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Canada’s main stock index fell in early going Wednesday, hit by a sharp drop in crude prices and a higher-than-forecast reading on inflation. South of the border, key indexes were also weaker at the open with Fed chair Jerome Powell’s testimony before Congress in focus.
At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 348.41 points, or 1.81 per cent, at 18,908.88.
The Dow Jones Industrial Average fell 177.68 points, or 0.58 per cent, at the open to 30,352.57.
The S&P 500 opened lower by 30.90 points, or 0.82 per cent, at 3,733.89, while the Nasdaq Composite dropped 127.35 points, or 1.15 per cent, to 10,941.95 at the opening bell.
On Wednesday, markets will have a close eye on an appearance by Mr. Powell on Capitol Hill, looking for indications of how aggressive the Fed will be in hiking rates as it looks to temper high inflation. In initial remarks, Mr. Powell said the Fed remains committed to bringing inflation under control.
“Jerome Powell’s semiannual testimony could turn the market mood sour again as the Fed chief is expected to reiterate his strong commitment to fighting inflation even if it means slower economy and a softer jobs market,” Swissquote senior analyst Ipek Ozkardeskaya said in an early note.
“Yesterday’s rally in stocks could be another dead cat bounce, and we may see the market painted in red in the following sessions,” she said.
In this country, inflation is front and centre with the release of the May consumer price index figures from Statistics Canada ahead of the start of trading.
The agency says the annual rate of inflation spiked to 7.7 per cent in May, the fastest pace since 1983. Economists had been expecting an increase, but most were looking for a number closer to 7.4 per cent. Statscan says higher gasoline prices were behind much of the increase although price pressures continued to be broad-based.
Economists are increasingly expecting the Bank of Canada to hike rates at its next policy meeting by 75 basis points following a similar move recently by the Fed.
“Inflation was already running well ahead of the Bank of Canada’s April projections prior to today’s release, and is now even further ahead,” CIBC senior economist Andrew Grantham said.
“The higher than expected inflation figure will have markets pricing an even greater probability of a 75-basis-point hike in July.”
On the corporate side, Canadian investors got results from Sobeys-parent Empire Co. Ltd. ahead of the start of trading. Empire Company Ltd. reported net earnings of $178.5-million or 68 cents per share in the quarter, compared to $171.9-million or 64 cents per share in the same period last year. The company announced a 10-per-cent increase to its quarterly dividend paid to shareholders, to 16.5 cents per share.
Overseas, the pan-European STOXX 600 fell 1.28 per cent just before midday. Britain’s FTSE 100 was down 1.11 per cent. Germany’s DAX and France’s CAC 40 were off 1.76 per cent and 1.58 per cent, respectively.
In Asia, Japan’s Nikkei finished down 0.37 per cent. Hong Kong’s Hang Seng dropped 2.56 per cent on weakness in tech stocks.
Crude prices fell in early going with an expected move by U.S. President Joe Biden to ease costs for drivers tempering sentiment.
The day range on Brent is US$108.62 to US$114.45. The range on West Texas Intermediate is US$103.20 to US$109.76. Both benchmarks were down more than 4 per cent in the predawn period.
“There is a distinct lack of drivers behind this move, and certainly no headlines to justify it,” OANDA senior analyst Jeffrey Halley said.
“I surmise that President Biden’s expected announcement of a temporary suspension of Federal fuel taxes [on Wednesday] has prompted the selling, and I do note the U.S.-centric WTI contract is leading the charge lower.”
Later in the day, Mr. Biden is expected to call for a temporary suspension of the U.S. federal tax on gasoline, according to a report by Reuters. The move is aimed at addressing high costs for consumers and soaring inflationary pressures.
Later Wednesday, traders will also got the first of two weekly U.S. inventory reports, with new figures from the American Petroleum Institute. More official government figures will follow on Thursday morning.
In other commodities, gold prices slid alongside a firmer U.S. dollar.
Spot gold fell 0.3 per cent to US$1,826.41 per ounce by early Wednesday morning, extending losses to a fourth straight session. U.S. gold futures dropped 0.6 per cent to US$1,827.40.
“Although gold’s interminable range-trading continued overnight, the falls of the past three sessions hint that any upward momentum for the yellow metal is doing an Elvis and is leaving the building,” Mr. Halley said.
“Gold has been grinding lower, even as U.S. yields and the U.S. dollar trade sideways,” Mr. Halley said.
The Canadian dollar was weaker, hit by uncertain risk sentiment and lower commodities prices, while its U.S. counterpart advanced against a basket of world currencies.
The day range on the loonie is 76.94 US cents to 77.43 US cents.
“The CAD has softened overnight, with price action driven by the weaker risk backdrop and a slump in energy prices,” Shaun Osborne, chief FX strategist with Scotiabank, said. “The CAD retains an unfortunately strong, negative correlation with US equities (-83 per cent by our measure) so the gravitational pull of sliding S&P 500 futures is hard to escape from.”
