Market close: TSX, U.S. stocks sell off
Canada’s main stock index declined Thursday, led by losses in utilities, base metals and telecom, while U.S. markets also fell after the latest report on inflation south of the border.
Headline inflation in the U.S. was slightly higher in September than expected on a year-over-year basis, remaining unchanged from August’s report, though it continued to slowly moderate on a monthly basis.
But it’s core inflation that the U.S. Federal Reserve is really looking at for its monetary policy decisions, said Ian Chong, portfolio manager for First Avenue Investment Counsel Inc.
That figure, which excludes food and fuel, was in line with expectations as it continued to decelerate, he said. Core prices were up 4.1 per cent from a year earlier, the smallest increase in two years, compared with a 4.3 per cent increase in August.
Inflation is still too hot for the Fed to loosen its grip, said Chong, but expectations are still that it won’t raise rates again in November, or perhaps even in December.
“They are very close to the end of the rate hiking cycle,” he said. However, Thursday’s data does bolster expectations that rates will remain higher for longer, said Chong.
Ten-year bond yields crept back up throughout the day after the inflation release, said Chong, after having eased somewhat earlier in the week. Equities, meanwhile, were mixed but relatively flat before selling off in the afternoon.
The S&P/TSX composite index closed down 163.60 points at 19,500.24.
In New York, the Dow Jones industrial average was down 173.73 points at 33,631.14. The S&P 500 index was down 27.34 points at 4,349.61,while the Nasdaq composite was down 85.46 points at 13,574.22.
The Canadian Press
— with files from The Associated Press
Read more: Here are Thursday’s top 3 performers on the TSX with Spin Master on top again
B.C. Real Estate Association says sales activity impacted by high interest rates
Home sales in British Columbia were up in September by more than 10 per cent from the same time last year.
However, the B.C. Real Estate Association says sales activity is clearly being affected by the Bank of Canada’s policy on interest rates and the subsequent rise in interest rates.
Chief economist Brendon Ogmundson says home sales are trending at below average levels as potential buyers struggle with the high cost of borrowing.
Active listings in the province were up slightly month-over-month at just over 33,000 total listings and were 8.1 per cent higher year-over-year.
The average residential price in the province was $966,530 in September, up 4.8 per cent compared with September 2022, while total sales in dollar volume were $5.3 billion, a 15.7 per cent increase from the same time last year.
Year-to-date figures point in a different direction with residential sales dollar volume down 15 per cent to $57.9 billion, compared with the same period in 2022.
The Canadian Press
Stock market update: Wall Street in the red as odds of another rate hike rise
Stocks retreated and Treasury yields climbed and as the latest reading on U.S. consumer prices bolstered speculation the Federal Reserve is nowhere near declaring victory over inflation — with bets on another rate hike back to “coinflip” territory.
The S&P 500 hovered near 4,350, down approximately one per cent. The S&P/TSX composite index was down 1.2 per cent at 19427.65.
Two-year U.S. government bond rates jumped eight basis points to 5.1 per cent. The dollar rose. Swap contracts linked to future Fed rate decisions pushed the odds of another quarter-point hike back to about 50 per cent — from closer to 30 per cent on Wednesday — and expectations for the first rate cut shifted toward July from the June meeting. The $20 billion 30-year Treasury auction was awarded at 4.837 per cent — the highest since 2007.
The so-called core consumer price index, which excludes food and energy costs, increased 0.3 per cent last month. From a year ago, it rose 4.1 per cent, the lowest since 2021. Economists favour the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.4 per cent, boosted by energy costs. Forecasters had called for a 0.3 per cent monthly advance in both the overall and core measures.
Tour companies reeling as Canadians rethink Israel travel plans
Travel businesses are scrambling to rebook passengers and reroute itineraries as the war sparked by Hamas’s attacks on Israel ramps up.
Following the group’s incursions into the country over the weekend and ongoing rocket assaults, the Israeli military hit back with airstrikes into the Hamas-ruled Gaza Strip ahead of a possible ground invasion, amid concerns the fighting could spiral into a regional conflict.
Artzi Korostelev says it’s been all hands on deck at his Toronto-based company Peerless Travel, as customers reschedule trips to Israel into 2024 and employees work the phones 16 hours a day, while new bookings have screeched to a halt.
