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☆ Toronto stocks seen up 6.2% by year-end, despite 'wall of worry'
▼ + stars: | 2023-02-22 | by ( Fergal Smith | ) www.reuters.com time to read: +3 min

"Equity markets have exhibited remarkable resilience, climbing a wall of worry toward higher common stock prices," said Brandon Michael, senior investment analyst at ABC Funds. "The main drivers toward higher stock prices include decelerating inflation, central banks easing up on their monetary policy tightening efforts, and improving investor risk appetite." Canada's annual rate of inflation cooled to 5.9% in January after peaking at 8.1% in June, data on Tuesday showed. The energy and materials sectors combined account for about 30% of the Toronto market's weighting. (Other stories from the Reuters Q1 global stock markets poll package:)Reporting by Fergal Smith; additional polling by Aditi Verma, Milounee Purohit and Mumal Rathore; Editing by Kim CoghillOur Standards: The Thomson Reuters Trust Principles.

OTTAWA, Feb 21 (Reuters) - Canada's annual inflation rate eased more than expected in January to 5.9%, data showed on Tuesday, which should allow the Bank of Canada to stay on the sidelines at its next meeting while it lets previous rate hikes sink in. Before the inflation figures were released, money markets saw a 100% chance for another rate increase this year. The bank forecasts inflation to slow to about 3% by the middle of 2023, and to come down to its 2% target next year. Excluding food and energy, January prices rose 4.9% compared with a 5.3% increase in December. The figures show prices coming down faster in Canada than in the United States, where annual inflation gained 6.4% in January.

The jobless rate held steady at 5%, which is just a decimal point higher than the record low, Statistics Canada (Statscan) said. Analysts surveyed by Reuters had forecast a net gain of 15,000 jobs and for the unemployment rate to edge up to 5.1% in January. "However, that won't stop markets reacting to today's strong data by pricing in a greater probability of further hikes, and pricing out rate cuts," he said. Before the jobs numbers, markets had been betting that the Bank of Canada's next move would be to cut rates. When he announced a pause on rates, Governor Tiff Macklem said it was "conditional" and did not rule out further increases.

That prompted the central bank to pause its most aggressive tightening cycle for now, becoming the first major central bank to do so. Traders have already bid up Canadian stocks and the Canadian dollar , dubbed a 'commodity currency', since the news of China reopening surfaced in December. Doug Porter, chief economist at BMO Capital Markets, said that for Canada, China's reopening is more a "clear-cut positive" than it would be for other countries with fewer commodities exports. The U.S. Federal Reserve, the European Central Bank and the Bank of England have since laid the groundwork for a pause as well. Karl Schamotta, chief market strategist at Corpay said China's reopening will help put a floor under global price levels, potentially offsetting demand destruction as economies slow.

☆ TSX ends lower for second day as industrials slide
▼ + stars: | 2023-01-25 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended down 29.95 points, or 0.2%, at 20,599.60, adding to a small decline on Tuesday. "We expect them to be on pause for quite a while," said Tom O'Gorman, director of fixed income at Franklin Templeton Canada. Industrials fell 2.1%, with Canadian National Railway Co (CNR.TO) down 4.7% after the company forecast lower 2023 earnings. U.S. crude oil futures settled 2 cents higher at $80.15 a barrel after a smaller than expected build in U.S. crude inventories. Shopify Inc (SHOP.TO) was a bright spot, rising nearly 11% after the e-commerce company updated its pricing plan.

☆ Bank of Canada set for one more rate hike in historic tightening campaign
▼ + stars: | 2023-01-25 | by ( Fergal Smith | ) www.reuters.com time to read: +3 min

[1/2] A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. This week's meeting will be significant as the BoC will offer minutes from the policy-setting session for the first time. Money markets see a roughly 70% chance of a 25-basis-point move and expect the policy rate to peak at 4.50%. Economists expect the BoC to leave the door open to further tightening should upcoming data show price pressures persisting and push back against market expectations for interest rate cuts in the second half of the year. Better to err on the side of too much tightening with a 25-basis-point hike."

