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TSX hits another record high as festive rally builds



World equity markets scaled fresh records as a year-end rally climbed further on Friday with upbeat Chinese economic data and optimism a U.S.-Sino trade deal is imminent raising global growth prospects, but the dollar weakened as risk appetite grew.

Wall Street set new all-time highs at the open or soon after and European shares rose to a third day of record peaks this week as various equity markets remained on course for their best year since the global financial crisis a decade ago.

Profits at Chinese industrial firms grew at the fastest pace in eight months in November, rising 5.4 per cent from a year earlier to 593.9 billion yuan ($84.93 billion). The gains snapped three months of decline, but broad weakness in domestic demand remains a risk for corporate earnings in 2020.

The U.S.-China trade war rattled international commerce. Bilateral trade between the two largest economies fell 15.2 per cent in the 12 months through November versus the same period ended in 2018, according to Panjiva, a S&P Global Market Intelligence unit.


The dollar slipped across the board as increased investor appetite for risk sapped the safe-haven appeal of the greenback.

In Toronto, Canada’s main stock index slipped slightly after reaching another record high on Friday as investors cheered upbeat economic data from China amid growing optimism over an initial U.S.-China trade deal.

The Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 11.94 points, or 0.07 per cent, at 17,168.21, after hitting a record high of 17,230.58 just after the opening bell.

The index is set for its best year since the global financial crisis, powered by returning confidence in the global economy in the wake of an imminent U.S.-China trade truce and hopes of a smooth Brexit.

Marijuana producers led a 2.7-per-cent drop in health care stocks. Hexo Corp. fell 18.3 per cent, while Aurora Cannabis Inc., Canopy Growth Corp. and Cronos Group Inc. all dipped more than 4 per cent.

The energy sector climbed 0.2 per cent, while the materials sector, which includes precious and base metals miners and fertilizer companies, slipped 0.5 per cent.

Leading the index were Semafo Inc., up 4.4 per cent, NovaGold Resources Inc., up 3.3 per cent, and Westshore Terminals Investment Corp., higher by 2.4 per cent.

MSCI’s gauge of stock performance in 49 countries gained 0.35 per cent while the pan-European STOXX 600 index rose 0.21 per cent, both setting all-time highs.

Equity markets are poised to rise further in 2020, even as high valuations pose a concern, said Rahul Shah, chief executive of Ideal Asset Management in New York.

“Considering the dynamics of the market right now we think that equity investors should be positioning for further bullish momentum in 2020,” Shah said.

“Valuations have been ticking up a little bit, but there have been many times in market history where valuations stay above average for a while,” he said.

The S&P 500 ended little changed on Friday and the Nasdaq ended an 11-day streak of gains after some late-session weakness, although the Dow managed to eke out another record as investors paused after a year-end rally.

The Dow Jones Industrial Average rose 23.53 points, or 0.08 per cent, to 28,644.92, the S&P 500 gained 0.07 points, or 0.00 per cent, to 3,239.98 and the Nasdaq Composite dropped 15.77 points, or 0.17 per cent, to 9,006.62.

The S&P 500 was just shy of surpassing a 29.6 per cent gain in 2013, which would give the U.S. benchmark its best year since 1997.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 0.8 per cent to 555.39, a level not seen since mid-2018. It is up 15.5 per cent so far this year.

Emerging market stocks rose 0.58 per cent.

Germany’s benchmark 10-year Bund yield held steady below recent six-month highs while U.S. Treasury yields fell as the government debt found support following a sell-off that sent yields to one-month highs.

Yields have risen amid increased risk appetite driven by optimism that a Phase 1 U.S.-Sino trade pact will spur global growth and as major central banks around the world inject liquidity into the market.

The euro rose to a 10-day high. The dollar index fell 0.62 per cent, with the euro up 0.78 per cent to $1.1183. The Japanese yen strengthened 0.20 per cent versus the greenback at 109.43 per dollar.

U.S. gold futures climbed to a seven-week high of $1,518.70 an ounce. Spot gold added 0.1 per cent.

Oil prices rose to the fourth consecutive weekly gain on Friday, steadying at three-month highs after new data showed U.S. crude inventories fell far more than expected, while upbeat economic data and optimism over a U.S.-China trade deal fueled a year-end stock market rally.

Brent crude rose 24 cents to settle at $68.16 a barrel, the highest since mid-September. The international benchmark has climbed nearly 27 per cent since the end of 2018.

West Texas Intermediate rose 4 cents to settle at $61.72 a barrel, another three-month high. The U.S. benchmark has risen 36 per cent so far this year.