He says the company had two groups of several dozen people in the country when fighting broke out, and two more slated to fly there last Saturday — the day the attacks began — on top of some 40 tour groups that were supposed to visit before the end of the year.
Korostelev, who grew up in Israel, says he and his staff are facing a logistical gauntlet while coping with the shock and grief given their personal connections in the country.
While Israel’s biggest airport remains open, many airlines including Air Canada have cancelled flights to the country this week, with the travel plans of thousands now in limbo.
The Canadian Press
Taylor Swift movie breaks Cineplex record for ticket pre-sales
Taylor Swift’s concert movie is proving to be a fairy tale for cinemas grappling with the rise of streamers and ongoing Hollywood strikes.
Cineplex Inc. says the Taylor Swift: The Eras Tour film hitting theatres today generated $6.2 million in pre-sales, making it the most successful pre-sale event of all time for Canada’s largest theatre chain.
The movie’s arrival on the big screen comes amid a slew of halted film productions, as talent represented by the Screen Actors Guild-American Federation of Television and Radio Artists union remain on strike even after the writers’ union ratified an agreement recently.
Before the strikes, cinemas were already battling with the major streaming companies, which have cut theatrical releases for some of their films.
Cineplex chief executive Ellis Jacob said that if the job action continues beyond the end of the year, it would be problematic for the cinema industry.
Theatre industry watchers believe Swift’s film and a concert movie from pop star Beyonce premiering on Dec. 1 could help cinemas end the year on a high note.
The Canadian Press
Read more: Cineplex banks on concerts as Taylor Swift film breaks presale record
Midday markets: TSX falls, U.S. stocks mixed
Canada’s main stock index posted a triple-digit decline in midday trading, weighed down by losses in the base metal, telecommunication and utility sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was down 100.78 points at 19,563.06.
In New York, the Dow Jones industrial average was down 62.95 points at 33,741.92. The S&P 500 index was up 1.77 points at 4,378.72, while the Nasdaq composite was up 38.94 points at 13,698.62.
The Canadian Press
Quebecor expands coverage for Freedom Mobile customers
Quebecor Inc. is extending coverage across Canada for customers of its Freedom Mobile, Vidéotron and Fizz brands following regulatory rulings that it says will promote competition.
The Montreal-based company says there will be a phased expansion of the service areas for those brands as it launches its mobile virtual network operator (MVNO) service.
The Canadian Radio-television and Telecommunications Commission (CRTC) announced a policy in 2021 allowing regional providers to compete as MVNOs across Canada using networks built by large companies and earlier this year ordered them to negotiate access agreements.
Earlier this week, the CRTC ruled in an arbitration proceeding over MVNO data access rates between Quebecor and BCE Inc., siding with the latter’s proposal, after previously deciding in favour of Quebecor in a separate proceeding between the company and Rogers Communications Inc.
Quebecor’s Vidéotron bought Freedom Mobile for $2.85 billion in April in a move prompted by Rogers’ takeover of Shaw Communications Inc., which agreed last year to sell Freedom to ease competition concerns.
Freedom later announced it would offer its first cellphone plan with national coverage and add 5G capability for customers with plans that cost $45 per month or more in the Toronto, Vancouver, Calgary and Edmonton areas and other select cities.
The Canadian Press
Lucrative Ford plant gets hit by major UAW strike escalation
Ford Motor Co. became the latest strike target for the United Auto Workers after members walked out of its largest plant, a highly profitable pickup factory in Kentucky.
The union announced the surprise walkout by 8,700 workers at Ford’s Kentucky Truck Plant in a post on social media Wednesday evening. The plant generates US$25 billion a year in revenue, making the higher-priced Super Duty versions of F-Series pickups and Lincoln Navigator and Ford Expedition large sport-utility vehicles.
Ford shares fell 2.8 per cent Thursday to US $11.91 as of 9:35 a.m. in New York. The stock has declined more than 20 per cent since early July amid uncertainty about labour contract negotiations.
Some analysts view the move as a sign that progress in the contract talks is imminent. While the shift in the tone is negative, “pressure was always needed to force a deal,” Chris McNally, an Evercore ISI analyst, wrote in a research note to clients.