[1/2] A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. "We are turning the corner on inflation," Bank of Canada Governor Tiff Macklem told reporters. If the economy evolves as forecast, the bank "expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases," the statement announcing the rate hike said. "Governing Council is prepared to increase the policy rate further if needed to return inflation to the 2% target," the statement said. "The Bank of Canada is back to using forward guidance," said Royce Mendes, director and head of macro strategy at Desjardins.

☆ Toronto market ends slightly down as Magna slides
▼ + stars: | 2023-01-24 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended down 2.03 points at 20,629.55, after posting on Monday its highest closing level in more than seven months. The U.S. benchmark index S&P 500 also ended slightly lower. "The issue for 2023 is going to be watching the lagged effects of the interest rate hikes that occurred last year," said Brian Madden, chief investment officer at First Avenue Investment Counsel in Toronto. Investors worry that aggressive interest rate hikes could trigger a recession, with data on Tuesday showing that U.S. business activity contracted for the seventh consecutive month in January. The Bank of Canada will hike its key interest rate by a quarter of a percentage point to 4.5% on Wednesday and then hit pause on its tightening campaign, a Reuters poll of economists showed.

☆ 'P.R. job' or antidote to 'groupthink'? Bank of Canada to offer policy-meeting minutes
▼ + stars: | 2023-01-22 | by ( Steve Scherer | ) www.reuters.com time to read: +4 min

Annual inflation shot to 8.1% in June, the highest in 39 years and four times the Bank of Canada's 2% target. On the recommendation of the International Monetary Fund, the BoC in September said it would release minutes to improve transparency,Other central banks including the U.S. Federal Reserve, the Bank of England and the European Central Bank already provide some form of record of their meetings. "The big enemy for policymakers and investors is groupthink," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. JOB'Other market-watchers say releasing minutes is more an exercise in public relations than an effort to boost transparency. Reuters GraphicsReuters GraphicsReporting by Steve Scherer, additional reporting by Fergal Smith, editing by Deepa BabingtonOur Standards: The Thomson Reuters Trust Principles.

OTTAWA, Jan 17 (Reuters) - Canada's annual inflation rate eased more than expected in December as gas prices came down but core measures remained little changed from the previous month, Statistics Canada said on Tuesday, making another interest rate hike this month likely. Inflation slowed to 6.3% in December from 6.8% in November, a notch lower than the 6.4% median forecast of analysts. Prices fell 0.6% from the previous month, again showing price pressures easing more than analysts' forecast for a 0.5% decline. Most analysts agreed the Bank of Canada would hike rates by a quarter of a percentage point on Jan. 25, when it next meets. Money markets see a 77% chance of a quarter-point hike by the Bank of Canada next week, up from 70% before the data.

Some two-thirds of firms expect a recession over the next 12 months, with 90% of those expecting it to be mild. Several businesses said rising interest rates were slowing household demand and housing market activity. The survey showed that 84% of firms expect inflation to remain above 3% for the next two years, up from 77% in the third quarter. Canada's annual inflation rate eased to 6.8% in November as gasoline prices rose more slowly, still well above the central bank's 2% target, data showed last month. Almost 64% of consumers said they would reduce spending and save more to cope with inflation and rising interest rates.

☆ Is Canadian inflation on a sustainable path to 2%? Essentials offer clues
▼ + stars: | 2023-01-15 | by ( Fergal Smith | ) www.reuters.com time to read: +3 min

Canada's consumer price index report for December, due on Tuesday, is expected to show headline inflation cooling to 6.3%, its lowest annual rate since last February, from 6.8% in November. If inflation expectations rise, it could push up wage demands, particularly in a tight labor market, leading to further price pressures. "One eye is on wage growth, which is strong but not too bad at the moment, but then this other idea (which is) on the price inflation for essentials that could keep wage demands high, as it affects inflation expectations." "If inflation slows and wage growth doesn't, then wages become more of a tailwind for inflation going forward. "What we really need to see in December is weaker price growth across the board."

☆ TSX hits 4-week high as investors eye 'beaten-down' sectors
▼ + stars: | 2023-01-09 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended up 42.56 points, or 0.2%, at 19,857.07, its highest closing level since Dec. 14. "Market moves on a day-to-day basis are very much being dictated by the inflation picture and central bank actions. That has not changed (from 2022)," said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth. It was up nearly 1% on Monday, while energy gained 0.6% as oil settled 1.2% higher at $74.63 a barrel. Oil rose after China reopened its borders, boosting the outlook for fuel demand.

