Today’s top headlines
Markets close: TSX ends day up almost 3%
Markets had a blockbuster day both in Canada and on Wall Street.
It was the best day since April for the S&P 500 a day after the United States Federal Reserve hinted it might be done with rate hikes.
On Wall Street, the S&P 500 jumped 1.89 per cent to close at 4,317.78. The Dow Jones Industrial Average and the Nasdaq composite rose 1.7 per cent and 1.78 per cent, respectively, closing at 33,839.08 and 13,294.19.
In Toronto, stocks advanced the most in nearly a year.
The S&P/TSX composite index rose 2.89 per cent to close at 19,626.34 in a broad-based rally led by information technology stocks. The sector gained 9.63 per cent buoyed by a strong earnings report from e-commerce company Shopify Inc., which rose 21.31 per cent and was the top performer on the index.
Shopify net income soared to US$718 million in its third quarter as the company benefited from a lower head count and a more careful approach to expenses.
Rounding out the top-three performers list were Gildan Activewear Inc., up 14.78 per cent and Lightspeed Commerce Inc., up 14.74 per cent.
The Canadian dollar traded for 72.58 cents U.S. compared with 72.07 cents U.S. on Wednesday.
The December crude oil contract ended up $2.02 at US$82.46 per barrel and the December natural gas contract was down two cents at US$3.47 per mmBTU.
The December gold contract was up US$6 at US$1,993.50 an ounce and the December copper contract was up two cents at US$3.67 a pound.
The Canadian Press, Financial Post, Bloomberg
Lead-up to holiday sales season ‘disappointing,’ Spin Master says
Spin Master Corp. executives say the lead-up to the usually bustling holiday sales season has so far wound up below expectations.
Across the toy industry, October store sales have been “disappointing” and “well below retailers’ plans,” said Mark Segal, chief financial officer at the Toronto-based toy manufacturer.
“Consumers are under pressure and whilst consumer spend remains high overall, consumers are allocating their spend to travel and experiences,” he said on a Thursday call with analysts.
Segal’s observations about the market come as Spin Master gears up for its typically busiest season of the year. The company’s Paw Patrol, Bakugan, Hatchimals, Rubik’s Cube and Gund toys often take top spots on wish lists, generating higher sales and revenues than other times of year.
However, this shopping season has come with stubbornly high inflation, making consumers think twice about purchases or hunt for deals more than they may have before prices rose.
Spin Master is watching these conditions closely.
“We expect consumers to purchase very late in the season, which will reduce our replenishment potential,” said Max Rangel, Spin Master’s chief executive, on the same call as Segal.
Responding to this trend, Segal has noticed retailers have taken on a “more conservative” approach to placing orders. Since mid-October, they’ve been reducing their orders slated for November and December delivery to prevent potential overstocking.
As a result, the company announced Wednesday that it had cut its guidance for sales and revenue for the full financial year.
At the same time, it reported net income for the third quarter of US$155.4 million, up from US$141.4 million from a year earlier.
Revenue for the period ended Sept. 30 was US$710.2 million, up from US$624 million.
The Canadian Press
Ontario increases HST rebate on rental housing projects to 100% of provincial share
Ontario will exempt purpose-built rental projects from the entire eight per cent provincial portion of the Harmonized Sales Tax (HST), the province said Nov. 1, a move aimed at spurring rental construction.
Currently, Ontario offers a rebate equal to 75 per cent of the provincial HST paid, capped at a maximum of $24,000. Under the proposed changes, this rebate would be upgraded to cover 100 per cent of the provincial HST, with no maximum limit.
According to a press release, for a two-bedroom rental unit valued at $500,000, the enhanced rebate would deliver $40,000 in provincial tax relief.
When added to the federal government’s recently announced GST rebate, the amount of tax relief would be $65,000.
To be eligible for the enhanced HST New Residential Rental Property Rebate, new residential units must be part of buildings featuring at least four private apartment units or 10 private rooms or suites, with at least 90 per cent of the residential units designated for long-term rental.
The move aligns with recommendations from last year’s Housing Affordability Task Force report, which called for elimination or reduction of tax disincentives to promote housing growth.