Similarly, Colin Langan, a Wells Fargo analyst, said the UAW’s tougher tactics may signal an end game is near. “We think this escalation is a sign that the UAW could be close to a contract proposal with Ford in the next 1-2 weeks,” he wrote in a note.
The timing of the move breaks with prior expansions of the almost month-long strike, which UAW president Shawn Fain had been announcing in scheduled Friday briefings. The union said in an emailed statement that the strike against the Kentucky plant was called “after Ford refused to make further movement in bargaining.”
Fain is scheduled to update his membership in a public livestreamed briefing at 10 a.m. local time in Detroit on Friday.
The Kentucky Truck Plant is one of the biggest auto factories in the world. In an emailed statement after the strike was called, the company called the union’s decision “grossly irresponsible” and said it poses “serious consequences for our workforce, suppliers, dealers and commercial customers.”
“This work stoppage will generate painful aftershocks — including putting at risk approximately a dozen additional Ford operations and many more supplier operations that together employ well over 100,000 people,” the company said in its statement.
Work stoppages at auto plants in the U.S. have implications for the industry in Canada. The Financial Post’s Larysa Harapyn talked to Flavio Volpe, president of the Automotive Parts Manufacturer’s Association, about the impacts. Watch the interview below:
Keith Naughton, Bloomberg, with additional reporting from the Financial Post
Stock markets are open: Wall Street in the red after inflation data
Treasury yields climbed and stocks fluctuated as consumer inflation data bolstered speculation on another United States Federal Reserve interest rate hike — even if the central bank decides to pause next month.
The S&P 500 was little changed. Treasury two-year yields, which are more sensitive to imminent Fed moves, rose eight basis points to 5.1 per cent. The U.S. dollar advanced. Swap contracts were back near “coin toss” territory for the next Fed tightening — and expectations for the first rate cut shifted toward July from the June meeting.
In Canada, the S&P/TSX composite index was down 0.03 per cent.
Laurentian Bank makes more senior executive changes after CEO shakeup
Laurentian Bank of Canada announced a series of changes to its senior executive ranks following a shakeup that saw the appointment of Éric Provost as chief executive earlier this month.
The Montreal-based bank says Sebastien Belair will expand his mandate by becoming chief operating officer, which now includes oversight of product and digital development.
Belair has served as chief human resources officer since 2021 and was appointed the chief administration officer in September.
Laurentian also announced that Thierry Langevin will join its executive committee as executive vice-president, commercial banking, in addition to his current role as president, LBC Capital, the bank’s equipment financing division.
Sophie Boucher has been promoted to senior vice-president, head of personal banking and small-medium enterprises. She was vice-president, commercial and syndication, within the Laurentian’s commercial banking unit.
Provost was named to the top job at Laurentian on Oct. 2, in a change that saw the departure of chief executive Rania Llewellyn and resignation of board chair Michael Mueller.
The Canadian Press
U.S. inflation higher than expected in September
United States consumer prices advanced at a brisk pace for a second month, reinforcing the United States Federal Reserve’s intent to keep interest rates high and bring down inflation.
The so-called core consumer price index, which excludes food and energy costs, increased 0.3 per cent in September, Bureau of Labor Statistics data showed Thursday. Economists favour the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.4 per cent, boosted by energy costs.
Recent inflation data underscore how a strong labor market is underpinning consumer demand, which risks keeping price pressures above the Fed’s target. At their meeting last month, a majority of officials saw a need for one more interest rate hike this year, and they may maintain that bias — despite a recent surge in bond yields — if inflation doesn’t cool further.
That said, comments from several Fed speakers this week suggest the central bank may hold interest rates steady when it meets Nov. 1, with some indicating that further hikes may not be necessary.
Treasury yields rose, while the S&P 500 index futures pared gains and the dollar appreciated. Traders still priced in a roughly 40 per cent probability of one more quarter-point increase this year.
Reade Pickert, Bloomberg
Ikea is cutting prices as inflation squeezes customers
Ikea, the flat-pack furniture giant, has started cutting prices after a year marked by soaring inflation and weak consumer sentiment in most of its markets.
