Economy

Betting on European stocks as the global economy reopens – Yahoo Canada Finance

Published

4 years ago

August 27, 2020

LOS ANGELES — Much of Europe remains off limits to American tourists because of the pandemic, but the region is looking like an attractive destination for stock investors.

While eurozone stocks remain in a slump relative to the U.S. stock market’s record-shattering rebound, they could be poised for solid gains as the global economy continues to reopen, analysts say.

Energy, materials and industrial companies tend to do better when the economy is emerging from a downturn, and are likely to see improved earnings as businesses reopen. And Europe has a bigger share of stocks in these categories than Wall Street.

These types of companies, known as cyclical stocks, also tend to benefit when inflation rises, something that analysts expect will happen as the global economy strengthens.

“When we move from surviving the pandemic to thriving in the rebound, European stocks ought to do better,” said David Kelly, chief global strategist, J.P. Morgan Asset Management.

Betting on stocks that rely on a growing economy may sound unwise in the middle of a recession and pandemic with no clear end in sight. That’s why investors this year have doubled down on tech companies that provide everything from streaming video, internet access, smartphones and other electronic devices that people stuck at home due to the coronavirus have come to rely upon.

But the reopening of businesses in Europe, massive government spending and the phasing out of restrictions on public life have stoked expectations that the region’s economy will recover more rapidly than the U.S.

“The region sports a robust health infrastructure, exposure to a pickup in global growth and galvanized policy response with room for more stimulus,” BlackRock investment strategists wrote in a research note last month. “As a result, we see it offering better risk-reward than traditional beneficiaries of a growth pickup: emerging markets.”

In a follow-up note this week, BlackRock said it still expects cyclical European stocks to make gains, even as some countries have renewed lockdowns to contain a resurgence in the virus.

Eurozone stocks don’t look so attractive when compared to how U.S. equities are doing this year. The S&P 500 index is up 7.4%, while the Stoxx Europe 600 index, excluding companies in the United Kingdom, is down 5.6%.

Still, that’s not stopping investors from taking the plunge. Two of the biggest Europe-focused exchange-traded funds, or ETFs, have seen inflows surge this summer, partly reversing a big outflow in March, April and May.

The Vanguard FTSE Europe ETF, which has $12.51 billion in assets under management, has seen about $529 million in inflows so far this month, making it the fund’s best month this year. The MSCI Eurozone ETF, which excludes companies in the U.K. and other European countries that don’t use the euro, had its first inflows this year in June, taking in $486 million, and inflows have continued rising since.

Results from a new Bank of America survey echo the growing interest in European equities. The survey, which was conducted earlier this month and involved 181 fund managers with nearly half a trillion dollars in assets under management, found that respondents’ allocation of Eurozone stocks is now at its highest level since May 2018.

While the fund managers’ stock portfolios remain skewed most heavily toward technology, health care and consumer discretionary stocks, they said they have begun to shift into European stocks and other assets that tend to do better at times of higher inflation, something more than half of the respondents expect to see in the next 12 months.

When inflation appears, it typically shows up in commodity prices, which can help drive earnings growth for industrial, materials and energy companies.

“If we get commodity inflation, then European stocks are going to really outperform,” said Manish Kabra, head of European Equity Quant Strategy for Bank of America Securities.

Even without a big bump in inflation some of the Eurozone companies in the industrial, energy and materials sectors are posting strong equity price gains. German industrial goods and services company Sartorius AG is up 82.4%. this year, while shares in Danish wind energy company Vestas Wind Systems have increased 40.2%. Polish mining company KGHM Polska Miedz SA is up 42% this year.

Of course, no trade is without risk. European stocks’ appeal would unravel should the pandemic worsen, leading to broad business closures and crippling the economic recovery, for example.

“Something could go wrong with the coronavirus response in Europe, or it’s possible no vaccine works,” Kelly said. “If that happens, and Europe and the United States continue to wallow in this crisis, then some of the cyclical argument goes away.”

Alex Veiga, The Associated Press

Let’s block ads! (Why?)

Source link

Business

A timeline of events in the bread price-fixing scandal

Published

7 hours ago

September 19, 2024

Anne Joseph

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)

Source link

Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

7 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

22 hours ago

September 18, 2024

Anne Joseph

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

Source link