Canada’s main stock index fell on Monday, dragged down by material-linked companies tracking lower metal prices, while investors scaled back hopes of an early rate cut by the Federal Reserve following Chair Jerome Powell’s recent comments.
At 11:10 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 221.35 points, or 1.05%, at 20,863.74
Materials stocks led declines, falling 1.9% after gold prices dropped to over-a-week low on a higher dollar and bond yields, while Chinese demand concerns weighed on copper prices.
Utilities stocks fell 1.8%. The sector was pulled down by Innergex Renewable Energy that slipped 5.2%.
In an interview on Sunday, Fed Chairman Jerome Powell said that the U.S. central bank can be “prudent” in weighing rate cuts, with a strong economy allowing central bankers time to build confidence inflation will continue falling.
“I don’t think there was too much of a surprise. March rate cut is pretty much off the table and people should reset,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.
“There are expectations of a rate cut, mid-year at the earliest unless the economy in the U.S. and, for that matter, the economy in Canada really starts to falter,” Small said.
Investors will also look forward to key domestic employment data due on Friday to gauge the timing of the Bank of Canada’s rate cuts.
Separately, Canadian service sector activity slowed for an eighth straight month in January as new business ebbed and cost pressures intensified, but the pace of decline eased from December, S&P Global Canada services PMI data showed on Monday.
Amongst individual stocks, Brookfield Asset Management lost 1% after the company said it had raised $10 billion in the first closing of its second “Brookfield Global Transition Fund (BGTF II).”
Wall Street’s main indexes fell on Monday, as Treasury yields rose after Fed Chair Jerome Powell pushed back firmly against market speculations of imminent rate cuts, while investors assessed earnings from corporate America.
In an interview aired on Sunday, Powell said more evidence on a sustainable downtrend in inflation was needed to warrant lower rates, while Minneapolis Fed President Neel Kashkari wrote in an essay published on Monday that a resilient economy could defer rate cuts for some time.
Fresh data from the Institute for Supply Management showed the
U.S. services sector’s growth picked up in January, with a measure of input prices rising to an 11-month high.
While Friday’s data signaled the labor market’s resilience in the face of tight credit conditions, uncertainty over when borrowing costs might be lowered prevailed.
U.S. Treasury yields were on the rise, with the two-year yield jumping to a one-month high of 4.48%.
“Investors are concerned that while the economy is good and we’re not headed for recession, it is too strong and so the Fed might cut rates later and have fewer cuts in all,” said Sam Stovall, chief investment strategist at CFRA Research.
Traders expect a 67% chance of an at least 25-basis-point rate cut in May and a near-94% chance in June, according to the CME FedWatch Tool.
Investors also took a breather after Wall Street’s recent bull-market run that saw the benchmark S&P 500 and the blue-chip Dow ending at record high levels on Friday, boosted by Meta Platforms and Amazon.com’s solid results.
Results are now in from nearly half of the S&P 500 firms and fourth-quarter earnings estimates are improving sharply, with about 80% of the reports so far beating expectations, according to LSEG data on Friday.
Caterpillar jumped 1.2% after a higher quarterly profit, while Estee Lauder surged 14.6% as the MAC lipstick maker aims to cut about 3% to 5% of its workforce.
The Dow Jones Industrial Average was down 255.47 points, or 0.66%, at 38,398.95, the S&P 500 was down 20.21 points, or 0.41%, at 4,938.40, and the Nasdaq Composite was down 69.85 points, or 0.45%, at 15,559.10.
The S&P 500 materials sector was the worst hit, down 2.6%, dragged down by a 15.3% decline in Air Products after the industrial gas manufacturer forecast 2024 profit below estimates.
Boeing dropped 2.1% after saying a new quality glitch in some 737 MAX planes would delay some deliveries.
Tesla lost 3.4% after Piper Sandler slashed the stock’s price target and on a report German software company SAP will no longer source its company cars from the EV maker.
Nvidia jumped 4% to a record high following a price-target raise by Goldman Sachs.
Catalent soared 10.0% to an all-time high on Novo Nordisk parent Novo Holdings’ plans to buy the contract drugmaker in an $11.5-billion all-cash deal.
Declining issues outnumbered advancers for a 6.62-to-1 ratio on the NYSE and a 3.48-to-1 ratio on the Nasdaq.
The S&P index recorded 19 new 52-week highs and nine new lows, while the Nasdaq recorded 30 new highs and 98 new lows.
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