☆ Canadian dollar to rebound in 2023 if economic uncertainty clears
▼ + stars: | 2023-01-06 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The loonie will edge 0.6% higher to 1.35 per U.S. dollar, or 74.07 U.S. cents, in three months, according to the median forecast of currency analysts. The Bank of Canada, along with the Federal Reserve and most other major central banks, has raised interest rates at a rapid pace to tackle soaring inflation. Another potential tailwind for the loonie would be the end of the U.S. dollar's in global currency markets since 2021. A "weaker dollar story" could emerge if the Fed moves to end quantitative tightening (QT), said Bipan Rai, global head of FX strategy at CIBC Capital Markets. QT is a process central banks use to shrink the size of their balance sheets.

☆ Canada posts hefty job gains, raising chances of another rate hike
▼ + stars: | 2023-01-06 | by ( Ismail Shakil | ) www.reuters.com time to read: +2 min

The economy gained a net 104,000 jobs in December, far exceeding analysts' forecasts, while the jobless rate decreased to 5% from 5.1% in November, Statistics Canada data showed. Analysts surveyed by Reuters had forecast a net gain of 8,000 jobs and for the unemployment rate to edge up to 5.2%. Money markets now see a 75% chance of a 25-bp rate increase in January, up from roughly 60% before the data. Employment in the goods-producing sector rose by a net 22,200, mainly in construction. Employees in the private sector rose by 112,000 in December, the largest increase since February, while public sector and self-employed workers were both little changed, Statscan said.

☆ Canada factory sector posts longest slowdown in 7 years
▼ + stars: | 2023-01-03 | by ( ) www.reuters.com time to read: +1 min

The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) fell to a seasonally adjusted 49.2 in December from 49.6 in November. It was the fifth straight month that the index was below the 50 threshold that marks contraction in the sector. That's the longest sequence of declines since a seven-month stretch from August 2015 to February 2016, S&P Global said. "The Canadian manufacturing economy turned in another relatively subdued performance as 2022 closed," Paul Smith, economics director at S&P Global Market Intelligence, said in a statement. After declining for five straight months, the input price index was higher in December, rising to 61.5 from 60.9 in the prior month.

OTTAWA, Dec 21 (Reuters) - Canada's annual inflation rate eased to 6.8% in November as gasoline price rose more slowly, data showed on Wednesday, leaving the door open for another interest rate increase in January. Consumer prices rose 0.1% from October, Statistics Canada said, above analysts' expectations they would be flat. Excluding food and energy, prices rose 5.4% versus a 5.3% gain in October. "Today's data will leave the door open to a 25 basis point rate hike in November," said Royce Mendes, head of macro strategy at Desjardins Group. Gasoline prices rose 13.7% after gaining 17.8% in October, largely driven by price declines in Western Canada, Statscan said.

☆ TSX hits 5-week low as Fed's hawkish stance fuels recession worries
▼ + stars: | 2022-12-15 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

[1/2] The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended down 291.02 points, or 1.5%, at 19,600.63, its lowest closing level since Nov. 9. Hopes that the U.S. central bank would soften its stance had helped lift equity markets off their lows from October. Higher interest rates reduce the value to investors of the future cash flows that companies in that sector are expected to produce. Reporting by Fergal Smith; additional reporting by Shashwat Chauhan in Bengaluru; editing by Jonathan OatisOur Standards: The Thomson Reuters Trust Principles.

☆ Canadian housing starts dip 0.2% in November; beat estimate
▼ + stars: | 2022-12-15 | by ( ) www.reuters.com time to read: 1 min

TORONTO, Dec 15 (Reuters) - Canadian housing starts edged lower in November compared with the previous month as a drop in single-detached urban starts offset groundbreaking in multiple unit urban homes, data from the national housing agency showed on Thursday. The seasonally adjusted annualized rate of housing starts fell to 264,159 units from a revised 264,581 units in October, the Canadian Mortgage and Housing Corporation (CMHC) said. Economists had expected starts to fall to 255,000. Reporting by Fergal Smith Editing by Raissa KasolowskyOur Standards: The Thomson Reuters Trust Principles.