Canadian investors will get inflation figures ahead of the start of trading with economists expecting to see another spike in price pressures.
On world markets, the U.S. dollar index, which weighs the greenback against a group of currencies, was up 0.33 per cent at 104.8, according to figures from Reuters.
The euro fell 0.4 per cent to US$1.0497.
The yen slid 0.3 per cent to 136.3 per U.S. dollar, having hit 136.71 in early trade, its lowest since October 1998, Reuters reports.
Other commodities-linked currencies were also lower. The Norwegian krone fell 1.3 per cent against the U.S. dollar. The Australian dollar slid 1.1 per cent to US$0.6898 by early Wednesday.
In bonds, the yield on the U.S. 10-year note was lower at 3.222 per cent.
More company news
The Globe’s Susan Krashinsky Robertson reports that Canada’s largest retailer is getting into the increasingly competitive rapid grocery-delivery field through a partnership with San Francisco-based DoorDash Inc. Starting in August, Loblaw Cos. Ltd. will offer customers delivery in roughly 30 minutes or less, beginning in Toronto and Winnipeg before expanding to 10 locations across the country within that month. Within a few years, Loblaw expects to have 40 to 50 PC Express Rapid Delivery locations.
Brookfield Asset Management said on Wednesday it had raised $15-billion for its Brookfield Global Transition Fund, a fund focused on investments in the decarbonization technology space.
Boeing expects supply chain problems to persist almost until the end of 2023, led by labour shortages at mid-tier and smaller suppliers, partly due to the faster-than-expected return of demand, its chief executive said on Wednesday. Boeing said last month that production of its 737 aircraft had been slowed by shortages of a single type of wiring connector, while some of its airline customers had been forced to cancel flights due to a lack of staff in the post-pandemic recovery. “The shift from demand to now supply issues … is remarkable, the speed with which it happened,” Boeing Chief Executive David Calhoun said at Bloomberg’s Qatar Economic Forum in Doha.
(8:30 a.m. ET) Canada’s CPI for May.
(9:30 a.m. ET) U.S. Fed Chair Jerome Powell testifies to the Senate Banking Committee.
With Reuters and The Canadian Press
Canadian retailers struggle with online shipping costs as fuel surcharges soar – Global News
Canadian retailers are struggling with higher shipping costs as couriers tack hefty fuel surcharges onto shipping rates to recoup record gas prices.
The additional charge is sending the cost of shipping goods within Canada higher, topping 40 per cent for some carriers.
For stores with high online return rates, such as apparel and footwear companies, the increased cost of shipping can be especially challenging.
So far, most companies are trying to absorb the extra domestic shipping charges, Retail Council of Canada spokeswoman Michelle Wasylyshen said.
With inflation squeezing consumers and an ongoing battle for online dollars, she said retailers are reluctant to pass on costs.
“Retail is one of the most competitive industries in Canada, so raising minimum free shipping thresholds or adding surcharges to consumers directly is often done as a last resort,” she said.
“Retailers would prefer to find savings elsewhere.”
Higher domestic shipping costs come as international freight costs finally begin to stabilize.
Retailers have basically traded more reasonable international container freight rates for higher shipping within Canada, experts say.
“The idea of ever being in equilibrium around fuel prices or containers or what’s happening with worldwide supply chains is long gone,” Indigo Books & Music Inc. president Peter Ruis said in an interview.
Indigo, which saw online sales soar during the pandemic, is also avoiding raising prices despite skyrocketing shipping rates.
“We’re absolutely clear that especially at the moment with inflation and how customers are feeling … we will not want to be raising prices,” Ruis said.
Instead, the company is focused on developing the ability to ship from local stores, rather than from a centralized warehouse, to cut down on shipping costs.
“In October we launch our new website which will have a ship from store facility, which means we can use all of our stores as a warehouse for the online consumer,” Ruis said. “If someone’s in Halifax, we could choose to send them product from the Halifax store rather than from the central (distribution centre) in Toronto or Calgary.”
He added: “In a situation where the fuel charges are really difficult, we can mitigate that by sending stock locally.”
Tips to conserve gas
Apparel retailers, which often see the highest return volumes among retailers, also appear determined to avoid passing fuel surcharges on.
Canadian underwear and apparel brand Knix Wear Inc., which does most of its sales online and offers free return shipping on most orders, said it doesn’t plan to change the qualifying threshold for free shipping.
“We know there are several external factors affecting shipping and costs but we do not want our customers to feel those impacts,” company spokeswoman Emily Scarlett said.
Shipping surcharges vary between different courier companies.
A FedEx spokesman said the shipping company manages fluctuations in fuel prices through “dynamic fuel surcharges.”
Fuel surcharges on shipments within Canada are subject to weekly adjustments based on a rounded average of the Canadian diesel retail price per litre, James Anderson said in an email.
For packages outside the country, the company bases its fuel surcharge on a rounded average of the U.S. Gulf Coast spot price for a gallon of kerosene-type jet fuel, he said.
