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• Bank of Canada measures suggest it’s more hawkish than market thinks: Scotiabank
• Toronto home sales off to hot start to 2024, but prices slip for eighth month in a row
• Suncor faces record $10.5-million fine for air pollution at Colorado refinery
• Extension of foreign buyer ban won’t solve affordability woes, economist says
• No evidence of grocery profiteering in Canada, researcher tells Ottawa
• Bank of Canada can’t solve the housing crisis, Tiff Macklem says

Top story

Freeland announces $199 million in support for low-income renters, shelters

Finance Minister Chrystia Freeland says the federal government is putting nearly $200 million in new money toward supporting low-income renters and shelters.

Ottawa is pouring an additional $99 million into the Canada Housing Benefit, which offers financial support for low-income renters in partnership with provinces and territories.

Freeland says another $100 million will go toward emergency winter funding to help shelters to create more spaces for people without housing.

The measures come as the government faces increasing pressure to address skyrocketing rent prices and help communities struggling with homelessness.

Freeland made the announcement alongside other cabinet members at a weekly news conference in Ottawa.

Ministers with portfolios that touch on the economy have been holding almost-weekly news conferences since the fall as part of the Liberal government’s effort to sell policies that address cost-of-living issues.
“We all know that housing is the central challenge in Canada right now,” Freeland said Tuesday.

“It’s a central challenge in people’s lives, and this is especially true for Canadians who are struggling with the high cost of rent.”

Data from Rentals.ca and market research firm Urbanation showed the average asking rent for December in Canada jumped 8.6 per cent year-over-year to a record high of $2,178 per month.

4:41 p.m.

Market close: Base metal stocks help boost TSX, U.S. stock markets tick higher

Strength in base metal stocks helped lead modest but broad-based gains on Canada’s main stock index, while U.S. markets ticked higher.

The S&P/TSX composite index closed up 85.85 points at 20,957.74.

In New York, the Dow Jones industrial average was up 141.24 points at 38,521.36. The S&P 500 index was up 11.42 points at 4,954.23, while the Nasdaq composite was up 11.32 points at 15,609.00.

The Canadian dollar traded for 74.04 cents U.S. compared with 73.93 cents on Monday.

The March crude oil contract was up 53 cents at US$73.31 per barrel and the March natural gas contract was down seven cents at US$2.01 per mmBTU.

The April gold contract was up US$8.50 at US$2,051.40 an ounce and the March copper contract was up one cent at US$3.78 a pound.

The Canadian Press

3:43 p.m.

OSFI head calls for backstop on insurance as catastrophe risk rises

The head of Canada’s financial institutions regulator says it’s important to develop a backstop for the insurance industry as the risk of catastrophes increase.

Peter Routledge, who leads the Office of the Superintendent of Financial Institutions, says sooner is better than later for developing a system to see the industry through a major catastrophe such an earthquake.

Speaking at a catastrophe insurance conference in Toronto, Routledge said a system based on similar principles to how the Canada Deposit Insurance Corporation backs up the banking sector would be helpful.

He says a major earthquake in Vancouver could potentially cause between $35 billion and $40 billion in damage and create systemic problems in terms of absorbing the aftermath.

The federal government committed in the 2023 budget to look into solutions to earthquake insurance and other evolving climate-related insurance market challenges.

Routledge says that on climate risk, the regulator’s focus is on pricing in the costs, which should lead private enterprise to transition away from fossil fuels and work on adaptation.

The Canadian Press

3:16 p.m.

Business funding for climate action needs to ‘rise exponentially’ to hit net-zero target: RBC

A report from Royal Bank of Canada says business funding for climate action needs to “rise exponentially” for the country to be on course for net-zero emissions by 2050.

The RBC Climate Action Institute report says that while money coming from public and private sources has grown by almost 50 per cent since 2021 to $22 billion, funding needs to reach $60 billion a year for the rest of the decade to hit emission reduction targets.

The report says public markets, private equity and venture capital will need to “step up” and push more money into green investments, as they made up only eight per cent of the capital flows into climate efforts since 2021.

It says private markets are generating more than sufficient capital to finance more of the transition, with only six per cent of new capital financing going towards climate and cleantech efforts last year.

