Latest news with #FergalSmith
Yahoo
a day ago
- Business
- Yahoo
Canada factory PMI rises in May but sector remains in contraction
By Fergal Smith TORONTO (Reuters) -Canadian manufacturing activity contracted for a fourth straight month in May as trade uncertainty led to firms shedding workers at the fastest pace since shortly after the start of the COVID-19 pandemic, data on Monday showed. The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) edged up to 46.1 in May from 45.3 in April but was stuck below the 50 no-change level for the fourth straight month. A reading below 50 indicates contraction in the sector. 'With manufacturers continuing to be hit by tariffs and trade uncertainty, May saw the sector experience a further significant contraction," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. "The hard to predict nature of trade policies means the outlook for production remains extremely uncertain and given the recent scale of the downturn in the sector, job losses are mounting." The employment component fell to 44.9 from 47.6 in April, marking the lowest level since June 2020, while measures of output and new orders also remained in contraction. Canada sends about 75% of its exports to the United States, including steel, aluminum and autos which have been hit with hefty U.S. duties. Retaliatory tariffs have been imposed on some U.S. goods. 'Unsurprisingly, tariffs remain the primary source of price pressures, whilst also leading to an intensification of supply side delays," Smith said. The measure of input prices rose to 63.5 from 62.1 in April, leaving it just below the 31-month peak it touched in March, while the average lead times for the delivery of inputs lengthened for an 11th straight month. The deterioration in vendor performance was linked to port congestion and challenges at customs. The Future Output Index edged up to 50.9 from 50.4 in April, with some firms hopeful that government policies could help stabilize the macroeconomic environment, but was well below the survey's historical norm, S&P Global said. Canadian Prime Minister Mark Carney, whose Liberal Party retained power in an April election, has proposed sweeping changes to boost economic growth. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Canadian dollar heads for fourth straight monthly gain as GDP beats estimates
By Fergal Smith TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, and was headed for a monthly gain, as stronger-than-expected Canadian economic growth bolstered expectations the Bank of Canada would continue to leave interest rates on hold at a policy decision next week. The loonie was trading 0.4% higher at 1.3750 per U.S. dollar, or 72.73 U.S. cents, after moving in a range of 1.3740 to 1.3829. For the month, the currency was on track to gain 0.3%. That would be its fourth straight monthly advance, the longest such stretch since May 2021. Canadian gross domestic product increased at an annualized rate of 2.2% in the first quarter, eclipsing the 1.7% rise that economists had expected, as U.S. companies rushed to stockpile Canadian goods before the implementation of tariffs. A separate report showed GDP rising 0.1% in March from February, while a preliminary estimate for April also showed a gain of 0.1%. "The odds favour a hold at next week's Bank of Canada meeting," Karl Schamotta, chief market strategist at Corpay, said in a note. It's possible "that the flow of credit into Canadian households unleashed by last year's rate-cutting cycle is translating into more spending power," Schamotta added. Investors see a roughly 75% chance the BoC leaves its benchmark interest rate unchanged at 2.75% on Wednesday. The central bank moved to the sidelines in April for the first time since its easing campaign began last June. The price of oil, one of Canada's major exports, was trading 1.2% lower at $60.20 a barrel as investors weighed prospects of a potentially larger OPEC+ output hike for July. The Canadian 10-year yield was little changed at 3.205% as U.S. Treasury yields declined following data that showed American inflation was in line with expectations last month. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
6 days ago
- Business
- Mint
TSX ekes out another record high as bank earnings impress
TSX ends up 0.1%, at 26,283.45 Posts new record closing high BMO gains 1.5% and National Bank adds 3.8% Definity Financial jumps 11.3%. (Updates at market close) May 28 (Reuters) - Canada's main stock index edged up on Wednesday to a record closing high as investors cheered quarterly earnings from some of the nation's biggest banks and assessed prospects of consolidation in the insurance sector. The Toronto Stock Exchange's S&P/TSX composite index ended up 14.45 points, or 0.1%, at 26,283.45, eclipsing Tuesday's record closing high. Wall Street shares ended lower as investors digested minutes from the last Federal Reserve meeting and awaited results from AI bellwether Nvidia. "The big story today is the banks," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "Bank earnings were quite impressive given the risks that are facing the Canadian economy right now." Canada sends 75% of its exports to the United States so its economy could be hurt particularly badly in a global trade war. Bank of Montreal, Canada's third largest lender, and National Bank of Canada beat analysts' estimates for quarterly earnings. Their share prices rose 1.5% and 3.8% respectively. Canadian property and casualty insurer Definity Financial's $2.4 billion purchase of Travelers Cos' Canadian business could spur a wave of consolidation in Canada's insurance sector, its CEO said. Shares of Definity Financial jumped 11.3%. The heavily weighted financials sector added 0.2% and the materials group, which includes metal mining shares, was up 0.6%. Technology lost 0.3%, while energy ended 0.7% lower despite higher oil prices. U.S. crude oil futures settled up 1.6% as OPEC agreed to leave their output policy unchanged and the U.S. barred Chevron CVX.N from exporting Venezuelan crude. (Reporting by Fergal Smith in Toronto and Sanchayaita Roy in Bengaluru; Editing by Shilpi Majumdar, Sahal Muhammed and Alistair Bell)
Yahoo
27-05-2025
- Business
- Yahoo
TSX's gains set to slow as trade war hits Canada's economy:Reuters poll
