Today’s top headlines
Here are Friday’s top three performers on the TSX
1. Eldorado Gold Corp. ($14.95, +9.36%)
Investors drove up shares of Vancouver-based gold producer Eldorado after the miner beat third-quarter earnings estimates. Eldorado reported earnings per share of 17 cents versus estimates of four cents. Analysts currently have six buys, four holds and one sell on the stock, and an average 12-month price target of $17.15, according to Bloomberg.
2. Dye & Durham Ltd. ($8.29, +7.11%)
Shares of Dye & Durham bounced off their year-to-date low set the day earlier. The software company’s stock has been in a downtrend after it reported a fourth-quarter net loss of $69 million versus estimates for a $9.6-million loss last month. Analysts currently have six buys, no holds and one sell on the stock, and an average 12-month price target of $24, according to Bloomberg.
3. K92 Mining Inc. ($5.41, +4.84%)
Vancouver-based K92, which owns and operates a gold mine and specializes in processing gold ore, rose on a day when the spot price for the precious metal pushed past US$2,000 an ounce on fears that the conflict between Israel and Hamas would expand. Earlier in the week, National Bank Financial cut its target price for the miner to $10 from $11.50, but maintained its outperform rating. Analysts currently have 12 buys, no holds and no sells on the stock, and an average 12-month price target of $17.15, according to Bloomberg.
Gigi Suhanic, Financial Post
Market close: TSX down almost 140 points, U.S. stock markets mixed
Losses in the financial and utilities sectors helped lead Canada’s main stock index lower, while U.S. stock markets were mixed.
The S&P/TSX composite index closed down 137.92 points at 18,737.39.
In New York, the Dow Jones industrial average was down 366.71 points at 32,417.59. The S&P 500 index was down 19.86 points at 4,117.37, while the Nasdaq composite was up 47.41 points at 12,643.01.
The Canadian dollar traded for 72.17 cents U.S. compared with 72.33 cents U.S. on Thursday.
The December crude oil contract was up US$2.33 at US$85.54 per barrel and the December natural gas contract was up less than a penny at US$3.48 per mmBTU.
The December gold contract was down US$1.10 at US$1,998.50 an ounce and the December copper contract was up six cents at US$3.65 a pound.
The Canadian Press
TC Energy exploring multibillion-dollar stake sales of assets
Pipeline and transportation company TC Energy Corp. is pursuing a multibillion-dollar asset sale plan to reduce debt and fund new investments, according to people familiar with the matter.
The Calgary-based company is working on a the sale of a minority stake in the ANR Pipeline Co., which it has ascribed an enterprise valuation of about US$3 billion, said the people, who asked not to be identified because they weren’t authorized to speak publicly.
TC is also looking at selling a minority of its Mexican operation, which has annual earnings before interest, taxes, depreciation and amortization of about US$600 million. Other potential transactions include a controlling stake in the Portland Natural Gas Transmission System and a significant minority stake in the Millennium Pipeline, both of which have enterprise values of more than US$1 billion, the people said.
No final decisions have been made and TC, which has a market value of US$35 billion, could elect to keep some or all of the assets, the people said. The company said in an emailed statement that it doesn’t comment on rumors or speculation.
“As we have previously disclosed, as part of our ongoing capital rotation program, we continue to evaluate opportunities to further our de-leveraging objectives and optimally fund our secured capital program,” according to the statement.
TC is undergoing an overhaul under chief executive Francois Poirier, with the company announcing in July a plan to spin off its Liquids Pipelines business and a partial sale of its Columbia Gas Transmission and Columbia Gulf Transmission business to Global Infrastructure Partners in a deal valued at US$5.2 billion.
The decision to look at sales comes amid a wave of pipeline asset transactions this year as companies look to take advantage of increasing free cash flow as usage increases post pandemic. ONEOK agreed to buy Magellan Midstream Partners for almost US$19 billion, while Energy Transfer bought Crestwood Equity Partners, both in May, according to data compiled by Bloomberg.
Talks resume but ships sit idle as ‘costly’ Seaway strike continues
Life’s unusually quiet on Canada’s main trade gateway to the Atlantic Ocean, which carried goods to Europe and beyond.
Ships sat idle along the St. Lawrence Seaway on Oct. 27, as the impasse of labour negotiations between port workers and the government-owned St. Lawrence Seaway Management Corporation (SLSMC) stretched toward a full week.
