Canada’s main stock index fell on Tuesday, led by losses in the resource sectors, while investors were disappointed that core inflation rose more than expected in December ahead of next week’s interest rate decision by the Bank of Canada.
At 10:39 a.m. ET, the TSX/S&P composite index was down 82.00 points, or 0.39%, at 20,979.45 after falling as low as 20,842.98 earlier in the trading day.
Energy shares were the top losers on the index, falling 1.7%, while materials were down 1.4% as prices of most base metals dropped on a stronger U.S. dollar and concerns over future demand after top consumer China skipped an expected rate cut.
Data on Tuesday showed Canada’s annual inflation rate rose to 3.4% in Dec. from 3.1% in Nov., driven mainly by higher gasoline prices last month.
While the headline numbers were in line with expectations, the sticky core measures show that overall inflation is likely to come down slowly.
“CPI has come down quite a bit from the peaks. It’s going to get a little bit more difficult to get it back to the 2% range. But my forecast is that the Bank of Canada is still likely to cut interest rates”, Mike Archibald, vice president and portfolio manager at AGF Investments, told Reuters.
“My assumption is that it will happen, likely sometime in the second quarter, but we have to continue to watch the data.”
Money markets now see a 34% chance that the BoC would start cutting interest rates in March, down from nearly 50% before the figures were released, but still see a high chance of a 25-basis-point reduction in April.
Among individual stocks, Barrick Gold slumped 4.6% after the company reported preliminary gold output of 4.05 million ounces in the financial year 2023, below its forecast and analysts’ estimates of 4.16 mln ounces.
First Quantum Minerals fell 3.4% after the Canadian miner said it plans to conserve capital after it was forced to halt production at its Cobre Panama copper mine.
Wall Street’s main indexes fell on Tuesday, as banks came under pressure after mixed earnings from Goldman Sachs and Morgan Stanley kept investors cautious about the health of capital markets and dealmaking, while declines in Tesla and Apple also weighed.
Tesla shed 2.2%, steering a 1% drop in the S&P 500 consumer discretionary sector, after CEO Elon Musk said he would be uncomfortable growing the automaker to be a leader in artificial intelligence and robotics without having at least 25% voting control of the company.
Apple fell 2.4% after offering rare discounts on its iPhones in China on competition pressures, just days after it was overtaken by Microsoft as the world’s most valuable firm.
On the fourth-quarter earnings front, Goldman Sachs reported a 51% rise in profit, as its traders capitalized on a nascent market recovery and its asset and wealth business revenue rose. However, Morgan Stanley’s profit declined, while revenue surpassed expectations on a rebound in dealmaking activity. Their shares were down 0.8% and 3.4%, respectively.
“Morgan Stanley, Goldman Sachs tend to service the wealthier high-net-worth clients, and have much less loan loss reserves,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.
“Overall, I think the banks (results) came in pretty good shape and the banking sector is pretty well-capitalized at this point.”
Wells Fargo, Bank of America, Citigroup and JPMorgan Chase dropped between 1.6% and 2.7% after reporting lower profits on Friday.
The broader banks index slid to an over one-month low on Tuesday.
Wall Street finished the previous week higher as investors continue to price in an around 70% chance of the Federal Reserve delivering a 25-basis-point rate cut in March – despite mixed inflation data and a lack of supporting voices among policymakers for a quick start to monetary policy easing.
UBS Global Research boosted its 2024 year-end target for the S&P 500 on Tuesday to 5,150, representing a nearly 8% upside from current levels.
Despite briefly surpassing its previous record closing high last week, the benchmark index has faced resistance to breaching its highest intra-day level, hit in January 2022.
Investors will parse Fed Board Governor Christopher Waller’s remarks during the day, after Atlanta Fed President Raphael Bostic warned about cutting rates too soon.
The Dow Jones Industrial Average was down 226.52 points, or 0.60%, at 37,366.46, the S&P 500 was down 26.82 points, or 0.56%, at 4,757.01, and the Nasdaq Composite was down 89.39 points, or 0.60%, at 14,883.37.
Dow-component Boeing declined 4.7%, as the Federal Aviation Administration extended the grounding of its 737 MAX 9 airplanes indefinitely and brokerage Wells Fargo downgraded the stock to “equal weight” from “overweight.”
Applied Digital slumped 22.3% after the data-center services provider posted downbeat second-quarter revenue.
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.
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.
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.