By Fergal Smith TORONTO (Reuters) - Canada's main stock index is set to largely consolidate its recent gains through the rest of 2025 and could be at risk of another correction as the domestic economy shows signs of a slowdown due to U.S. tariffs, a Reuters poll found. The S&P/TSX Composite index has rebounded nearly 16% from its lowest closing level in April to post a record closing high on Monday at 26,073.13. Since the start of the year, the index has gained 5.4%, outperforming major U.S. indexes such as the S&P 500. It has been helped by a heavy weighting in metal mining shares as safe-haven demand lifted the price of gold to record highs. "We still believe that peak uncertainty is behind us but the Canadian economy is starting to show the impact from tariffs," said Angelo Kourkafas, a senior global investment strategist at Edward Jones. Canada sends about 75% of its exports to the United States, including steel, aluminum and autos which have been hit by hefty U.S. duties, while Canada's unemployment rate was at 6.9% in April, its highest level since November. The median prediction of 21 equity strategists and portfolio managers in the May 15-27 poll was for the S&P/TSX Composite index to edge 0.7% higher to 26,250 by year-end, slightly less than the 26,500 mark expected in a February poll. "As companies continue to grapple with the implications of tariffs and recalibrate their inventory strategies, alongside the inclination to delay capital expenditures, profit margins will likely face pressure," said Victor Kuntzevitsky, a portfolio manager at Stonehaven, Wellington-Altus Private Counsel. CORRECTION? Seven out of 13 analysts who answered a separate question said corporate earnings would be lower in 2025 compared with 2024 while eight out of 13 said a correction was likely or highly likely over the coming three months. A correction, or a drop of 10% or more from the peak, was confirmed in April before the market rebounded. "We are focusing more on dividend payers as it will protect one's portfolio better during a market correction," said Ben Jang, a portfolio manager at Nicola Wealth. "Over time, falling interest rates are expected to drive outflows from money market instruments." The Bank of Canada has cut its benchmark interest rate by 2-1/4 percentage points since last June, to 2.75%, to support the economy. Lower borrowing costs and the potential for trade deals could eventually see the market take another leg higher, analysts say. The index was expected to reach 27,750 by the end of next year, a gain of 6.4%. "Once there is more clarity on trade and lower interest rates start filtering through the economy in 2026, we see a reacceleration in earnings," Kourkafas, from Edward Jones, said. (Other stories from the Reuters Q2 global stock markets poll package)
Yahoo
27-05-2025
- Business
- Yahoo
Investors brace for record Canadian government debt issuance as budget delayed
By Fergal Smith TORONTO (Reuters) -Canada's government debt issuance is expected to surpass a pandemic-era record high this fiscal year, which could raise borrowing costs and add to calls for the ruling Liberal Party to be more transparent on its spending plans. Prime Minister Mark Carney has said his government, which retained power in last month's general election, will present a budget in the fall. The budget is typically tabled by April, the first month of the fiscal year. With debt issuance running high, some analysts and investors worry the budget could reveal a surprise increase in government spending for the current fiscal year, resulting in increased bond issuance that needs to be absorbed by the market in a shorter space of time. Canada sends about 75% of its exports to the United States so its fiscal outlook is particularly uncertain as the U.S. wages a global trade war. Still, analysts can estimate Canada's borrowing needs for 2025-26 by taking the government's forecasted financial requirement in a December economic update, adjusting it for increased spending in the Liberal Party's campaign platform and adding maturing debt. The estimate comes to C$628 billion ($457.26 billion), according to Reuters calculations. That would exceed 2020-21 debt issuance of C$593 billion, and mean an even greater increase in the net supply of debt after much of the pandemic-era debt was purchased by the Bank of Canada to support the economy. Bond maturities are historically high as some of the additional debt load accumulated during the pandemic comes due, while deficit spending remains elevated and the government began last year purchasing mortgage-related bonds to help lower the cost of housing. Investors tend to demand higher returns for the risk of providing larger loans. "We do think that this will have an impact on Government of Canada bond yields," said Andrew Kelvin, head of Canadian and global rates strategy at TD Securities. He forecast a steeper yield curve in Canada, where long-term borrowing costs rise faster than short-term rates, and debt issuance of C$645 billion this fiscal year. His supply estimate anticipates lower economic growth than used in the Liberal platform. "Whatever is going to be in the budget, the more time the market has to process it, the easier it is for the market to digest that supply," Kelvin said. The Canadian 10-year yield has already climbed more than 50 basis points from its trough in April to 3.31%, tracking a move in U.S. yields as a worsening fiscal outlook for the United States raises concerns about demand for U.S. government debt. The 10-year yield remains low by historic standards, but is trading 63 basis points above the 2-year rate, which is nearly the largest gap since November 2021. While fiscal policy is a concern for long-term investors, the Bank of Canada's interest rate-cutting campaign has helped anchor short-term rates. Investors have said that Carney's experience as a central banker is reassuring, but the long wait for a budget is unwelcome. "It raises questions about transparency and contributes to greater economic and fiscal uncertainty," said Joshua Grundleger, director, sovereigns at Fitch Ratings. "It would be helpful for markets to have a clear sense of which aspects of the party platform will be implemented and what the ultimate impact will be on deficits, debt and the taxpayer," Grundleger said. Canada's debt is popular with foreign investors but that demand cannot be taken for granted, analysts said. The Canadian dollar accounts for only a small share of foreign exchange reserves held by central banks. "Markets need greater clarity sooner on debt issuance plans," Derek Holt, head of capital markets economics at Scotiabank, said in a note. "If you're going to do (the) fall, make it September." ($1 = 1.3734 Canadian dollars) Sign in to access your portfolio
