Today’s news: Trending business stories for December 12, 2023

The latest business news as it happens

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4:50 p.m.

Market close: TSX down as price of oil falls, U.S. stock markets rise

stock chart

Canada’s main stock index moved lower, weighed down by losses in energy, utilities and battery metals, while U.S. markets rose after the latest inflation report ahead of Wednesday’s interest rate announcement.

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The S&P/TSX composite index closed down 84.52 points at 20,233.84.

In New York, the Dow Jones industrial average was up 173.01 points at 36,577.94. The S&P 500 index was up 21.26 points at 4,643.70, while the Nasdaq composite was up 100.91 points at 14,533.40.

The Canadian dollar traded for 73.53 cents U.S. compared with 73.69 cents U.S. on Monday.

The January crude oil contract was down US$2.71 at US$68.61 per barrel and the January natural gas contract was down 12 cents at US$2.31 per mmBTU.

The February gold contract was down 50 cents at US$1,993.20 an ounce and the March copper contract was up a penny at US$3.79 a pound.

The Canadian Press

1:20 p.m.

Tourism recovery not expected until 2024, report finds

Travellers make their way through Pearson International Airport in Toronto.
Travellers make their way through Pearson International Airport in Toronto. Photo by Cole Burston/The Canadian Press files

A new report from Destination Canada says the country’s tourism industry won’t fully recover until next year.

The Crown corporation says the number of overnight leisure and business visits in the country will fall just short of 2019 levels by the end of 2023, while projections show it beating pre-pandemic figures by a whisker in 2024.

Destination Canada, which promotes tourism across the country, says nominal spending in the sector will exceed 2019 levels this year, but that was largely driven by inflation.

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The organization’s chief executive Marsha Walden says attracting wealthier tourists, building out the workforce and attracting more visitors outside of peak season are all key to industry growth.

Destination Canada says that while the projected annual tourism growth rate of nearly six per cent through 2030 is expected to exceed overall economic growth in Canada, that pace looks sluggish next to global tourism revenues that are forecasted to climb by more than seven per cent each year.

The Crown corporation says that leisure comprised the main driver of travel over the past two years and hit pre-pandemic levels in 2022 with $72.4 billion in revenue, but that business travel is now picking up at last.

The Canadian Press

12:12 p.m.

Midday markets: TSX falls as oil price continue to drop

Markets chart

Canada’s main stock index was down almost 150 points in early-afternoon trading, led lower by losses in the energy stocks as the price of oil fell.

West Texas Intermediate, the United States crude oil benchmark, fell as much as 3.4 per cent to below US$69 a barrel, near the lowest since late June on further reports of robust global supply.

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In Toronto, the S&P/TSX composite index was down 0.73 per cent at 20,196.18.

In New York stocks gyrated before finding their footing as new U.S. inflation data indicated the Federal Reserve will likely be in no hurry to cut interest rates in 2024 as markets had hoped — a hope that launched the S&P 500 on a major winning run in November.

On Wall Street, the S&P 500 was up 0.09 per cent at 4,626.45. The Dow Jones industrial Average was up 0.41 per cent at 36,553.38 while the Nasdaq composite was up 0.17 per cent at 14,456.57.

The Canadian Press, Bloomberg

11:28 a.m.

Oil falls to near five-month low

Oil price chart

Oil plunged, approaching its lowest level in five months, amid more signs of robust supplies.

West Texas Intermediate fell as much as 3.4 per cent to below US$69 a barrel, near the lowest since late June. Crude has slid for seven straight weeks, with even new output cuts by OPEC and its allies failing to halt the skid. In a fresh sign that supplies remain ample, the weekly average of Russia’s seaborne crude exports jumped to the highest level since early July.

Spreads between monthly contracts continue to indicate oversupply, with the front end of the Brent futures curve this week closing at the weakest level since June.

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“Futures are trying to solidify a bottom from last week’s selloff,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities.