Read the full story here.
Marisa Coulton, Financial Post
War fears drive gold and oil higher as Israel expands strikes in Gaza
Oil topped US$85 and gold rose past US$2,000 amid the latest geopolitical developments.
Volatility resurfaced on news that Israeli forces are expanding their activity in Gaza, an Israeli defence spokesman said, as the region lost Internet and phone service and Israel stepped up airstrikes in the area.
Gold has jumped about nine per cent since Hamas attacked Israel on Oct. 7, bouncing back from a seven-month low as demand for haven assets increased. The initial surge was intensified as many investors betting on a further slide were caught off guard by the outbreak of war, forcing them to quickly cover their shorts.
The announcement from the Israeli Defense Forces pushed West Texas Intermediate up as much as 3.2 per cent after a volatile session that saw prices whipsawed by developments in the Middle East conflict. The drumbeat of geopolitical headlines that buffeted oil prices on Friday continued a trend that has pushed oil’s 30-day volatility to the highest in three months.
All told, crude is up about 3.7 per cent since the conflict started.
Meanwhile, a rebound in stocks sputtered, with the S&P 500 extending a slide from its July peak to 10 per cent — the threshold of a “correction,” succumbing to its worst week in a month.
U.S. stocks are in their third month of declines after bond yields soared on worries about a persistently hawkish U.S. Federal Reserve. Concern about the war in the Middle East as well as an underwhelming corporate earnings season have dented risk appetite more recently.
Unifor contract talks with Stellantis head into final weekend before strike deadline
Unifor is heading into the final weekend of its negotiations with Stellantis NV before a strike deadline, as the United Auto Workers (UAW) in the United States also move into a new stage of talks.
Unifor has set Oct. 29 at 11:59 p.m. as the deadline for talks with the automaker.
The union says it is working to secure the same gains it established at Ford Motor Co. and General Motors Co., as well as specifics from Stellantis on its electric vehicle plans for its Canadian plants.
While talks in Canada continue, the UAW announced a breakthrough Wednesday with a tentative deal with Ford that came after about six weeks of escalating strikes.
Barry Eidlin, an associate professor of sociology at McGill University in Montreal, says that based on the details released so far, the UAW deal looks to be better than what Unifor secured in Canada.
He says the Unifor pattern is still quite good, and that the UAW had much more ground to make up because of past concessions.
The Canadian Press
Don’t expect interest rates to return to pre-pandemic levels, experts say
With interest rates likely at or near their peak in Canada, experts say consumers shouldn’t expect rates to return to pre-pandemic levels.
The central bank is more likely to bring its overnight rate to between two and three per cent, though not anytime soon, said David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.
“That’s a ways off. That’s not next year,” he said, adding that consumers may not have fully grasped this yet.
The Bank of Canada on Wednesday held its overnight rate at five per cent, after a breakneck tightening cycle from near-zero in March 2022. The overnight rate affects interest rates offered by financial institutions.
The Bank of Canada’s overnight rate was 1.75 per cent throughout 2019, before the central bank dropped it to a quarter of a point to support the economy during the onset of the COVID-19 pandemic.
The central bank is widely expected to hold rates high in the near term as it seeks to quell inflation. But even once rates begin to fall, economists said ultra-low rates aren’t in the cards.
The Canadian economy, and consumers along with it, is going through an accelerated paradigm shift, said TD chief economist Beata Caranci — less a gradual shift than a cold glass of water to the face.
Caranci thinks Canadians are aware that interest rates aren’t going back to pre-pandemic levels, but she also thinks they’re too optimistic about when, and how fast, rates will go down.
Borrowers have been increasingly opting for shorter terms on their mortgages, hoping rates will be lower in a year or two, she said.
That may well happen, but it’s not a guarantee, she said.
“If you look at our forecast, if you look at the consensus on the street … Most people have some cuts coming in by the second half of next year. But that’s presumed that the economy is weaker than it is today,” said Caranci.
“One of the points I’ve been stressing with our clients is, the speed at which rates went up will not be the speed at which they go down.”
The Canadian Press
Midday markets: TSX down, U.S. stock markets mixed
Losses in the energy, financial and utilities sectors helped lead Canada’s main stock index lower in late-morning trading, while U.S. stock markets were mixed.
The S&P/TSX composite index was down 81.42 points at 18,793.89.