Provincial and municipal governments will also have to ramp up efforts, the report said, and consumers will also have to change spending patterns, as the federal government has so far supplied much of the funding and is reaching its fiscal limits.

The inaugural report from RBC’s climate institute comes as environmental groups increasingly urge all Canada’s big banks to direct more funding towards climate efforts, and away from fossil fuel expansion projects.

The Canadian Press

1:03 p.m.

Bank of Canada can’t solve housing affordability with interest rates, Macklem says

Bank of Canada governor Tiff Macklem is laying out the limits of monetary policy as he warns the central bank can’t solve problems like housing affordability with Bank of Canada measures suggest it’s more hawkish than market thinks: Scotiabank.

According to prepared remarks Macklem is delivering in Montreal today, he says history shows monetary policy is quite effective at controlling inflation in the medium term.

But the governor says it also has limitations, including an inability to address short-term price fluctuations.

Macklem says interest rates also can’t fuel economic growth in the long run, noting that can only be accomplished through population growth or productivity improvement.

And despite the effect of higher interest rates on shelter costs today, the governor says monetary policy cannot address the structural barriers behind the housing crisis.

The Bank of Canada is currently holding its key interest rate at five per cent and is widely expected to start cutting interest rates around mid-2024.

Bank of Canada can’t solve the housing crisis, Tiff Macklem says

The Canadian Press

12:30 p.m.

Midday markets: Energy, base metal stocks help boost TSX, while U.S. markets mixed

Strength in the base metal and energy stocks helped Canada’s main stock index climb in late-morning trading, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 81.90 points at 20,953.79 after falling more than 200 points on Monday.

In New York, the Dow Jones industrial average was up 87.51 points at 38,467.63. The S&P 500 index was up 3.06 points at 4,945.87, while the Nasdaq composite was down 16.29 points at 15,581.39.

The Canadian dollar traded for 74.02 cents U.S. compared with 73.93 cents on Monday.

The March crude oil contract was up 30 cents at US$73.08 per barrel and the March natural gas contract was down six cents at US$2.02 per mmBTU.

The April gold contract was up US$9.70 at US$2,052.60 an ounce and the March copper contract was up two cents at US$3.79 a pound.

The Canadian Press

11:28 a.m.

No evidence of grocery profiteering, researcher tells House of Commons food committee

Dalhousie University food researcher Sylvain Charlebois says there is no substantiated evidence of profiteering within the food retail industry in Canada.

He says the government should be more concerned with price co-ordination within the industry, noting a recent example where Loblaw Cos. Ltd. changed a discount program, citing alignment with its competitors.

Charlebois, who is the director of Dalhousie’s Agri-Food Analytics Lab, made the comments before a House of Commons committee studying food prices.

Canada’s largest grocers have been under intense scrutiny from the committee and from the federal ministers of industry and food as grocery prices continue to rise at a faster pace than overall inflation.

Headline inflation accelerated to 3.4 per cent in December, while grocery prices rose 4.7 per cent that month.

Charlebois says the committee should also prioritize the grocery code of conduct, which is nearly complete but at a standstill with Loblaw and Walmart saying they’re not ready to sign on.

No evidence of grocery profiteering in Canada, researcher tells Ottawa

— The Canadian Press

10:21 a.m.

OSC extends CEO’s term by five years

Grant Vingoe, the first dedicated chief executive of the Ontario Securities Commission since the roles of chair and CEO were split in 2022, has had his term extended by five years.

Kevan Cowan, chair of Canada’s largest capital markets regulator, called Vingoe a “steadfast and unwavering champion” of those markets.

“Under his leadership, the OSC has delivered on critical initiatives to better protect investors, modernize regulation for market participants, and provide new avenues for raising capital,” Cowan said in a statement.

“With Grant at the helm, the OSC is well positioned to navigate the opportunities and challenges that lie ahead, and deliver results for Ontario under our new strategic plan.”

Vingoe said he plans to roll out a six-year strategic plan in the spring that will respond to emerging trends while being supportive of innovation and growth.

“We are operating in an environment marked by rapid technological advancements, changing demographics, and shifting investor attitudes,” Vingoe said in the statement. “This evolving landscape is challenging traditional models of regulation and enforcement, and we must adapt to continue supporting the people and businesses of Ontario.”

