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Loonie rises to highest point in 2 years on vaccine optimism, oil prices – CBC.ca

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The Canadian dollar hit its highest point in more than two years on Thursday as the U.K. announced it had approved a coronavirus vaccine for emergency use and oil prices were buoyed by an apparent deal among OPEC nations to extend their current production cuts past January.

The loonie at one point touched 77.61 cents US, its highest level since October 2018.

One catalyst for the loonie’s uptick was word that members of the Organization of Petroleum Exporting Countries and Russia are reportedly nearing a deal to extend production cuts of more than seven million barrels a day past January. 

Some in the oil cartel have pushed for a three month extension to May to the cuts, but given the recent run up in oil prices, the cartel has settled on a compromise of maintaining the cuts into February.

“This is roughly what was expected to come from these talks which will be why oil prices continue to trade around the highs,” said Craig Erlam, an analyst with foreign exchange company OANDA.

A barrel of West Texas Intermediate oil was trading above $45 US on Thursday, a level it has not reached and stayed above since early March when the pandemic walloped demand for energy around the world.

Currencies benefit from hope world economy will recover

The loonie is riding the wave of higher oil prices, but is also benefiting from a general weakness in the U.S. dollar.

The Australian dollar, the euro and the Korean won also hit two-year highs against the U.S. dollar on Thursday, as the flight for the perceived safety of America’s currency seems to be coming to an end.

Britain announced it has approved Pfizer’s COVID-19 vaccine for emergency use, which has spurred expectations that other nations may soon follow suit. That, in turn, is stimulating hopes that the world’s economy may soon get back to some semblance of normal.

“The big talk seems to be all about the U.K. getting ready to do the vaccine next week — faster than a lot of people expected and it’s having an effect on pretty much everything,” said Michael Currie, vice-president and investment adviser at TD Wealth.

Counterintuitively, that’s bad news for the U.S. dollar, which has seen its value increase by about 13 per cent during the pandemic because it is a perceived store of value. If things are indeed getting better, there’s less need to keep cash stashed in something safe like a U.S. dollar. 

Loonie could be headed higher: analyst

Shaun Osborne, chief foreign exchange strategist with Bank of Nova Scotia says the loonie has appreciated by about 10 cents since bottoming out in April, and he thinks a case can be made that the loonie could be headed higher still in the medium term.

“The U.S. economy is likely to perform on par with the rest of the world [and] may underperform Canada,” he said in an interview.

“A stronger global economy and higher demand for commodities … that is something I would expect to be positive for the Canadian dollar [but] I think we need to get through the next two or three months just to see just how much this move can extend,” Osborne said.

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Credit Suisse stops custodian service for some U.S. cannabis stocks

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By Shariq Khan and Matt Scuffham

(Reuters) – Credit Suisse Group AG has told customers in recent months it will no longer execute transactions in shares of cannabis companies with U.S. operations or hold them on behalf of clients, a cannabis company executive and other industry sources told Reuters on Wednesday.

The Swiss lender was among a handful of banks that had been willing to buy and sell marijuana-related stocks for clients in the United States and hold those shares as a custodian.

Credit Suisse declined to comment.

Cannabis remains illegal under U.S. federal law, even though many states have legalized its use. This represents a legal risk for investment banks working for companies that produce or trade the drug.

Credit Suisse’s compliance and risk management procedures have come under scrutiny from investors and analysts after it lost at least $4.7 billion from the collapse of Archegos, an investment firm dedicated to managing the fortune of hedge fund veteran Bill Hwang, as well as the suspension of funds linked to insolvent supply chain finance company Greensill.

The MSOS exchange-traded fund, which tracks U.S. marijuana stocks, has fallen by more than a fifth since early February. Several market players said they believed Credit Suisse’s actions played a role in the selloff.

“(When) Credit Suisse pulled custodian (services) on cannabis stocks, a number of large investors in the space lost their ability to custodian the stocks,” said Abner Kurtin, Chief Executive Officer of newly-floated marijuana grower Ascend Wellness Holdings Inc.

“That led to a significant selloff.”

A custodian bank holds customers’ securities for safekeeping, to prevent them from being stolen or lost, while also collecting dividends and handling other corporate actions. It plays an important role in helping many investors to hold shares in companies.

The weed industry has boomed over the last three years, as Canada and a succession of U.S. states, including most recently New York and New Jersey, legalized recreational use.

Credit Suisse shares are down over 20% so far this year, and the bank has said it is cutting its prime brokerage business, which caters to hedge fund clients, by about a third.

 

(Reporting by Shariq Khan and Matt Scuffham; Writing by Patrick Graham; Editing by Howard Goller)

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Sun Life’s misses first-quarter profit estimates

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Sun Life

TORONTO (Reuters) – Sun Life Financial Inc on Wednesday missed analyst estimates for first-quarter core profit, which rose from a year earlier due to business growth and earnings in its asset management and Canadian units.

Underlying profit was C$850 million ($693 million), or 1.45 Canadian cents a share, in the three months ended March 31, from C$770 million, or C$1.31, a year earlier. Analysts had expected C$1.46 a share.

Reported net income jumped to C$937 million, or C$1.59 a share, from C$391 million, or 67 Canadian cents, a year earlier.

($1 = 1.2266 Canadian dollars)

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Manulife, Sun Life post improved first-quarter core profits on business growth, investments

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Manulife

TORONTO (Reuters) – Manulife Financial and Sun Life Financial Inc on Wednesday reported increased core profits from a year ago, driven in part by business growth and improved earnings across all major business units.

But while Manulife beat analyst expectations for the quarter ended March 31, Sun Life missed estimates.

Payouts globally have risen due to claims related to the coronavirus pandemic, but strength in stock markets has helped soften some of that impact. Earnings of Canada‘s top two insurers were affected by steepening yield curves in North America.

While it tempered Sun Life’s results, the No. 2 insurer still saw reported profit more than double from a year ago as a result of favourable equity markets and interest rate changes.

Sun Life also took an after-tax restructuring charge of C$57 million related to changes it is making to its workspace, the company said.

Manulife reported core earnings of C$1.6 billion ($1.3 billion), or 82 Canadian cents a share, in the three months ended March 31, from C$1 billion, or 51 Canadian cents, a year earlier. Analysts had expected 77 Canadian cents.

Reported net income attributable to shareholders declined to C$783 million, or 38 Canadian cents, from C$1.3 billion, or 64 Canadian cents, a year earlier.

Sun Life reported underlying profit of C$850 million ($693 million), or 1.45 Canadian cents a share, in the three months ended March 31, from C$770 million, or C$1.31, a year earlier.

Analysts had expected C$870.8 million or C$1.46 a share.

Reported net income jumped to C$937 million, or C$1.59 a share, from C$391 million, or 67 Canadian cents, a year earlier.

($1 = 1.2277 Canadian dollars)

 

(Reporting By Nichola Saminather; Editing by Chris Reese and David Gregorio)

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