In New York, the Dow Jones industrial average was down 71.23 points at 32,713.07. The S&P 500 index was up 15.63 points at 4,152.86, while the Nasdaq composite was up 173.48 points at 12,769.08.
The Canadian dollar traded for 72.17 cents U.S. compared with 72.33 cents U.S. on Thursday.
The December crude oil contract was up 86 cents at US$84.07 per barrel and the December natural gas contract was up nine cents at US$3.57 per mmBTU.
The December gold contract was down US$6.70 at US$1,990.70 an ounce and the December copper contract was up six cents at US$3.65 a pound.
The Canadian Press
Ottawa plans university crackdown after international student criticism
Prime Minister Justin Trudeau’s government is planning new measures to tighten standards on colleges, responding to criticism that Canada’s education sector is bringing in so many foreign students that it’s boosting pressure on housing and the labour market.
Immigration Minister Marc Miller announced today a framework that will push universities and colleges to set a higher standard for services, support and outcomes for international students, starting in time for the fall 2024 semester. Miller will also roll out measures to tackle admission fraud, according to a government statement.
Schools that meet the higher benchmark will get priority for the processing of student visas, Miller said.
The plan comes amid growing concern that Canadian educational institutions are increasingly reliant on international students as a source of funding. International students are charged an average of five times as much as Canadian students, and colleges catering to foreigners have popped up in strip malls and temporary buildings, most notably in the Toronto suburb of Brampton, Ontario, where Miller made his announcement on Friday.
Many foreign students, on the other hand, use admission to college as a pathway to gain permanent residency in Canada. While Trudeau’s government has previously mulled introducing a cap on international student visas, Miller did not announce one today. The number of foreign students in Canada has tripled in about a decade, reaching more than 800,000 last year.
International education contributes more than $22 billion to the Canadian economy annually — greater than Canada’s exports of auto parts, lumber or aircraft — and supports more than 200,000 jobs, according to Miller’s office. But the influx of foreign students has exacerbated housing shortages, leaving many of them without proper accommodation, and flooded labour markets in some regions where there aren’t enough jobs.
Miller’s announcement appeared aimed at private colleges and immigration consultants accused of exploiting international students for profit. Earlier this year, it was revealed that 700 Indian newcomers had unknowingly arrived in Canada with fake college admissions letters.
Ottawa posts $4.3-billion deficit between April and August
The federal government posted a budgetary deficit of $4.3 billion from April to August.
In its monthly fiscal monitor, the Finance Department says this compares to a surplus of $3.9 billion during the same period of the 2022-23 fiscal year.
Government revenues increased $2.4 billion, or 1.4 per cent, largely due to higher interest revenues and other non-tax revenues.
Program expenses excluding net actuarial losses increased $7.4 billion, or 4.8 per cent.
Public debt charges grew by $4.1 billion, or 27.7 per cent, largely due to higher interest rates.
Net actuarial losses decreased by $0.9 billion, or 22.7 per cent, compared to the same period last year.
The Canadian Press
Sleep Country to give Silk & Snow acquisition its first brick-and-mortar store
Sleep Country Canada Holdings Inc. will give one of its newest acquisitions its first ever brick-and-mortar store next month.
The mattress and bedding retailer says its latest Sleep Country location in Ottawa will be anchored by a shop dedicated solely to Silk & Snow.
The brand acquired by Sleep Country in January evolved from a Kickstarter campaign in 2017 to become a purveyor of high-quality sleep and lifestyle products.
Silk & Snow focuses on bedding crafted from traceable raw materials and uses sustainable manufacturing practices.
Sleep Country says the new store coming to the Westboro neighbourhood is meant to offer a premium experience.
The store will be inspired by the company’s dedication to mid-century modern styles and blend of Japanese and Scandinavian design.
The Canadian Press
Imperial Oil earns $1.6 billion in Q3
Imperial Oil Ltd. says it earned $1.6 billion in the third quarter of 2023, down from $2.0 billion in the prior year’s quarter.
The Calgary-based oil company says its profit worked out to $2.76 per share, compared with $3.24 per share in the same three-month period of 2022.
Imperial reported upstream production in the third quarter of 423,000 gross oil-equivalent barrels per day on average.
The company’s Kearl oilsands site reported its highest-ever quarterly production at 295,000 total gross oil-equivalent barrels per day.
Refinery throughput in the quarter averaged 416,000 barrels per day with refinery capacity utilization of 96 per cent.
