TORONTO —
Canada’s main stock index hit 19,000 points for the first time Wednesday on a supportive outlook by the U.S. Federal Reserve.
The S&P/TSX composite index erased morning losses to close up 109.09 points to 18,983.10 after hitting an intraday record of 19,037.13.
In New York, the Dow Jones industrial average was up 189.42 points at 33,015.37 to surpass 33,000 for the first time. The S&P 500 index gained 11.41 points to a record close of 3,974.12, while the Nasdaq composite increased 53.63 points at 13,525.20.
Sentiment was buoyed by the U.S. central bank’s bullish outlook for economic growth and reduced unemployment that should keep its benchmark interest rate near zero through 2023 despite increased inflation.
The Fed significantly upgraded its forecasts for growth and inflation. It now envisions the economy expanding 6.5 per cent this year, up sharply from its previous projection in December of 4.2 per cent.
The increase is being propelled by a rise in COVID-19 vaccinations, supported by a US$1.9-trillion fiscal relief package.
Unemployment is expected to fall from the current 6.2 per cent to 4.5 per cent by year’s end and to 3.9 per cent, near a healthy level, at the end of 2022.
It raised its forecast for inflation by the end of this year to 2.4 per cent from 1.8 per cent. That level of inflation would finally surpass the Fed’s two per cent annual target after years of chronically low inflation. But the Fed foresees inflation falling back to two per cent in 2022.
The central bank also said it would continue to buy US$120 billion in bonds each month to keep longer-term borrowing costs down.
Markets responded positively to the pledge of ongoing support and upbeat assessment of the global economy, said Candice Bangsund, portfolio manager for Fiera Capital.
“This essentially has alleviated fears of a hawkish turn from the Fed which would risk derailing the economic recovery and the record-breaking equity market rally,” she said in an interview.
“So when you think about it, taken together, it’s a very lucrative environment for stocks and risk assets in general.”
The Fed’s outlook and projections are consistent with what officials have telegraphed about remaining supportive until the recovery is well underway.
When asked about timing of the next move, chairman Jerome Powell insisted it wasn’t time to discuss an exit strategy.
The Fed reinforced the rotation toward economically sensitive sectors such as energy, financials, materials and industrials over technology and telecommunications.
That benefits the TSX because of its exposure to these sectors, which resulted in it outperforming U.S. stock markets, said Bangsund.
“Very much a compelling proposition for equity investors,” she said, noting that her year-end target for the TSX has been revised upwards to 20,000.
Bond yields increased to a 13-month high of 1.689 per cent before shaving some of the gains to reach 1.65 per cent.
A steepened yield curve hurts the technology sector.
Commodity sectors rose with energy up 1.4 per cent despite a dip in crude oil prices.
Enerplus Corp. led with shares gaining 7.8 per cent followed by Vermilion Energy Inc. at 5.6 per cent.
The May crude oil contract was down 88 cents at US$63.98 per barrel and the April natural gas contract was down four cents at US$2.52 per mmBTU.
Crude prices fell on a surprising 2.4-million-barrel increase in U.S. stockpiles last week to the highest level since December.
In addition, the International Energy Agency gave a downbeat assessment of crude markets in its monthly report. It said oil markets are not on the verge of a new price supercycle with supplies remaining plentiful.
The Canadian dollar traded for 80.22 cents US compared with 80.29 cents US on Tuesday.
Materials also climbed 1.4 per cent despite lower gold prices with Torex Gold Resources Inc. up seven per cent, B2Gold Corp. up 5.1 per cent and Oceanagold Corp. 4.6 per cent higher.
The April gold contract was down US$2.10 at US$1,728.80 an ounce and the May copper contract was up four cents at US$4.11 a pound.
Technology was one of five sectors that fell on the day with shares of Lightspeed POS Inc. down three per cent but Shopify Inc. up 2.4 per cent.
Telecommunications slipped for the first time in three days as Rogers Communications Inc. lost five per cent, the first drop since announcing its blockbuster $26-billion deal to buy Shaw Communications Inc.
This report by The Canadian Press was first published March 17, 2021.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
