Business

What every Canadian investor needs to know today

Published

4 years ago

January 5, 2021

U.S. and Canadian stock futures are modestly lower this morning, as unease among investors continues after the S&P 500 posted its worst daily performance on Monday since Oct. 27.

While surging gold stocks kept the TSX in positive territory on Monday, the S&P 500 lost 1.5% and the Dow shed 382 points after being down 700 points at one point during the day.

The soft tone in markets today is very much tied to the concerns circulating on Monday: stretched valuations at a time COVID-19 continues to explode in many parts of the developed world, leading to more extensive lockdowns that are stalling economies. Politics is also a key issue, as investors looked to twin Senate runoff elections in Georgia that would determine the balance of power in Washington.

A Democratic victory in both races could tip control of the Senate away from Republicans, potentially boosting the agenda of President-elect Joe Biden.

While a “blue sweep” of Congress could usher in greater fiscal stimulus to aid the coronavirus-ravaged economy, it could also pave the way for Biden to push through greater corporate regulation and higher taxes, hurting some areas of the market.

Latest polls from data website 538 gave a slight edge to both Democratic candidates in their respective races.

The Cboe Volatility Index eased after closing at its highest level in two months in the prior session as investors braced for a “Blue Sweep.”

While the start of vaccine rollouts and massive monetary support powered the major U.S. stock indexes to record levels, the discovery of a more contagious strain of the coronavirus and the latest virus-related curbs have muddied the economic outlook.

A reading of ISM’s manufacturing sector PMI is expected to drift lower for a second straight month in December. The Federal Reserve’s minutes from its latest policy meeting as well as monthly employment report are also on tap this week.

Stock futures for the major U.S. and Canadian indexes are in the -0.10% to -0.20% range. European stocks are similarly under pressure, with the Stoxx 600 index off about half a percentage point.

In overseas action, MSCI’s broadest index of Asia-Pacific shares outside Japan pulled back from a record high. Australian stocks fell 0.3%. Chinese shares ended higher.

In Hong Kong, China Mobile, China Unicom, and China Telecom rallied by more than 6% after the New York Stock Exchange suddenly abandoned plans to de-list the companies’ shares following a U.S. executive order.

Japanese shares lost 0.3% after the government said it would reach a decision on a state of emergency for Tokyo and surrounding cities on Thursday to curb record coronavirus infections.

Equities

Commodities

Oil prices rose by around $1 on Tuesday as tension simmered following Iran’s seizure of a South Korean vessel and as the OPEC+ group studied a possible production cut in February.

Brent crude futures for March rose 96 cents to $52.05 a barrel by 1206 GMT, while U.S. West Texas Intermediate crude for February was at $48.53 a barrel, up 91 cents.

Both contracts fell more than 1% on Monday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, failed to agree on changes to February’s oil output.

Saudi Arabia argued against pumping more because of new lockdowns that are likely to limit demand, while Russia led calls for higher production, citing recovering consumption.

An OPEC document dated Jan. 4, showed the group was studying a 500,000 barrel per day (bpd) cut for February, and other scenarios that include stable production or an increase of 500,000 bpd.

Tensions around OPEC member Iran’s seizure of a South Korean vessel continued, as Iran said the Asian country owed it $7 billion.

More bearishly, given the implications for fuel demand, England began a new lockdown on Monday as its coronavirus cases surged.

Gold prices hit a two-month high on Tuesday, lifted by a lackluster dollar as investors awaited the U.S. Senate runoffs in Georgia that will determine which party controls Congress and prospects of additional fiscal stimulus.

Spot gold was up 0.1% to $1,944.91 per ounce by 1013 GMT, after hitting its highest since Nov. 9 at $1,947.96. U.S. gold futures edged 0.2% up to $1,950.10.

Currencies and bonds

The Canadian dollar is a little firmer this morning, finding support from the stronger crude prices.

“The broader U.S. dollar tone and risk appetite remain key drivers for the Canadian dollar at present but we do feel that the CAD’s recent gains are largely justified by background fundamentals,” said forex strategists at Scotiabank in a note. “We remain sensitive to seasonal trends which often see the CAD soften against a mostly stronger USD early in the new calendar year, however. With spot opening up more or less mid-way between yesterday’s range extremes, spot may continue to drift in the short run until levels are more attractive for USD buyers or sellers.”

Other corporate news

Canadian miner Agnico Eagle Mines said on Tuesday it would buy TMAC Resources increase for about $286.6 million, two weeks after Canada rejected Shandong Gold Mining’s bid for the indebted company. Toronto-based Agnico Eagle said it will pay $2.2 per share for TMAC, which has a gold mine in Canada’s far north, higher than the $1.75 per share Shandong Gold was to pay for the company. Shandong Gold’s $230 million bid for TMAC was blocked by the Canadian authorities on concerns about a Chinese state-owned entity operating in the country’s sensitive Arctic region.

Suncor Energy Inc. says it will take a $425-million impairment charge related to its stake in the White Rose offshore oilfield and West White Rose expansion project. While White Rose is currently producing, the $2.2-billion West White Rose Project was intended to access 200 million barrels of crude oil and extend the life of the White Rose field by about 14 years. However, Suncor says the recent acquisition of Husky Energy, the project’s operator, by Cenovus Energy Inc. has cast doubt on the future of the West White Rose project which has been under review since September.

Chipmaker Micron Technology Inc rose 4% after Citigroup raised its rating on the stock to “buy” from “neutral.”

Economic news

(10 a.m. ET) U.S. ISM Manufacturing PMI.

With files from Reuters

Source: – The Globe and Mail

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Business

Japan’s SoftBank returns to profit after gains at Vision Fund and other investments

Published

23 hours ago

November 12, 2024

Anne Joseph

TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.

Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.

Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).

SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.

The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.

WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.

SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.

SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.

SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.

The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.

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Yuri Kageyama is on X:

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Business

Trump campaign promises unlikely to harm entrepreneurship: Shopify CFO

Published

24 hours ago

November 12, 2024

Anne Joseph

Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.

“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.

“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”

Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.

On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.

If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.

These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.

If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.

However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.

He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.

“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.

Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.

The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.

Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.

Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.

Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.

Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.

Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”

In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.

“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:SHOP)

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Business

RioCan cuts nearly 10 per cent staff in efficiency push as condo market slows

Published

24 hours ago

November 12, 2024

Anne Joseph

TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.

The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.

The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.

RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.

The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.

RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:REI.UN)

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