Imperial says its quarterly cash flow from operating activities was $2.4 billion.
The Canadian Press
Markets are open: Solid Amazon, Intel earnings lift Nasdaq, S&P 500, TSX falls
Wall Street took the latest inflation figures in stride, with big tech leading a rebound in stocks on Friday after solid earnings from Amazon.com Inc. and Intel Corp.
The S&P 500 rose from its lowest since May. The tech-heavy Nasdaq 100 gained about one per cent. Treasury two-year yields, which are more sensitive to imminent policy moves, edged lower. The U.S. dollar dropped.
In New York, the S&P 500 was up 0.05 per cent at 4,140.02. The Nasdaq rose 0.89 per cent to 12,703.75, meanwhile the Dow Jones Industrial Average fell 0.30 per cent to 32,687.81.
The Fed’s preferred measure of underlying inflation accelerated to a four-month high in September and consumer spending picked up, keeping the door open to another interest-rate hike in the months ahead.
“While there isn’t an expectation for a rate increase at next week’s Fed meeting, the FOMC will acknowledge the underlying strength of the economy given a still resilient labour market, they may find it appropriate to suggest that financial conditions are still not tight enough to quell consumer spending,” said Quincy Krosby, chief global strategist for LPL Financial.
The S&P 500 is at risk of dropping another five per cent after the index fell below a key technical level this week of 4,200 points, according to Bank of America Corp.’s Michael Hartnett.
In Toronto, the S&P/TSX composite index was down 0.44 per cent at 18,792.84 with of its main sectors from financials to energy in the red.
Bloomberg, Financial Post staff
Canadian earnings today: Fortis, Corus
Fortis reported a third-quarter profit of $394 million, up from $326 million a year earlier.
The gas and power utility says the profit amounted to 81 cents per diluted share for the quarter ended Sept. 30, up from 68 cents per diluted share in the same period of 2022.
Revenue for the quarter totalled $2.72 billion, up from $2.55 billion.
On an adjusted basis, Fortis says it earned 84 cents per share in its latest quarter compared with an adjusted profit of 71 cents per share a year earlier.
Corus Entertainment Inc.
Corus reported a net income attributable to shareholders of $50.4 million in its latest quarter, a turnaround from its net loss of $367.1 million in the fourth quarter of last year.
The television and radio broadcaster says its profits amounted to 25 cents per diluted share for the quarter ended Aug. 31, compared with a loss of $1.82 cents per diluted share in the same quarter last year.
Revenue totalled $338.8 million for the company’s fourth quarter, down slightly from $339.6 million a year earlier.
On an adjusted basis, Corus says it recorded a loss of four cents per share for the quarter, compared with a loss of eight cents per share in the same quarter last year.
The company says revenues for the year decreased as a result of declines in almost all advertising categories as well as subscriber revenues, which was partially offset by an increase in distribution, production and other revenue.
Corus is awaiting a decision from the CRTC in response to its application earlier this month asking the regulator to ease some Canadian content spending requirements.
The Canadian Press
National Bank of Canada cuts jobs in capital markets business
National Bank of Canada has cut a number of jobs in its capital markets business, according to people with knowledge of the matter.
The move included reductions in the equity research and sales and trading divisions, the people said, speaking on condition they not be named because they aren’t authorized to discuss the matter publicly.
Marie-Pierre Jodoin, a spokesperson for the Montreal-based bank, said it has made “a few adjustments to our financial markets structure based on the ongoing assessment of business needs and priorities.” She didn’t provide a number.
The layoffs at National Bank, Canada’s sixth-largest bank, come amid a wave of job cuts at other Canadian lenders over the past few months that have totalled at least 6,000. Bank of Montreal, Royal Bank of Canada and Bank of Nova Scotia have announced layoffs representing two per cent to three per cent of their workforces.
Canada’s large banks had largely avoided job cuts for the past three years, but in the face of numerous revenue and capital pressures, they’re now looking to trim expenses ahead of the Oct. 31 end of their fiscal years.
National Bank had 28,901 employees as of July 31. Executives said during its third-quarter earnings call in August that expenses had grown during the period, largely because of an increase in full-time positions in 2022.
Chief financial officer Marie Chantal Gingras told analysts at the time that the bank was focused on “prudently managing headcount through attrition.”
