Canada reports first trade deficit since July
Canada’s merchandise trade balance recorded its first monthly deficit since July, due to a combination of higher imports of pharmaceutical products and the appreciation of the Canadian dollar.
The country posted a $312 million trade deficit in December, from a surplus of $1.1 billion a month earlier, Statistics Canada reported Wednesday in Ottawa. Economists had been expecting exports to exceed imports by $1 billion in December.
The drop in exports that month was partly due to the increase in the average value of the Canadian dollar by 1.5 US cents compared with November. When the loonie appreciates against the greenback, monthly trade values expressed in Canadian dollars are lower.
A large proportion of import and export transactions are done in U.S. dollars and must be converted to Canadian dollars to compile monthly statistics, the agency said. Total exports were down 1.9 per cent in December and imports increased 0.2 per cent. But when expressed in U.S. dollars, Canadian exports edged up 0.1 per cent, and imports rose 2.3%.
Imports of consumer goods jumped 9.4 per cent, the strongest monthly increase on record for this product category. Imports of pharmaceutical products, which surged 28.1 per cent, contributed most to the increase, driven by “atypical high-value imports” from the United States, the agency said. Clothing and alcoholic beverages also posted notable increases.
In volume terms, exports fell 0.4 per cent, while imports rose 1.3 per cent.
— Randy Thanthong-Knight, Bloomberg
Market close: TSX ekes out gain, U.S. stock markets move higher
Canada’s main stock index just barely stayed in the green, while U.S. stock markets rose.
The S&P/TSX composite index closed up 11.44 points at 20,969.18.
In New York, the Dow Jones industrial average was up 156.00 points at 38,677.36. The S&P 500 index was up 40.83 points at 4,995.06, while the Nasdaq composite was up 147.65 points at 15,756.64.
The Canadian dollar traded for 74.24 cents U.S. compared with 74.04 cents U.S. on Tuesday.
The March crude contract was up 55 cents at US$73.86 per barrel and the March natural gas contract was down four cents at US$1.97 per mmBTU.
The April gold contract was up 30 cents at US$2,051.70 an ounce and the March copper contract was down five cents at US$3.74 a pound.
The Canadian Press
S&P 500 closes in on 5,000 milestone as stocks climb ‘wall of worry’
The S&P 500 came within a striking distance of its 5,000 milestone as tech megacaps rallied and a strong sale of 10-year Treasuries dimmed supply concerns. Bonds were little changed.
Equities extended a torrid surge from their October 2022 lows on prospects that a solid economy will continue fuelling corporate earnings. Traders shrugged off concerns about lofty valuations, February’s weak seasonality and cautious commentary from United States Federal Reserve officials — with stocks hitting all-time highs. Not even fresh volatility in New York Community Bancorp Inc., which has unsettled investors over the past week, was able to deter equity bulls.
“The market continues to climb the wall of worry, including shifting Fed expectations, geopolitical tension, and overbought market conditions,” said Mark Hackett at Nationwide. “We are entering a sluggish seasonal period, but the market has strong momentum.”
The U.S. government sold a record $42 billion of 10-year notes Wednesday at a lower-than-anticipated yield, a sign of investor confidence that the Fed will pivot to interest-rate cuts this year in response to a growth slowdown. The lower yield indicates stronger demand than traders anticipated.
Also on Wall Street’s radar was a raft of central bank speakers — all signalling no rush to cut rates
Fed Governor Adriana Kugler presented an optimistic case for a continued slowdown of inflation while indicating little urgency to reduce borrowing costs. Fed Bank of Boston President Susan Collins said she’s looking for more evidence that inflation is durably set to align with the target before moving to cut rates — though that step is likely “later this year.” Her Minneapolis counterpart Neel Kashkari told CNBC that said officials need to see “a few more months” of inflation data before easing policy.
Couche-Tard gets €10 billion in orders to refinance M&A debt
Alimentation Couche-Tard Inc., which recently completed the purchase of almost 2,200 gasoline stations in Europe from TotalEnergies SE, got close to €10 billion in orders for its first bond deal in the common currency in almost eight years to refinance acquisition debt.
