Stock markets around the world fell on Thursday as investors faced up to the prospect of persistent high inflation, and much higher borrowing costs to fight it.
The Toronto Stock Exchange main index closed just shy of 20,700, down by almost 500 points or 2.3 per cent with every sector on the benchmark Canadian stock market lower on the day.
Shares in Ottawa-based e-commerce giant Shopify led the way down, losing 14 per cent of their value on the day. The company, which reports in U.S. dollars, announced before markets opened that it lost $1.5 billion US in the first quarter. That’s a reversal from a profit of $1.3 billion US in the same period a year ago.
At one point in the pandemic, Shopify was the most valuable company in Canada, worth more than $200 billion. Today it’s worth about a quarter of that peak, as the company that saw demand for its services explode during the pandemic is now dealing with slowing revenues.
“Easing lockdowns are driving higher consumer spending on in-store retail, services and travelling,” said Daniel Chan, an analyst with TD Bank who covers the company. “These shifting spending patterns are a headwind for Shopify.”
The sell-off was worse in New York, with the Dow Jones Industrial Average off by more than 1,000 points or more than three per cent, and the technology-heavy Nasdaq faring worst of all, down by more than 600 points or five per cent.
Tech stocks hit hardest
Former high-flying tech stocks like Apple, Microsoft, Amazon, Google and Tesla were down by between four and seven per cent on the day.
“Large-cap technology, media and telecom stocks are deflating from their pandemic-bubble peak, but the group still has more air to lose amid rising interest rates and cooling growth expectations,” said Gina Martin Adams, chief equity strategist at Bloomberg Intelligence.
The gloomy mood came on the heels of the decision by the U.S. central bank to raise its interest rate on Wednesday, its biggest single move upwards in 22 years.
That will increase the cost of borrowing, which is bad news for companies and the stock investors looking to buy them. The Bank of England also raised its lending rate on Thursday and warned of “stagflation” to come, which is when an economy is dealing with high inflation, but also slow growth.
Brenda O’Connor-Juanas, a senior vice-president with UBS based in Miami, told CBC News on Thursday that investors are reacting to a deluge of worrisome news, from supply chain issues to the ongoing pandemic and uncertainty in Ukraine.
“The markets right now in general are just responding and reacting to every negative headline,” she said.
“There is just so much uncertainty about inflation and about rates … we’re just going to see the markets move around a lot like this,” she said. “Volatility is here to stay.”
John Zechner, chair of Toronto-based investment firm J Zechner Associates, says the sell-off is happening because investors are realizing that lending rates are going to have to get a lot more expensive and quickly, in order to get inflation under control.
“The punch is being pulled away,” he said in an interview Friday. “Free money has sustained this bull market for the last 12 years effectively, and we’re probably seeing the most aggressive move away from free money that we’ve seen in over 20 years.”
“The only way to tame inflation is to is to try to slow down growth or tighten the economy a little,” Zechner said. “And one of the casualties is the stock market.”
The value of bitcoin, which has been trumpeted as a hedge against inflation, slumped along with everything else, losing about 6 per cent or more than $3,000 to change hands below $37,000 US. That’s half what the world’s biggest cryptocurrency was worth in November, and its lowest level since January.
Other cryptocurrencies joined in the sell-off as investors pulled out their cash from the volatile sector and parked it in assets deemed to be safer.
Globally, $120 million US was pulled out of cryptocurrencies in the week up to May 5, according to data from digital investing firm Coinshares. Over the past month, the total jumps to $339 million US.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
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)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