Exxon raises dividend after free cash flow soars, despite earnings miss
Exxon Mobil Corp. and Chevron Corp. posted disappointing profits amid weak performances by their oil-refining and chemical businesses.
Exxon fell nine cents U.S. shy of third-quarter expectations, on a per-share basis, while Chevron’s miss was 66 cents U.S. The companies cited an international oversupply of chemicals from new production plants and losses from overseas refining, respectively.
Exxon shares traded flat in pre-market U.S. trading; Chevron declined 2.3 per cent.
The results come as both companies pursue historic deals that are expected to vastly expand their oil-production potentials. Exxon’s US$60 billion agreement to acquire shale giant Pioneer Natural Resources Co. and Chevron’s US$53 billion offer for Hess Corp. highlight their determination to stay ahead of European supermajors and American independents by locking up control of vast resources than can underpin crude output for decades to come.
Despite the earnings miss, Exxon lifted quarterly investor payouts to 95 cents U.S. a share, payable on Dec. 11, a penny higher than the Bloomberg Dividend Forecast. Meanwhile, third-quarter free cash flow more than doubled from the prior period to US$11.7 billion, far in excess of the US$9.36 billion average estimate.
As for Chevron, the California explorer’s overseas refining division delivered roughly half the net income analysts were expecting. The company’s Permian Basin crude-production business lagged and costs at the mammoth Tengiz project in Kazakhstan increased by roughly four per cent.
Danielle Smith says Alberta’s CPP exit campaign to continue
Premier Danielle Smith says Alberta will continue its $7.5-million pension-exit advertising and survey campaign, despite acknowledging the key dollar figure is disputed and likely headed to court.
Smith says her government stands by its assertion that Alberta deserves $334 billion if it leaves the Canada Pension Plan — a figure that represents more than half of all CPP assets.
Smith says the number stands because it’s the only number out there.
“We’ve asked the federal government to give us their interpretation. They declined,” Smith told reporters in Calgary on Oct. 26.
“We’ve asked the CPP Investment Board to give us their interpretation, it declined.
“So maybe the next step is to go to court to see if the court supports our interpretation.”
Smith reiterated comments she made a day earlier in Edmonton that until that transfer number is nailed down, she will not ask Albertans to vote in a referendum on leaving the CPP.
“We will have a firm number before we go into a referendum,” Smith said.
“Albertans want to know what the number will be.
“The amount of the asset transferred will then determine how much we can reduce premiums or it will determine how much we can increase benefits.”
For the past month, Smith’s government has been expounding in ads and an online survey the benefits that could come to Albertans with a $334-billion transfer from the CPP. That would include lower premiums, higher pensions and perhaps thousands of dollars in bonus payments to seniors.
The Canada Pension Plan Investment Board pegs Alberta’s share of the CPP at 16 per cent. University of Calgary economist Trevor Tombe, puts the figure at about 20 per cent.
Alberta represents about 15 per cent of the people who contribute to CPP.
The Canadian Press
Before the opening bell:
United States equity futures climbed at the end of a turbulent week after Amazon.com Inc. and Intel Corp. reported solid earnings. Crude oil rose as the U.S. conducted strikes on Iran-linked facilities in Syria.
Nasdaq futures added 0.9 per cent after a selloff that drove the index to its lowest since May. The retreat also put the S&P 500 on the brink of a “correction,” with the gauge down almost 10 per cent from its July peak. Intel jumped 7.7 per cent in premarket trading Friday, while Amazon was up six per cent.
The earnings season has proved a mixed bag so far, with investors punishing misses more severely than they are rewarding beats. In the U.S., 78 per cent of companies reporting so far beat estimates, compared with 57 per cent in Europe, according to JPMorgan Chase & Co. strategists. But more firms than usual are flagging lower consumer demand and a deteriorating economic environment, they said, even as data Oct. 26 suggested price pressures continue to dissipate in the U.S. despite solid economic growth.
In Canada, the S&P/TSX composite index closed down 72.54 points at 18,875.31 on Thursday.
What to watch today
The Department of Finance Canada will publish financial results for August 2023 this morning.
ExxonMobil Corp. and Chevron Corp. are among companies reporting earnings today.
Need a refresher on yesterday’s top headlines? Get caught up here.
Return to normal is proving elusive for Bank of Canada
Banks are taking it on the chin, but they deserve a second look
Additional reporting by The Canadian Press, Associated Press and Bloomberg.
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