Before he was appointed to his current role on April 29, 2022, Vingoe held both top roles at the regulator for about a year. He was named acting chair and CEO in April 2020 following the early departure of his predecessor Maureen Jensen. Vingoe joined the OSC in 2015 as vice-chair after practising cross-border corporate and securities law.

— Barbara Shecter, Financial Post

10:16 a.m.

Markets open: Wall Street mixed, TSX up on energy, financials

U.S. stocks were flat to slightly down as bonds stabilized on Tuesday, with investors awaiting a slew of United States Federal Reserve speakers for clues on whether the latest economic reports will impact their rate outlooks.

Following a selloff that drove two-year yields to the highest levels since before the Fed’s December “pivot,” the bond market saw small moves. Recent data showing a resilient economy has prompted traders to tap the brakes on the timing and magnitude of rate cuts in 2024. The S&P 500 was down 0.01 per cent. The Dow Jones industrial average was up 0.12 per cent and the Nasdaq composite was down 0.13 per cent.

Without any relevant economic reports on schedule, traders will be focused on remarks from Fed officials including Cleveland’s Loretta Mester, Minneapolis’ Neel Kashkari, Boston’s Susan Collins and Philadelphia’s Patrick Harker. That’s after Chair Jerome Powell signalled the central bank will be in no rush to lower rates, with a March cut being unlikely.

“They are likely to echo the chairman’s recent message,” said Chris Low at FHN Financial. “The Fed expects to cut this year, but not right away.”

In Canada, the S&P/TSX composite index was up 0.34 per cent.

— Bloomberg

8:58 a.m.

Earnings roundup: TMX Group, Precision Drilling

TMX Group Ltd. reported a fourth-quarter profit attributable to equity holders of $84.4 million as its revenue rose nine per cent compared with a year earlier.

The operator of the Toronto Stock Exchange says the profit amounted to 31 cents per diluted share for the quarter ended Dec. 31 compared with a profit of $102.2 million or 37 cents per diluted share a year earlier.

Revenue totalled $301.5 million, up from $275.7 million in the same quarter a year earlier.

TMX Group chief financial officer David Arnold says the revenue growth in the quarter was driven by increases across all of the company’s key business areas.

On an adjusted basis, TMX Group says it earned 37 cents per diluted share, up from an adjusted profit of 35 cents per share in the fourth quarter of 2022.

Last month, TMX Group announced that it had closed its deal to buy the stake in VettaFi Holdings LLC that it did not already own. U.S.-based VettaFi provides indexing, digital distribution and analytic services to the financial services industry.

Precision Drilling Corp. says it earned $146.7 million in its latest quarter, up from a profit of $3.5 million a year earlier, as its revenue edged lower.

The company says the profit amounted to $9.81 per diluted share for the quarter ended Dec. 31, up from 27 cents per diluted share in the last three months of 2022.

Revenue for the company’s fourth quarter totalled $506.9 million, down from $510.5 million a year earlier.

Precision Drilling says its adjusted earnings before interest, taxes, depreciation and amortization was $151.2 million in its latest quarter, up from $91.1 million a year earlier.

The company’s drilling rig utilization days in Canada for the quarter were down 2.5 per cent compared with a year ago, while its United States operations saw a 24.5 per cent drop.

International drilling rig utilization days were up 25.5 per cent compared with last year.

Precision Drilling says its service rig operating hours for the quarter were up 14.8 per cent from a year ago.

— The Canadian Press

7:30 a.m.

Airline passengers face the prospect of years of disruption

Airline passengers face the prospect of delayed and cancelled flights for years to come as staffing challenges continue to plague the industry, according to a survey.

About 55 per cent of the 150 senior airline and airport executives surveyed by the travel software company Amadeus expect disruption to remain elevated in the coming years, while just 37 per cent see a return to pre-COVID levels, the survey said.

Staff turnover was exacerbated by the massive job cuts during the pandemic, which led to a shortage of experienced workers as travel sharply rebounded. Over the summer peak season in 2022 and 2023, airlines were forced to trim back schedules, while airports limited flights to cope with the surge in demand.

“We lost the expertise, the people who knew exactly what to do because they’ve seen that scenario before,” said Guy Kavanagh, head of flight operations at Amadeus. “The demand is back but the capabilities aren’t there so we see disruption increasing and that’s likely to continue.”