The FedEx Express fuel surcharge is currently 41.50 per cent within Canada, and 26.50 per cent on international shipments.
DHL Express said it applies the fuel surcharge to offset fluctuations in fuel prices, which can impact the cost of transportation services _particularly for the company’s aviation fleet.
The fuel surcharge for international shipments is set at 25 per cent for July 2022, according to the company’s website.
Canada Post’s fuel surcharge on domestic services is currently 37 per cent, while its international parcel service is 21.75 per cent, according to its website.
© 2022 The Canadian Press
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Air Canada is cancelling more than 9500 flights this summer. What that means for your travel plans – The Globe and Mail
Air Canada announced last week that it was cancelling thousands of flights in July and August in an effort to quell what it said were “unprecedented strains” that the overwhelming resurgence of travel had placed on the airline industry.
The airline was already operating at just 80 per cent of prepandemic levels. The move prompted outrage from consumers and advocates, who say Air Canada should offer better compensation to the hundreds of thousands of passengers whose summer flights have now been cancelled.
Air Canada spokesman Peter Fitzpatrick said the airline believes the schedule changes announced last week will help stabilize the situation, but warned that it will take time.
Here’s what the cancellations mean for your travel plans.
How many flights will be cancelled?
More than 9,500 flights will be cancelled in July and August – or an average of 154 flights per day – as Air Canada looks to cut 15 per cent of its schedule, most of which will be to and from Toronto or Montreal.
Three routes from Montreal to Pittsburgh, Baltimore and Kelowna, B.C., will be temporarily suspended. Air Canada will also suspend its route from Toronto to Fort McMurray, Alta.
International flights will remain unaffected, in part because they are harder to rebook, Mr. Fitzpatrick said.
Some of the main issues for the airline relate to late-evening flights using single-aisle aircrafts, he said. Reducing evening flights, Mr. Fitzpatrick added, will allow Air Canada to improve start-up performance the next morning, help stabilize the airline’s schedule and aid in other areas such as baggage handling, catering and plane grooming.
Is Air Canada offering refunds and financial compensation?
Currently, Air Canada’s policy for delays and cancellations provides customers with the option of receiving a full refund no matter the reason in the event a flight is cancelled, delayed more than three hours or if a connection is added to an itinerary.
The airline also offers compensation – distinct from refunds – of between $400 and $1,000 either because of a cancellation or delay for travellers who arrive at their final destination three or more hours after their scheduled time of arrival for reasons deemed within Air Canada’s control, and unrelated to safety issues.
Cancellations because of reasons within Air Canada’s control include crew scheduling issues or when necessary equipment is unavailable. However, travellers who have had their flights cancelled because of safety problems such as maintenance issues, travel advisory updates, bad weather and sick crew members or passengers will not be eligible for compensation.
More protections for passengers are coming. Amendments to the Air Passenger Protection Regulations, which took force in 2019, will require airlines to provide refunds or alternative flights to passengers whose trips are cancelled or delayed by at least three hours for reasons outside the control of the carriers. They will go into effect on Sept. 8.
The changes allow customers to choose between a refund or another flight that leaves within 48 hours on the airline in question, or a partner airline, at no additional cost. Large carriers are required to put customers on competitors’ planes. But until then, passengers whose flights are cancelled or delayed by three hours or more for reasons the airline cannot control, including weather or closed borders, are not entitled to a refund, and the airline must rebook them on the next available flight.
How to check if your flight is affected
Air Canada’s flight-status page on its website allows passengers who have already booked a flight to see whether it has been cancelled up to one week ahead of time. Travellers with a reservation can enter their flight number or flight route and departure date into the search engine.
When you book a flight with Air Canada, the airline says you are also automatically enrolled to receive flight notifications, which can be reconfirmed when you check in. For further questions, travellers within Canada and the U.S. can call 1-888-247-2262 at any time.
What to do if your luggage gets lost
If you can’t find your luggage at the baggage claim, Air Canada says to contact your airline’s baggage-service agent upon arrival, who will ask for your contact information, a detailed description of your luggage and items, your baggage claim stubs and boarding passes.
That information will be used to help you create a WorldTracer incident report, which you can use on the WorldTracer website to update or review the status of your lost luggage. Air Canada advises anyone who doesn’t immediately create this incident report to call Air Canada’s Central Baggage Office at 1-888-689-2247 as soon as possible, at any time.
If your luggage isn’t found after three days, you’ll be asked to fill out a Baggage Tracing form, which can be found here.
If your baggage is lost, Air Canada will refund checked-baggage fees and offers interim reimbursements for “reasonable expenses that you’ve incurred for rentals or essential items.” You may request to be reimbursed here, as long as your claims are supported by receipts.
“Each delayed bag is costly for us to handle and deliver post-flight, so we are doubly incentivized to have bags arrive with the customers,” Air Canada said in an e-mailed statement.
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