Oil is on the longest weekly losing streak since 2018 and is down by about a fifth from a peak in late September. Forecasts for slowing Chinese consumption growth and lingering risks of recession in the United States are making for a gloomy demand outlook in the first quarter.

This week, the International Energy Agency, the Organization of Petroleum Exporting Countries and the U.S. Energy Department will publish their latest monthly assessments of market fundamentals. Investors also will monitor the Federal Reserve’s final rate decision of the year.


10:42 a.m.

Loonie will bear brunt of Canada’s ‘dismal’ productivity: Rosenberg

The Canadian dollar is in a “structural bear market” as it bears the brunt of the country’s stagnating productivity, says economist David Rosenberg in his morning newsletter.

Read his full comment here:

“Real gross domestic product per capita in Canada has been down or negative sequentially in the past five quarters and has contracted 2.4 per cent on a year-over-year basis. Productivity in the third quarter declined at a 2.3 per cent annual rate, marking the sixth consecutive fall off. Definitive recessionary signs, but also evidence of an economic backdrop in structural decay, masked by booming immigration and population gains which, sadly, are not paying for themselves.

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Productivity in Canada has completely stagnated now for the past six years. Dismal is not a strong enough word to describe the situation. Because of this, unit labour costs in Canadian dollar terms are up 6.2 per cent from year-ago levels and up 3.4 per cent in U.S. dollar terms. That currency-adjusted pace compares with a 1.6 per cent trend in the U.S. (where productivity is up 2.5 per cent year-over-year, in stark contrast to the trajectory north of the border).

It is a matter of pure math that to re-establish a more competitive cost setting in Canada, the loonie is going to have to bear the brunt and act as the antidote to this secular downward path in Canadian productivity, both in absolute terms, but most importantly in comparison to what is happening south of the border (exchange rates, after all, are simply “pair trades” that in large part reflect comparisons in economic success between two countries).

Barring any changes in relative productivity or wage compensation, the Canadian dollar likely needs further depreciation to equalize unit labour costs in common currency terms.”

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David Rosenberg

10:34 a.m.

Ottawa to create catalogue of housing designs to speed up construction

Sean Fraser, minister of housing
Sean Fraser is the federal minister of housing. Photo by Patrick Doyle/The Canadian Press

The federal government is planning to launch a catalogue of pre-approved home designs to speed up the home-building process for developers.

Housing Minister Sean Fraser announced today the federal government will begin a consultation process to develop the catalogue in January.

Fraser says this brings back a policy from the post-Second World War era when the Canada Mortgage and Housing Corp. developed blueprints to speed up the construction of homes.

A report released this summer co-authored by housing expert Mike Moffatt came with a set of recommendations for the federal government that included developing such a catalogue.

Fraser says the initiative will start with low-rise builds and will then explore a potential catalogue for higher-density construction.

Read the full story here.

The Canadian Press

10:15 a.m.

Wall Street whipsaws as CPI report underwhelms

The sun shines through the U.S. flags flying in front of the New York Stock Exchange
The sun shines through the U.S. flags flying in front of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, Tuesday, Nov. 14, 2023. Photo by J. David Ake/THE ASSOCIATED PRESS

Stocks, bonds and the dollar struggled for direction, with inflation data that only matched estimates reinforcing bets the United States Federal Reserve will keep rates elevated for a period to bring inflation back to its target.

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The so-called core consumer price index, which excludes food and energy costs, increased 0.3 per cent following a 0.2 per cent advance in October. From a year ago, it advanced four per per cent. Economists favour the gauge as a better indicator of underlying inflation than the overall CPI. That measure ticked up slightly. From a year ago, it was up 3.1 per cent.

After falling in the immediate aftermath of the report, U.S. Treasury two-year yields reversed course and rose two basis points to 4.73 per cent.

Swap traders slightly trimmed their expectations for Fed rate cuts in 2024.