The shortages are seen throughout the aviation ecosystem, from ground handling services to flight crews. Post-pandemic staff turnover is much higher and the industry is less attractive to young workers starting their careers, according to Christos Pantazis, ground operations director at Goldair Handling.

Flights across Germany’s major hubs were disrupted for a day last week, after security staff walked out over pay and working conditions. Ground staff at Deutsche Lufthansa AG are set to strike this Wednesday over similar demands.

Airlines face expensive bills for disrupted services. Passengers whose flights start or end in the European Union are entitled to compensation of between €250 to €600 in the event of delays, cancellation or denied boarding, under the so-called EU261 rules.

Scandinavian carrier SAS AB estimates disruption is responsible for eight to 10 per cent for its costs, according to Michael Lindborg, the carrier’s vice president for airline solutions.

“If we want to minimize customer disruption, we can, but that solution may result in a significant cost increase or poor utilization of the fleet,” he said. “We need to be able to quickly understand the full implication of new plans in terms of delay, cost and compensation.”

— Charlotte Ryan, Bloomberg

7:30 a.m.

Stock markets before the opening bell

Global bond markets steadied after the biggest two-day selloff in months, while stocks looked for direction amid mixed earnings.

Ten-year Treasuries posted small moves after yields soared about 28 basis points in the previous two sessions. European equities and S&P 500 futures were little changed. BP PLC jumped almost seven per cent as the oil major announced plans to repurchase US$3.5 billion of shares in first half. UBS Group AG retreated after its earnings disappointed analysts.

A raft of United States Federal Reserve officials are due to speak this week, which may add additional insight into the central bank’s thinking. Strong U.S. economic data has forced traders to reduce their bets on interest rate cuts and chair Jerome Powell reiterated his wait-and-see approach in an interview on Sunday.

“Wary sentiment from central bankers, cautious about stubborn inflation, may hold back gains again on Wall Street,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “Policymakers still want to keep a tighter rein on demand, so high borrowing costs are likely to linger for longer.”

While market pricing once made a first quarter-point Fed cut in March look like a near-certainty, those odds have now dwindled to around 10 per cent. The Fed’s Loretta Mester and Patrick Harker are due to speak on Tuesday, with Adriana Kugler and Tom Barkin slated for the following day.

Some of the biggest market moves were in Asia, where Chinese equities soared on speculation authorities are planning more forceful efforts to end the rout. Regulators plan to brief President Xi Jinping on the market as soon as Tuesday.

“While the bounce today is strong and certainly welcome, investors will probably want more concrete actions to be taken by policy makers,” said Eugene Leow, fixed income strategist at Dbs Bank Ltd. “Sentiment on Chinese assets has been in the doldrums for some time.”

The Hang Seng China Enterprises Index jumped almost five per cent, while a broader gauge of emerging market equities headed for its biggest advance this year.

Meanwhile, Palantir Technologies Inc. surged as much as 20 per cent in U.S. pre-market trading after giving a higher-than-expected profit outlook on demand for artificial intelligence products.

Citigroup Inc. strategists warned that positioning in U.S. technology stocks is now so bullish that any selloff could trigger a wider rout. Wagers on declines in tech-heavy Nasdaq 100 futures have been completely erased, leaving investors overwhelmingly expecting further gains, which could “amplify a turn in the market,” strategists led by Chris Montagu wrote.

— Bloomberg

What to watch today

Bank of Canada governor Tiff Macklem speaks at the Montreal Council on Foreign Relations starting at 1:00 p.m. Eastern time.

Deputy Prime Minister Chrystia Freeland provides an update on the government’s economic plan in Ottawa starting at 9 a.m. Eastern time.

Peeter Routledge, superintendent of financial institutions, and Celyeste Power, chief executive of the Insurance Bureau of Canada, participate in a fireside chat at CatIQ’s Canadian Catastrophe Conference in Toronto.

On the earnings front, expect reports from Ford Motor Co., BP PLC., Toyota Motor Corp., Spotify Technology SA, Snap Inc., Nintendo Co. Ltd., Precision Drilling Corp., Finning International Inc., Algoma Steel Group Inc.

Need a refresher on Friday’s’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

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