The central bank sets short-term interest rates but longer-term borrowing costs, such as for businesses and some mortgage rates, are determined by the bond market. Canadian bond yields, like U.S. bond yields, have tumbled since October as investors anticipate that the tightening cycle is nearing an end and the central bank is poised to shift to cutting rates next year. Bond yields, along with other measures, such as the strength of the stock market and the currency, help determine financial conditions, or the availability of funding in the economy. Since October, Canada's 5-year yield has tumbled nearly 100 basis points and the Toronto stock market (.GSPTSE) has rallied 11%. "Otherwise, we could be on an inflation and rates roller-coaster for years to come that is biased toward higher average inflation."

☆ TSX posts biggest weekly decline since September as oil tumbles
▼ + stars: | 2022-12-09 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

[1/2] The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended down 22.12 points, or 0.1%, at 19,947.07, its lowest closing level since Nov. 17. For the week, the index was down 2.6%, its biggest weekly decline since September. The Toronto market's energy sector fell 0.7% as U.S. crude oil futures settled 0.6% lower at $71.02 a barrel. Reporting by Fergal Smith; Additional reporting by Shashwat Chauhan in Bengaluru Editing by Marguerita ChoyOur Standards: The Thomson Reuters Trust Principles.

OTTAWA, Dec 8 (Reuters) - The Bank of Canada will study the most recent economic data to gauge whether to raise interest rates further, a deputy governor said on Thursday, adding it would still move forcefully if necessary. "We expect our decisions will be more data-dependent," Deputy Governor Sharon Kozicki said in a speech in Montreal, adding the bank was still prepared to be "forceful" with rates if necessary. "We are moving from how much to raise interest rates to whether to raise interest rates." Asked to clarify if being prepared to be "forceful" meant the bank was still prepared to make oversized rate moves, Kozicki said it was a hypothetical. Deliberations ahead of Wednesday's rate hike centered on how supply challenges are resolving, how higher rates are slowing demand, and how inflation and inflation expectations are evolving, Kozicki said.

OTTAWA, Dec 8 (Reuters) - The Bank of Canada will study the latest economic data to gauge whether or not to raise interest rates further, a deputy governor said on Thursday, adding it would still move forcefully if necessary. "We are moving from how much to raise interest rates to whether to raise interest rates." But three-month rates of core inflation have declined to about 3.5%, Kozicki said, an indication "that momentum in inflation is easing". Deliberations ahead of Wednesday's rate hike centered on how supply challenges are resolving, how higher rates are slowing demand, and how inflation and inflation expectations are evolving, Kozicki said. Kozicki reiterated that starting next year, the bank will release a "summary of deliberations" in an effort to provide more transparency.

The bank cited still-strong growth and tight labor markets as the reason for the latest increase. But it eliminated the forward guidance it has used since it began cranking rates higher in March, dropping language that said they would have to rise further. Money markets had bet on a 25-basis-point increase, but a slim majority of economists in a Reuters poll expected a 50-bps move. Overall, however, the central bank said that data supported its October forecast that growth would stall through the middle of next year. Additional reporting by Fergal Smith in Toronto, Editing by Sandra Maler, Kirsten Donovan and Deepa BabingtonOur Standards: The Thomson Reuters Trust Principles.

☆ Canadian dollar seen higher as analysts eye peak interest rates: Reuters poll
▼ + stars: | 2022-12-07 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The loonie has weakened over 7% against the U.S. dollar since the start of 2022, with almost all of the decline coming since mid-August. Canada's economy grew at an annualized rate of 2.9% in the third quarter, much stronger than both analysts and the Bank of Canada were expecting. The BoC has raised its benchmark interest rate by 350 basis points since March to 3.75%, its highest level since 2008, in an attempt to cool inflation. Along with a more stable path for U.S. interest rates it "should help the loonie rally closer to fair value," Zhao-Murray said. Measures of fair value include purchasing power parity (PPP), or the exchange rate that equalizes the purchasing power of separate currencies.

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