One Wall Street, the S&P 500 was down 0.04 per cent at 4,620.86. The Dow Jones Industrial Average was up 0.19 per cent at 36,477.86 while the Nasdaq composite was up 0.14 per cent at 14,453.30.

In Toronto, the S&P/TSX composite index down 0.6 per cent at 20,199.61.


9:40 a.m.

U.S. inflation comes in stronger than expected

U.S. core inflation

United States consumer prices picked up in November, reinforcing the Federal Reserve’s resolve to keep interest rates elevated in the near term.

The so-called core consumer price index, which excludes food and energy costs, increased 0.3 per cent following a 0.2 per cent advance in October, according to government figures. From a year ago, it advanced four per cent for a second month.

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Economists favour the core metric as a better gauge of the trend in inflation than the overall CPI. That measure ticked up slightly after being little changed in October. From a year ago, it was up 3.1 per cent.

Tuesday’s data underscore the choppy nature of getting inflation back in line. While price pressures have largely retreated from multi-decade highs, a still-strong labour market continues to power consumer spending and the broader economy.

Fed officials begin a two-day meeting Tuesday that is expected to culminate with them holding interest rates steady again. Chair Jerome Powell will likely reiterate he and his colleagues want to see a more sustainable pullback in price growth before easing policy.

Treasuries erased gains, stock futures fell and the dollar pared losses after the release. Traders scaled back bets on a interest-rate cut in March.


7:30 a.m.

Biden appears unbothered by Canada’s 3% tax on U.S. tech giants, Trudeau says

Canada’s tax on Netflix Inc. and other foreign digital services companies may be a major irritant for the United States tech sector, but Prime Minister Justin Trudeau says it doesn’t seem to be much concern to President Joe Biden.

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In a year-end interview with The Canadian Press, Trudeau said “not once” did Biden indicate that the digital services tax, which is set to go into effect on Jan. 1, was a significant worry for the White House.

The prime minister said he was poised to defend the policy, which is widely opposed on Capitol Hill. David Cohen, the U.S. ambassador to Canada, warned in October about the risk of a “big fight” over the three per cent levy.

“I understand that Americans may not be very happy that we are going to do it, but we have promised to do it,” Trudeau said. He said he was prepared with “all sorts of responses” had Biden raised the upcoming tax.

The measure is aimed at ensuring foreign tech giants that are generating revenue from Canadian users are required to pay taxes on that revenue in Canada. The bulk of those companies are based in the U.S.

“I think that, in all the conversations we had with the Americans, not once did President Biden raise that as a priority, a concern, directly with me.”

Emilie Bergeron, The Canadian Press

Read the full story here.

Stock markets before the opening bell

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Stock market, December 12, 2023

Treasury yields and the United States dollar fell, while U.S. stock futures posted small moves before a crucial inflation report.

Equity traders were reluctant to make big bets ahead of this week’s heavy load of economic data and interest-rate decisions, with contracts on the S&P 500 and Nasdaq 100 keeping to narrow ranges.

Tuesday’s consumer price index will give Wall Street a sense of whether the disinflation trend is continuing, a day before the last scheduled United States Federal Reserve decision of 2023. The U.S. central bank is widely expected to hold rates, with most market focus on whether it will try to temper policy easing expectations after investors’ aggressive dovish repricing.

The S&P/TSX composite index closed down 13.18 points at 20,318.36 on Monday.


What to watch today

We’ll get an updated look at inflation in the United States with the release of the consumer price index for November at 8:30 a.m. ET.

Expect earnings reports from Transcontinental Inc., Reitmans Canada Ltd. and DavidsTea Inc.

The Economic Club of Canada hosts an armchair discussion on the topic of “Examining Canada’s Current Economic Landscape.” Frances Donald, global chief economist at Manulife Investment Management; John Manley, former federal finance minister; and Stephen Poloz, former Bank of Canada governor, will participate.

Need a refresher on yesterday’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

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