Ontario’s initiative aims to encourage the development of much-needed rental homes, associate minister of housing Rob Flack, said in the Nov. 1 release.
“Our government is committed to exploring innovative solutions that can fast-track the construction of attainable housing,” he said. “Innovative options like modular housing will propel Ontario’s housing sector into a new era of affordability.”
Shantae Campbell, Financial Post
Markets on a tear as TSX surges more than 500 points
Today’s broad-based stock rally continued as Canada’s main stock index rose more than 500 points in afternoon trading, while U.S. markets continued to climb higher.
The S&P/TSX composite index was up 520.63 points, or 2.74 per cent, at 19,601.09.
In New York, the Dow Jones industrial average was up 519.85 points, or 1.56 per cent, at 33,792.44. The S&P 500 index was up 71.63 points, or 1.7 per cent, at 4,309.91, while the Nasdaq composite was up 219.20 points, or 1.67 per cent, at 13,279.53.
Energy earnings roundup: CNRL, Parkland
A slew of Canadian energy companies reported earnings today. Here’s how they performed.
CNRL’s McKay to retire
Canadian Natural Resources Ltd. announced the retirement of president Tim McKay next year as it raised its quarterly dividend and reported a third-quarter profit of $2.34 billion, down from $2.81 billion a year ago.
Canadian Natural says McKay will assume the role of vice-chairman on Feb. 28, 2024, when Scott Stauth, currently chief operating officer of oilsands, will be promoted to president. As vice-chairman, McKay is expected to help with the management transition until his retirement in the summer.
The announcement came as company said it will now pay a quarterly dividend of $1 per share, up from 90 cents.
Canadian Natural reported its profit amounted to $2.13 per diluted share for the quarter ended Sept. 30, down from $2.49 per diluted share a year earlier.
Revenue for the quarter totalled $9.90 billion, down from $10.46 billion in the same quarter last year.
On an adjusted basis, the company says it earned $2.59 per diluted share in its most recent quarter, down from $3.09 per diluted share a year ago. Analysts on average had expected an adjusted profit of $2.39 per share and $9.55 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.
Parkland doubles Q3 profit
Less than 12 months after an activist investor critiqued its performance, fuel retailer Parkland Corp. has doubled its third-quarter profit and announced it will exceed its previously announced earnings guidance for 2023.
On a conference call with analysts Thursday, chief executive Bob Espey hailed the Calgary-based company’s third-quarter financial results, which saw Parkland report net earnings of $230 million, up from $105 million in the same period of 2022.
On an adjusted basis, Parkland earned $231 million, nearly five times its third-quarter 2022 adjusted earnings.
Espey attributed the results to favourable market conditions and the company’s ongoing efforts to optimize its assets and operations.
“We’re doing exactly what we said we would do.” he said.
The Canadian Press
TSX surges over 400 points on tech sector strength as Wall Street rallies too
Strength in the technology sector helped lead a broad-based rally as Canada’s main stock index was up more than 400 points in early afternoon trading, while U.S. stock markets also climbed higher.
The S&P/TSX composite index was up 454.58 points, or 2.39 per cent, at 19,534.10.
In New York, the Dow Jones industrial average was up 367.84 points, or 1.09 per cent, at 33,634.84. The S&P 500 index was up 60.55 points, or 1.44 per cent, at 4,298.96, while the Nasdaq composite was up 174.75 points, or 1.34 per cent, at 13,234.93.
The Canadian dollar traded for 72.47 cents U.S. compared with 72.07 cents U.S. on Wednesday.
The December crude oil contract was up 53 cents at US$80.97 per barrel and the December natural gas contract was down five cents at US$3.44 per mmBTU.
The December gold contract was up US$4.30 at US$1,991.80 an ounce and the December copper contract was up two cents at US$3.67 a pound.
The Canadian Press
Ontario to launch $3-billion infrastructure bank, source says
Ontario plans to invest $3 billion into creating an arm’s-length infrastructure bank with a mandate to help build major projects in affordable housing, health care and transportation.
The province will announce the proposed Ontario Infrastructure Bank today, according to a senior official familiar with the plan. The provincial government wants to use the bank to attract private money from institutions such as pensions and insurance funds.
