Canada’s commodity-linked main stock index is expected to rise less than previously expected over coming months and could see a correction as investors grapple with a slowdown in China and higher borrowing costs, a Reuters poll found.
The median prediction of 24 portfolio managers and strategists in the August 9-21 poll was for the S&P/TSX Composite Index to advance 3.5% to 20,479 by year-end, compared with 21,000 expected in a previous poll in May.
It was then expected to climb to 21,800 by end-2024, stopping short of the record closing high it set in March last year of 22,087.22.
“Our baseline economic forecast incorporates a significant slowdown of the global economy and a recession in Canada at the turn of the year,” said Lorenzo Tessier Moreau, a senior economist at Desjardins.
“Key interest rates and most of the yield curve will also remain relatively high for the better part of 2023, which should weigh on stock markets.”
The yield on Canada’s 5-year notes has climbed in recent days to a 16-year high at 4.165% as investors bet major central banks, including the Bank of Canada, will hold interest rates at elevated levels for longer than previously thought.
Toronto’s market has advanced 2.1% since the start of the year, which is well below a gain of 14.6% for the S&P 500.
The U.S. benchmark has benefited from a heavy weighting in high-flying technology shares. In contrast, resource and financial shares dominate the Toronto market, accounting for 31% and 29% respectively.
“Downside risks to China’s growth trajectory could pressure commodity prices and resource sectors in the near term,” said Angelo Kourkafas, an investment strategist at Edward Jones.
“However, the improvement in inflation, a resilient labour market, and expectations for an end to the BoC’s rate-hiking cycle have moved us away from any worst-case scenarios.”
China’s economic recovery has lost steam in recent months due to a worsening property slump, weak consumer spending and tumbling credit growth.
Nine of 12 analysts who answered an additional question said a correction for the TSX is likely or highly likely by the end of 2023.
A correction is often seen as a pullback of 10% from the most recent peak. From its peak in January, the TSX is down over 4%.
“There are far too many headwinds for the equity markets in the near term,” said Matt Skipp, president of SW8 Asset Management.
In addition to high interest rates and a slowdown in China, headwinds for the market include waning fiscal stimulus and the end of pent-up demand for travel and entertainment caused by the COVID-19 pandemic, Skipp said.
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TORONTO – Cineplex Inc. reported a loss in its latest quarter compared with a profit a year ago as it was hit by a fine for deceptive marketing practices imposed by the Competition Tribunal.
The movie theatre company says it lost $24.7 million or 39 cents per diluted share for the quarter ended Sept. 30 compared with a profit of $29.7 million or 40 cents per diluted share a year earlier.
The results in the most recent quarter included a $39.2-million provision related to the Competition Tribunal decision, which Cineplex is appealing.
The Competition Bureau accused the company of misleading theatregoers by not immediately presenting them with the full price of a movie ticket when they purchased seats online, a view the company has rejected.
Revenue for the quarter totalled $395.6 million, down from $414.5 million in the same quarter last year, while theatre attendance totalled 13.3 million for the quarter compared with nearly 15.7 million a year earlier.
Box office revenue per patron in the quarter climbed to $13.19 compared with $12 in the same quarter last year, while concession revenue per patron amounted to $9.85, up from $8.44 a year ago.
This report by The Canadian Press was first published Nov. 6, 2024.
TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.
Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.
Consolidated comparable sales were up 0.3 per cent.
On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.
The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.
The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.
Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.
Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.
On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.
The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
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