Bond arrangers for the owner of the Circle K convenience-store chain garnered over €4.7 billion in bids for its sale of seven-year notes, according to people familiar with the matter, who asked not to be identified because they’re not authorized to speak publicly about the matter. The company, based in Laval, Quebec, also got another €5.1 billion in orders for the 12-year portion, said the people.
Couche-Tard, which priced €1.35 billion of the notes Wednesday, last sold euro-denominated bonds in May 2016, when it raised €750 million of 1.875 per cent notes due 2026, data compiled by Bloomberg show. On Tuesday, the company also raised US$1.5 billion of 10- and 30-year bonds in its first transaction in the dollar market in almost three years. Last month it priced in its home market C$500 million of five-year bonds.
The company plans to use proceeds from the bond deals to repay outstanding debt, including amounts under the 2023 credit agreement facilities, according to people familiar with the matter. The company signed in December a US$3.37 billion acquisition credit facility made up of six euro- and dollar-denominated portions maturing between 2024 and 2026, data compiled by Bloomberg show.
Couche-Tard priced the seven-year debt at 100 basis over the mid-swaps rate, compared to a spread of around 140 basis points discussed earlier Wednesday, according to the people familiar. The company’s new 12-year bonds were priced at 130 basis points, which is 40 basis points tighter than in earlier talks, said the people.
The deals are aimed at enhancing the company’s capital structure and supporting its strategic vision, a representative for Couche-Tard said in emailed comments on the transactions this week.
Midday markets: TSX down slightly, U.S. stock markets move higher
Canada’s main stock index was down in late-morning trading as gains in the technology stocks were offset by losses in the base metal, telecommunications and utility sectors.
The S&P/TSX composite index was down 0.04 per cent at 20,949.09.
In New York, the Dow Jones industrial average was up 0.41 per cent at 38,677.81. The S&P 500 index was up 0.76 per cent at 4,991.73, while the Nasdaq composite was up 0.74 per cent at 15,725.57.
The Canadian dollar traded for 74.22 cents US compared with 74.04 cents US on Tuesday.
The March crude contract was up 0.34 per cent at US$73.56 per barrel and the March natural gas contract was down five cents at US$1.96 per mmBTU.
The April gold contract was up 0.15 per cent at US$2,054.50 an ounce and the March copper contract was down three cents at US$3.75 a pound.
— The Canadian Press
Laurentian Bank appoints 3 new board members
Laurentian Bank of Canada announced the appointment of three new members to its board of directors.
Board chair Michael Boychuk says Johanne Brunet, Jamey Hubbs and Paul Stinis have joined the board, effective today.
The appointments bring the board to 13 members, including chief executive Eric Provost.
Brunet is a professor of marketing at HEC Montreal and also serves on a number of other boards including as chair of the Quebec Liquor Corp. (SAQ).
Hubbs is a former executive at the Office of the Superintendent of Financial Institutions, while Stinis is a former BCE Inc. executive.
The new additions to the board come after Laurentian Bank appointed Provost as chief executive last year in a change that saw the departure of chief executive Rania Llewellyn and resignation of board chair Michael Mueller.
— The Canadian Press
Markets open: Wall Street rises in advance of record Treasuries auction
Stocks and bonds on Wall Street advanced before a record US$42 billion sale of 10-year Treasuries, with investors also awaiting a handful of United States Federal Reserve speakers for clues on the interest-rate path.
Another solid government auction could be a bullish catalyst for both the equity and bond markets due to recent supply concerns. Traders also kept a close eye on New York Community Bancorp — whose shares whipsawed even after the regional lender tried to reassure investors that its financial position is strong. Tech megacaps led gains in the S&P 500. Ten-year yields fell below 4.1 per cent.
The S&P 500 was up 0.39 per cent while the Nasdaw composite rose 0.67 per cent. The Dow Jones industrial average was up 0.33 per cent.
In Toronto, the S&P/TSX composite index was down 0.12 per cent on declines in financial, energy and materials stocks.
