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At midday: TSX falls after BoC keeps key rate on hold, ends quantitative easing – The Globe and Mail

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Canada’s main stock index fell on Wednesday morning as energy shares lost their footing on weaker oil prices and the Bank of Canada signaled a rate hike might now come earlier next year than previously expected.

At 10:42 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 163.73 points, or 0.76%, at 21,009.72 after opening at 21,163.29.

The Bank of Canada held its key overnight interest rate at 0.25% as expected on Wednesday and said it was ending its quantitative easing program.

The central bank, which slashed interest rates to a record low 0.25% in March of last year in the first wave of the pandemic, said it was ending the QE program “in light of the progress made in the economic recovery”.

It will continue to buy only enough Government of Canada bonds to replace those that are maturing. It had previously said it would end QE before hiking rates.

The Bank of Canada, which is committed to holding rates at record lows until slack is absorbed, said it now expects that to happen “sometime in the middle quarters of 2022.” The previous estimate was for the second half of 2022.

In Toronto, the energy sector fell 1.5%, extending losses for the second session, as oil prices fell after industry data showed U.S. crude stockpiles rose more than expected.

Adding to losses was the materials sector, which includes precious and base metals miners and fertilizer companies, falling 0.8%.

The tech sector was down 1.6%, while consumer discretionary and staples slid 1.1% each.

After snapping a seven-month winning streak in September, the Canadian equity index has gained 6% so far this month, on course for its best monthly performance since November 2020.

The Nasdaq led gains among Wall Street indexes on Wednesday after a robust forecast from Microsoft supported optimism about the third-quarter earnings season, while a decline in oil prices hurt shares of energy companies.

The S&P 500 index and the Dow Jones Industrial Average struggled for direction in the first hour of trading, with seven of the 11 major S&P 500 sectoral indexes falling.

Microsoft Corp jumped 3.6% after it forecast a strong end to the calendar year, helped by its booming cloud business. Google-owner Alphabet Inc gained 3.3% after reporting a record quarterly profit on a surge in ad sales.

Their shares, coupled with other mega-cap growth names Amazon.com, and Tesla Inc, provided the biggest boost to the Nasdaq index.

“Today feels exactly like the calm before the storm ahead of a pile of earnings that is due tomorrow and everyone wants to know how the supply-chain issues are going to work out,” said Dennis Dick, a trader at Bright Trading LLC.

Worries over rising prices, potentially higher corporate taxes and the Federal Reserve’s tapering plans had rattled markets last month, but upbeat earnings reports have reinforced sentiment in October, helping drive the S&P 500 and the Dow to all-time highs this week.

As of Tuesday, profits for S&P 500 companies are expected to grow 35.6% year-on-year in the third quarter. Out of the 144 Of companies that have reported earnings, 81.9% reported above analyst expectations, according to Refinitiv IBES data.

Energy and materials led S&P 500 sectoral declines, tracking lower commodity prices.

Major lenders such as Bank of America Corp and JPMorgan slipped on a flattening U.S. yield curve .

The Dow Jones Industrial Average was down 33.66 points, or 0.09%, at 35,723.22, the S&P 500 was up 1.19 points, or 0.03%, at 4,575.98, and the Nasdaq Composite was up 59.99 points, or 0.39%, at 15,295.70.

Shares of McDonald’s Corp rose 1.9% after the fast-food company reported upbeat quarterly same store sales, while Coca-Cola Co added 2.1% after the beverage maker raised its full-year profit forecast.

Visa Inc slipped 4.4% as its ‘conservative’ 2022 forecast clouded better-than expected fourth quarter earnings.

Top Senate Democrat Ron Wyden proposed a so-called billionaires tax that would require U.S. billionaires to pay tax on unrealized gains from their assets.

“Taxing unrealized gains is a spooky thing. We have a government that is not scared to tax and that effectively affects investor sentiment,” said Dick.

Texas Instruments Inc fell 6.0% after it forecast tepid quarterly revenue as the chipmaker struggles with supply chain constraints in the semiconductor industry.

Robinhood Markets Inc tumbled 9.7% after the retail broker reported downbeat third-quarter revenue as trading levels declined for cryptocurrencies including dogecoin.

Reuters

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Ontario passes new rules aimed at work-life balance for employees – CP24 Toronto's Breaking News

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The Ontario government has passed new laws it says will help employees disconnect from the office and create a better work-life balance.

On Tuesday, the government said it passed the “Working for Workers Act,” which requires Ontario businesses with 25 people or more to have a written policy about employees’ rights when it comes to disconnecting from their job at the end of the day.

These workplace policies could include, for example, expectations about response time for emails and encouraging employees to turn on out-of-office notifications when they aren’t working, the government says.

According to the act, between January 1 and March 1 of each year an employer must ensure it has a written policy in place for all employees with respect to disconnecting from work.