“I think 2023 was the year where we turned the corner on prices and started lowering them again,” chief executive Jon Abrahamsson Ring of Inter Ikea Group, the worldwide franchiser for the brand, said in an interview. The company is cutting prices across a range of products, including a 20 per cent cut on the popular book shelf Billy, he added.
Ikea’s retail sales hit another record at €47.6 billion (US$50.6 billion) for the 2023 fiscal year, an increase of 7.3 per cent when adjusted for currency impact, thanks to price increases from the previous year and the first half that helped compensate for the “continued challenge of lower sales quantities,” Ring said.
Not only is competition over consumer’s wallets increasing, “the wallets are also getting thinner,” the executive said, pointing to how the ongoing cost-of-living crisis continued to affect demand at retailers worldwide.
The furniture company hiked prices to franchisees at the beginning of the year amid soaring costs in its supply chain. Since May, that pressure has eased as “raw material prices, transportation costs are going in the right direction,” he said. Product availability at Ikea stores also improved after the global shortages of previous years.
As COVID-19 restrictions were fully lifted and visitors returned to the physical stores, Ikea’s online sales remained roughly flat. The company continued to develop small store formats, adding more than 70 locations. It also entered a new market in South America with a store opening in Colombia.
Rafaela Lindeberg, Bloomberg
Royal LePage downgrades home price forecast
Real estate company Royal LePage is forecasting the aggregate price of a home in Canada will increase seven per cent in the final quarter of 2023 compared with the same period last year, downgrading its previous outlook of 8.5 per cent.
The decrease reflects a sluggish third quarter in which the national aggregate home price rose 3.6 per cent year over year to $802,900, but fell 0.8 per cent on a quarterly basis.
More than half of the 63 regional markets analyzed by the company for its latest house price survey posted a quarter-over-quarter price decline in the third quarter as sales activity softened.
“While many Canadians have adjusted to the increased cost of borrowing, elevated interest rates continue to impact activity in markets across the country,” stated the report, released Thursday.
Aggregate home prices in the Toronto and Vancouver regions fell 2.8 per cent and 1.8 per cent, respectively, compared with the previous quarter, while the Greater Montreal Area posted a 0.6 per cent aggregate price increase.
“Prices remain up on a year-over-year basis, with today’s stable market standing in sharp contrast to the steep declines experienced in the third quarter of 2022,” said Royal LePage chief executive Phil Soper in a press release.
“While trading volumes in most regions remain sluggish, Canada’s housing market is on solid footing, with pent-up demand building. We don’t anticipate a material change in property prices through the remainder of the year.”
The Canadian Press
Read Financial Post reporter Shantaé Campbell’s story on the report here.
Stock markets: Before the opening bell
Shares and United States equity futures advanced before a report that’s expected to show a slowing in U.S. inflation, which will help shape the outlook for the United States Federal Reserve’s next steps.
Europe’s Stoxx 600 Index advanced to a three-week high. Energy shares led gains as oil rebounded after OPEC+ leaders Saudi Arabia and Russia reaffirmed their close co-operation to support the crude market.
Banks lagged, with Barclays PLC falling as much as 3.8 per cent after chief executive C.S. Venkatakrishnan said stagnant deal activity, easing volatility and peaking interest rates are set to weigh on the sector’s earnings.
U.S. futures climbed after the S&P 500 rose for a fourth day Wednesday, its longest winning streak since August.
The S&P/TSX composite index closed up 162.64 points at 19,663.84. Here’s a look at yesterday’s top performers.
What to watch today
The United States will release its latest data on inflation with the consumer price index for September at 8:30 a.m. Markets are closely watching the release, with the expectation that inflation is slowing. Data on initial jobless claims will also be released this morning.
The parliamentary budget officer will post a report entitled “Cost Estimate of a Single-payer Universal Drug Plan” on the website at pbo-dpb.ca.
The 17th Toronto Global Forum continues. Speakers today include Alex Pourbaix, executive chair of Cenovus Corp. and Mary Ng, Minister of Export Promotion, International Trade and Economic Development.
Need a refresher on yesterday’s top headlines? Get caught up here.
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Additional reporting by The Canadian Press, Associated Press and Bloomberg