U.S. crude stocks fell by 5.5 million barrels in the week to Dec. 20 to 441.4 million barrels, according to the Energy Information Administration, far exceeding analysts’ expectations of a 1.7 million-barrel drop.

“Inventories are bullish almost across the board,” said Josh Graves, senior market strategist at RJO Futures in Chicago.

A year-end stock market rally also helped lift oil prices as consumer sentiment continued to improve, he said.

“It’s a Santa Claus rally. People tend to buy more things that will indirectly drive the price of oil up,” Graves said.


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Rob Carrick: What the Bank of Canada rate hike means for investors and savers who want to park money safely – The Globe and Mail




The benefit of parking cash in a high-interest savings account ETF was demonstrated this week after the latest increase in the Bank of Canada’s overnight rate.

The central bank raised its trendsetting rate by a quarter of a percentage point Wednesday. Almost immediately, the yield on HISA exchange-traded funds increased by a similar amount. For example, the gross yield on the Horizons High Interest Savings ETF CASH-T was 5.18 per cent late this week, up from 4.93 per cent late last month. CASH has a management expense ratio of 0.11 per cent, so its net yield is now 5.07 per cent.

Changes in the overnight rate do not directly influence returns from guaranteed investment certificates, but there’s an indirect effect that right now is working in favour of GIC investors. The Bank of Canada is worried about inflation – that’s why it increased the overnight rate. Inflation fears are also weighing on the bond market, where rates have been moving higher as well lately. Yields on Government of Canada bonds influence rates on GICs, which have been creeping higher lately for terms of one and two years.


As of late this week, the number of alternative banks, trust companies and credit unions offering 5 per cent for one year had grown to seven, and the number offering 5 per cent for two years was four. The best three-year rate was 4.95 per cent. GIC issuers have been reluctant to raise rates on longer terms, but this could change if bond yields keep rising.

HISA ETFs accounted for two of the top 10 sellers last month in ETF land, even though they are under review by the federal Office of the Superintendent of Financial Institutions. These funds hold their assets in accounts at big banks that pay rates of return that are superior to what’s offered to retail depositors. Regulators at OSFI are looking into what would happen to banks if investors were to pull all their money from HISA ETFs at once. OSFI may order changes that will lower returns on HISA ETFs.

As a hedge against this outcome, some ETF providers recently introduced funds holding government treasury bills. T-bill yields have been rising lately as a result of the same inflation concerns that drove the Bank of Canada rate increase this week. T-bill ETF yields would benefit if this continues.

HISAs for investors are also available in a mutual fund format. Rates on these products have been stuck in the 4.05 to 4.35 per cent range in recent months.

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Indigo shakeup: Heather Reisman retiring, 4 other board members stepping down



Indigo Books and Music Inc. says founder Heather Reisman will retire as executive chair and as a director this summer, while four other members of its board have also stepped down.

The company says director Chika Stacy Oriuwa indicated she resigned “because of her loss of confidence in board leadership and because of mistreatment.”

In addition to Oriuwa, Indigo says Frank Clegg, Howard Grosfield and Anne Marie O’Donovan have also stepped down as directors. No explanation for their departures was given.


Click to play video: 'Indigo CEO Heather Reisman talks about creating a happier planet in her new book ‘Imagine It!’'
Indigo CEO Heather Reisman talks about creating a happier planet in her new book ‘Imagine It!’


Indigo wished the departing directors well and thanked them for their contributions.

The retailer says Reisman will retire as executive chair and from the board effective Aug. 22.

Reisman stepped down as chief executive of Indigo last year as part a transition that saw Peter Ruis, who had been the retailer’s president, promoted to chief executive.


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Canadian banks raise prime rate to 6.95% after Bank of Canada hike



Big banks follow suit after surprise quarter-point hike

Canadian banks announced they were raising their prime lending rates after the Bank of Canada surprised markets by hiking it benchmark interest rate on June 7.

Royal Bank of Canada, TD Canada Trust, Canadian Imperial Bank of Commerce (CIBC), Bank of Montreal, National Bank of Canada and Bank of Nova Scotia all said they were increasing the prime rate by 25 basis points to 6.95 per cent from 6.70 per cent, effective June 8, 2023.


Desjardins Group and Equitable Bank also announced it would raise its Canadian prime rate by the same amount.

The Bank of Canada surprised markets and observers when it raised its benchmark policy rate by a quarter percentage point to 4.75 per cent earlier in the day.

The central bank has raised its rate nine times, and 4.5 percentage points, since March 2022, and the commercial banks’ prime rate has moved in lockstep from 2.7 per cent to 6.95 per cent.

Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below:



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