors sought out safe-haven assets amid concern over the collapse of Silicon Valley Bank.
Spot gold was up 0.6 per cent at US$1,878.54 per ounce by early Monday morning. Earlier in the session, bullion hit its highest since Feb. 3 at US$1,893.96.
U.S. gold futures gained 0.9 per cent to US$1,884.30.
Currencies
The Canadian dollar was up early Monday morning as its U.S. counterpart fell against a group of world currencies on speculation the collapse of Silicon Valley Bank could move the Fed to pause rate hikes.
The day range on the loonie was 72.15 US cents to 72.93 US cents in the predawn period.
“The CAD is trading a little firmer against a generally soft USD but it has edged off earlier highs,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“Canada’s jobs report Friday may not move the needle for the BoC at the moment but the strong report—in pretty much all aspects—does tilt risks towards the BoC having to return to tightening down the road.”
The U.S. dollar index, which measures the U.S. currency against six rivals, fell 0.55 per cent to near one-month lows of 103.67 after Goldman Sachs said it no longer expects the Fed to deliver a rate hike at its March 22 meeting, Reuters reports. The index was last at 103.85.
The euro was up 0.72 per cent at US$1.072, hovering near the one-month high of US$1.0737. Sterling was last trading at US$1.2114, up 0.71 per cent.
In bonds, the yield on the U.S. 10-year note was down at 3.602 per cent.
More company news
Pfizer will spend US$43-billion to buy Seagen and deepen its reach into treating cancer. The pharmaceutical giant said Monday that it will pay US$229 per Seagen share. “Together, Pfizer and Seagen seek to accelerate the next generation of cancer breakthroughs and bring new solutions to patients by combining the power of Seagen’s antibody-drug conjugate (ADC) technology with the scale and strength of Pfizer’s capabilities and expertise,” Pfizer Chairman and CEO Dr. Albert Bourla said in a statement.
Economic news
(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q4.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
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