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Economy

Oil rebound lifts Toronto stocks; Trillium soars on Pfizer deal

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Canada‘s commodities-heavy main stock index inched toward record highs on Monday as oil prices rebounded from a seven-day losing streak, while shares of drug developer Trillium nearly tripled on its acquisition by U.S. pharma major Pfizer.

By 09:56 a.m. ET (13:56 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 49.72 points, or 0.24%, at 20,388.74, with the surge in Trillium lifting the healthcare index to a two-week high.

Energy stocks bounced 3.6% after sliding 6.5% last week, when worries about slowing economic growth in China and the United States had sent ripples through global markets.

“We believe that common stocks are relatively attractive,” said Irwin Michael, portfolio manager at ABC Funds.

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“Growth may be slackening off from the highs of the recovery from the pandemic, but there’s still pretty good growth.”

The U.S. S&P 500 also rebounded on Monday after snapping a two-week winning streak, even as data showed U.S. business activity growth slowed for a third straight month in August.

HIGHLIGHTS

* The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.4% as gold futures rose 1.2% to $1,802.5 an ounce. [GOL/] [MET/L]

* Crescent Point Energy Corp was the second-biggest gainer on the TSX, after Trillium.

* Discount retailer Dollarama Inc, on the other hand, led the decliners, with a 2.9% fall. IT services firm CGI Inc was the second biggest decliner.

* The most heavily traded shares by volume were Fortis Inc, Sun Life Financial and Hexo Corp.

* The TSX posted 15 new 52-week highs and no new low.

* Across all Canadian issues there were 86 new 52-week highs and six new lows, with total volume of 52.43 million shares.

 

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

Economy

Canadian economy to get ‘back on its feet’ next year, Deloitte Canada says

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TORONTO –Canada’s near-term economic struggles will ease next year when growth returns and the Bank of Canada begins cutting its key lending rate, a new forecast from Deloitte Canada said.

A better-than-expected U.S. outlook and continued population growth here will offset some of the downward pressure from high household debt, soaring interest payments and stubbornly persistent inflation, the company said in its latest economic outlook report, released Thursday.

“We do have an economy getting back on its feet in the first half of next year,” said Dawn Desjardins, chief economist at Deloitte Canada, who co-authored the report.

“The recovery will pick up steam in the second half of 2024 because it’s during the time we anticipate the Bank of Canada will be able to pivot from having high interest rates we’re living with today,” she said.

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The report estimates GDP will rise one per cent this year and 0.9 per cent next year. Deloitte Canada had earlier predicted GDP would contract 0.9 per cent in 2023.

The next two quarters for the Canadian economy, however, are going to be tough, Desjardins said.

“Canada’s economy has entered a rough patch and the growth is likely to be negligible,” she said. “In fact, we have a few negative quarters in the forecast.”

The slowdown results from the months-long crackdown on high inflation by the Bank of Canada, pushing household debt and interest payments higher — which the Deloitte economist expects will continue in the near term.

Desjardins said a third of Canadian households have a mortgage, adding that an increasing number of them are moving to refinance their property as they struggle to keep up with monthly mortgage payments — a trend expected to continue going forward.

“We do think the housing market will continue to be relatively sluggish (in the near term),” Desjardins said, which would affect other sectors as well.

“When that happens, people are not buying durable goods like refrigerators, stoves and washing machines they would normally purchase when they buy a new home.”

Despite the affordability and housing crises, Deloitte Canada said strengthening U.S. trade and population growth in Canada appear to be helping the country avoid a deeper recession.

Canada’s population is set to jump 2.7 per cent this year, the only other time the country came close to that type of population surge was back in 1971 when it rose 2.2 per cent.

Economists suggest population growth would outpace job gains in the coming months, with the unemployment rate expected to hit 5.9 per cent early next year. A pullback in hiring would drive unemployment and, in turn, slow down consumer spending.

Canada’s record-high population surge also pushed Deloitte to recalibrate its expectations for consumer spending. The report suggests real consumption on a per capita basis dropped 1.5 per cent over the last year, more in line with falling real wages and high interest rates.

“We have finally seen evidence that consumers are taking a step back,” Desjardins said. “The bank’s rate increases are stressing some budgets.”

The report suggests consumer spending this year will grow by two per cent but slow to a pace of 1.2 per cent in 2024.

Deloitte Canada estimates the overnight interest rate would fall to a neutral level of three per cent by mid-2025.

For the business sector, the report says the investment outlook remains muted in the near term as cost pressures and economic uncertainties hamper confidence among Canadians.

This report by The Canadian Press was first published Sept. 28, 2023.

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Economy

Powell Says Public's Understanding Key to Fed Impact on Economy – Bloomberg

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Canada's economy flatlined in July, showed little momentum moving forward – The Globe and Mail

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