Oil price holds two-day gain, but stays range-bound
Oil edged higher within its recent price range as geopolitical risk in the Middle East was offset by a report showing stockpiles expanded in the United States.
Brent crude hovered near US$79 a barrel after climbing 1.6 per cent over the previous two sessions. West Texas Intermediate rose by a similar amount to US$73.82 on Wednesday. The Houthis said they targeted two ships in the southern Red Sea, the latest in a string of attacks that has forced a major re-routing of global trade. The U.S. has vowed more strikes against Iranian forces and their proxies in the region.
The industry-funded American Petroleum Institute said U.S. nationwide crude inventories rose 674,000 barrels last week, including an increase at the Cushing, Oklahoma, hub, according to people familiar with the data. Official figures are due later Wednesday.
Crude is only slightly higher than it was at the start of the year, with the Middle East war premium and rising transport costs largely cancelled out by a mixed macroeconomic outlook. The lacklusre price moves are belying a boom in oil derivatives trading, with aggregate open interest across the main futures contracts rising to the highest since March 2022.
“It continues to remain a narrow, range-driven market for crude,” said Keshav Lohiya, founder of consultant Oilytics. “One of the biggest reasons behind the oil markets absorbing all these geopolitical risk premiums has been the silent supply growth from non-OPEC countries.”
Brookfield Asset Management raises dividend after profit beat
Brookfield Asset Management Ltd. reported earnings that beat estimates and raised its quarterly dividend, as its results were boosted by strong fundraising and capital deployment.
The Toronto-based firm posted distributable earnings of US$586 million in the fourth quarter, or 36 cents U.S. per share, according to a statement Wednesday. That beat the 34 cents U.S. per share average estimate of analysts surveyed by Bloomberg.
The firm ended the year with US$457 billion of fee-bearing assets, up four per cent from September. It aims to reach US$1 trillion by 2028.
“We had strong performance in our first year following our listing,” president Connor Teskey said in the statement. “We raised US$93 billion of capital which, combined with the approximately US$50 billion anticipated upon the closing of the American Equity Investment Life insurance account, brings the total to $143 billion.”
Brookfield had set a target of raising US$150 billion. The firm gathered US$8 billion in the first close of its fifth flagship real estate fund and garnered US$10 billion in the first close of its second global transition fund. In December, Brookfield closed a record US$30-billion infrastructure fund.
Over the past two years, higher interest rates have crimped fundraising and dealmaking for alternative asset managers. Brookfield is increasingly relying on oil-rich countries in the Middle East to fill a gap left by institutional investors in North America, many of which became overallocated to private assets when rates were lower.
— Layan Odeh, Bloomberg
Read the full story here.
Stock markets before the opening bell
Shares were mixed Wednesday in Europe and Asia as Chinese shares extended their gains after Beijing stepped up support measures for wobbling markets.
France’s CAC 40 edged 0.1 per cent higher to 7,648.12. Germany’s DAX dipped 0.1 per cent to 17,010.92. Britain’s FTSE 100 lost 0.2 per cent to 7,666.67.
The future for the S&P 500 was nearly unchanged while that for the Dow Jones industrial average edged 0.1 per cent higher.
The S&P/TSX composite index closed up 0.41 per cent on Tuesday.
What to watch today
The Bank of Canada will release its summary of deliberations for its interest rate decision on Jan. 24.
The Empire Club of Canada and the Ontario Chamber of Commerce hold an event in Toronto to launch their flagship 2024 Ontario Economic Report.
Merchandise trade balance numbers for December will be released this morning. In the United States, expect the goods and services trade balance for December and consumer credit.
Sun Life Financial Inc., Brookfield Asset Management Ltd., The Walt Disney Co., Alibaba Group Holding Ltd., Uber Inc. and Equifax Inc. are among companies reporting earnings today.
Recommended from Editorial
Toronto home sales surge almost 40%
Retirement math you need to know
Need a refresher on yesterday’s top headlines? Get caught up here.
Additional reporting by The Canadian Press, Associated Press and Bloomberg
Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.