“We are determined to rebalance the scales and put workers in the driver’s seat of Ontario’s economic growth while attracting the best workers to our great province,” Monte McNaughton, Minister of Labour, Training and Skills Development, said in a statement Tuesday.

The act also bans the use of non-compete clauses, which prevent people from exploring other work opportunities and higher salaries at other jobs.

According to the government, Ontario is the first jurisdiction in Canada, and one of the first in North America, to ban non-compete agreements in employment.

McNaughton says the new laws not only protects workers’ rights, but also will help to attract top talent and investments to the province.

The act also removes “unfair” work experience requirements for foreign-trained immigrants trying to work in their professions. 

It also introduces a mandatory licencing framework for temporary help agencies and recruiters to help prevent labour trafficking.

“This legislation is another step towards building back a better province and cementing Ontario’s position as a global leader, for others to follow, as the best place in the world to live, work and raise a family,” McNaughton said.

A government spokesperson told CTV News Toronto that while the act has not yet received royal assent, it is expected to later this week.

Timelines for when each law under the Working For Workers Act will come into effect have not been announced yet and the government said it there will be a initial grace period for businesses.

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Asian factories shake off supply headaches but Omicron presents new risks

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Asian factory activity grew in November as crippling supply bottlenecks eased, but rising input costs and renewed weakness in China dampened the region’s prospects for an early, sustained recovery from pandemic paralysis.

The newly detected Omicron coronavirus variant has also emerged as a fresh worry for the region’s policymakers, who are already grappling with the challenge of steering their economies out of the doldrums while trying to tame inflation amid rising commodity costs and parts shortages.

China’s factory activity fell back into contraction in November, the private Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) showed on Wednesday, as soft demand and elevated prices hurt manufacturers.

The findings from the private-sector survey, which focuses more on small firms in coastal regions, stood in contrast with those in China’s official PMI on Tuesday that showed manufacturing activity unexpectedly rose in November, albeit at a very modest pace.

“Relaxing constraints on the supply side, especially the easing of the power crunch, quickened the pace of production recovery,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.

“But demand was relatively weak, suppressed by the COVID-19 epidemic and rising product prices.”

Beyond China, however, factory activity seemed to be on the mend with PMIs showing expansion in countries ranging from Japan, South Korea, India, Vietnam and the Philippines.

Japan’s PMI rose to 54.5 in November, up from 53.2 in October, the fastest pace of expansion in nearly four years.

South Korea’s PMI edged up to 50.9 from 50.2 in October, holding above the 50-mark threshold that indicates expansion in activity for a 14th straight month.

But output shrank in South Korea for a second straight month as Asia’s fourth-largest economy struggles to fully regain momentum in the face of persistent supply chain disruptions.

“Overall, with new export orders flooding back to countries previously hamstrung by Delta outbreaks and the disruption further down the supply chain still working through, there is plenty of scope for a continued rebound in regional industry,” said Alex Holmes, emerging Asia economist at Capital Economics.

India’s manufacturing activity grew at the fastest pace in 10 months in November, buoyed by a strong pick-up in demand.

Vietnam’s PMI rose to 52.2 in November from 52.1 in October, while that of the Philippines increased to 51.7 from 51.0.

Taiwan’s manufacturing activity continued to expand in November but at a slower pace, with the index hitting 54.9 compared with 55.2 in October. The picture was similar for Indonesia, which saw PMI ease to 53.9 from 57.2 in October.

The November surveys likely did not reflect the spread of the Omicron variant that could add further pressure on pandemic-disrupted supply chains, with many countries imposing fresh border controls to seal themselves off.

(Reporting by Leika Kihara; Editing by Sam Holmes)

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ANZ faces class action for “unfair” interest charged from credit card customers

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Australia and New Zealand Banking Group has been sued by a law firm for charging interest on some purchases by credit card holders which were repaid on time for nearly a decade, the parties said on Wednesday.

The law firm, Phi Finney McDonald, filed a class-action suit in the federal court against Australia’s No. 4 lender for charging interest between July 2010 and January 2019 on purchases that should have been interest-free.

“The terms of ANZ’s contract made it impossible for a typical consumer to understand that they would be charged retrospective interest, even on purchases which they repaid on time,” the law firm said in a statement.

Australia outlawed charging retrospective interest in January 2019.

The lawsuit alleged “unfair contract terms and unconscionable conduct” by the bank, but did not specify the damages it was seeking against ANZ in the federal court.

ANZ said in a statement it would review the claim that its contract contravened the Australian Securities and Investments Commission Act.

The lawsuit is the latest in a string of legal actions faced by Australia‘s top banks, ranging from breach of consumer protection credit laws to charging financial advice fees to dead customers.

Scrutiny of Australian lenders and financial institutions has ramped up significantly since a Royal Commission inquiry in 2018 found widespread shortcomings in the sector, forcing companies and regulators to take swift action.

 

(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)

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