The bank’s initial focus will be on sectors including long-term care facilities, energy, housing, municipal infrastructure and transportation. The idea is to use the government cash to reduce the risk of certain projects, attracting more private capital.
The new agency will operate at arm’s length from the government, led by a board of directors that will appoint a management team to make investment decisions, said the official, who spoke on condition they not be identified.
Ontario Finance Minister Peter Bethlenfalvy is set to announce the plans when he delivers an update on the province’s financial condition today. A spokesperson for Bethlenfalvy declined to comment.
Shopify soars after sales, profit beat expectations
Shopify Inc. reported sales and profit for the third quarter that beat analyst expectations after the Canadian e-commerce giant slashed costs and partnered with Amazon.com Inc. for its fulfillment network.
Revenue for the period came in at US$1.71 billion, up about 25 per cent year-over-year and beating the US$1.68 billion average estimate of analysts surveyed by Bloomberg. Profit, excluding one-time items, was 24 cents a share, well above the 15 cents expectation.
Shopify Inc rose as much as 18 per cent in U.S. premarket trading.
Gross merchandise volume, the overall value of merchant sales across Shopify’s systems, was US$56.2 billion, above Wall Street projections of US$54.42 billion.
The Ottawa-based company said 2023 revenue is expected grow at a “mid-twenties percentage rate” on a year-over-year basis, driven by sales growth in the fourth quarter “in the high teens.” Free cash flow will also continue to improve, the company said.
Shopify has been on a drive to turn around its business as it seeks to reverse a late-pandemic slump. Earlier this year it cut more than 2,000 jobs in a second round of job cuts and sold the majority of its logistics unit to Flexport Inc. In late August, it struck a deal to allow merchants on its platform to use Amazon’s “Buy with Prime” service to deliver packages.
Ilya Banares, Bloomberg
Read the full story here.
Barrick profits rise in Q3 on higher gold prices
Barrick Gold Corp. reported a third-quarter profit of US$368 million, up from US$241 million a year earlier, helped by higher gold prices.
The Toronto-based gold miner, which keeps its books in U.S. dollars, says the profit amounted to 21 cents U.S. per share, up from 14 cents U.S. per share a year earlier.
Revenue totalled US$2.86 billion, up from US$2.53 billion in the same quarter last year.
Gold sales amounted to 1,027,000 ounces, up from 997,000 ounces a year ago, while Barrick’s realized gold price for the quarter was US$1,928 per ounce, up from US$1,722 a year ago.
Copper sales totalled 101 million pounds, down from 120 million pounds a year earlier, while Barrick’s realized copper price was US$3.78 per pound, up from US$3.24 in the same quarter last year.
On an adjusted basis, Barrick says it earned 24 cents U.S. per share, up from 13 cents U.S. per share a year earlier.
The Canadian Press
Before the opening bell: Stocks gain on hope rate hikes are over
Stocks and bonds extended gains Thursday as traders bet the United States Federal Reserve is coming to the end of its historic tightening campaign. The latest major company earnings also provided a dose of good news.
S&P 500 contracts added about 0.5 per cent, while Nasdaq 100 futures rose 0.7 per cent. Both underlying indexes had jumped on Wednesday after the Fed held interest rates steady and the Treasury announced plans to slow the pace of increases in quarterly long-term securities sales. The 10-year US Treasury yield dipped two basis points after falling below 4.75 per cent for the first time in two weeks.
In Canada, the S&P/TSX composite index closed up 205.53 points at 19,079.
What to watch today
It’s a big day for earnings. Expect reports from Apple Inc., Shell PLC, Starbucks Corp., Canadian Natural Resources Ltd., Shopify Inc., Cenovus Energy Inc., Barrick Gold Corp., Fairfax Financial Holdings Ltd., Open Text Corp. and Gildan Activewear Inc., among others.
Ontario will release its fall economic statement today.
Data releases in the United States include the Challenger Layoff Report, productivity for the third quarter, initial jobless claims for the week of Oct. 28 and factory orders for September.
Canadians to wait until next summer for rate cut
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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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