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Top headlines: Freeland, provinces to meet Friday over Alberta's possible CPP exit Back to video

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4:35 p.m.

Markets close: TSX ekes out small gain, Wall Street rises day before Fed rate decision

Canada’s main stock index eked out a small gain on Tuesday despite weakness in metals and utilities stocks, while U.S. markets rose the day before the central bank is set to make a decision on interest rates.

In Toronto, the S&P/TSX composite index rose 0.09 per cent to 18,873.47.

The top three performers on the TSX were Cameco Corp., up 8.35 per cent, Celestica Inc., up 5.34 per cent, and NexGen Energy Ltd., up 5.02 per cent.

Cameco rose after it raised its revenue outlook for 2023 and reported a profit of $148 million in its latest quarter compared with a loss a year ago.

On Wall Street, the S&P 500 was up 0.65 per cent on Tuesday to close at 4,193.80. The Dow Jones Industrial Average and the Nasdaq composite rose 0.38 per cent and 0.48 per cent, respectively, closing at 33,052.87 and 12,851.24.

One thing investors will be watching this week is the third-quarter earnings release from Apple Inc. on Thursday, which investors see as a big sentiment indicator.

On Wednesday, the United States Federal Reserve is slated to announce its interest rate decision. Analysts have been saying the central bank will likely hold its key rate, echoing the Bank of Canada.

There’s also some other important U.S. and Canadian economic data coming later in the week including jobs numbers on Friday. Investors will be eyeing the data for an indication of what’s to come with the central banks’ monetary policy, said Greg Taylor, chief investment officer at Purpose Investments.

On Tuesday, Statistics Canada released its August gross domestic product. The Canadian economy was flat for the month, and a preliminary estimate showed a small contraction in the third quarter.

“The report wasn’t really a surprise,” Taylor said.

The Canadian dollar traded for 72.08 cents U.S., down 0.37 per cent.

The December crude oil contract was down 1.20 per cent to US$81.32 per barrel.

Oil plunged to the lowest in two months amid signs that the Israel-Hamas conflict will remain contained, bringing angst about interest rates and a slowing global economy back to the fore.

U.S. benchmark West Texas Intermediate fell 1.6 per cent to near US$81 a barrel after Hamas told mediators it will release foreign hostages in the next few days, further damping concerns of the war spreading and impairing crude flows in the Middle East. Oil has now declined below its pre-war levels, reaching the lowest settlement price since Aug. 28.

The December gold contract was down US$13.10 at US$1,992.50 an ounce.

The Canadian Press, Financial Post, Bloomberg

4:11 p.m.

Freeland to meet with provincial finance ministers on possible Alberta CPP withdrawal

Finance Minister Chrystia Freeland says she will meet provincial and territorial finance ministers later this week to discuss the possibility of Alberta’s withdrawal from the Canada Pension Plan (CPP).

A letter from Freeland to her counterparts says she is convening the virtual meeting on Friday to speak to what she calls flaws underlying Alberta’s proposed exit formula.

Alberta Premier Danielle Smith said last week her government stands by its assertion that the province deserves $334 billion if it leaves the CPP, which represents more than half of the plan’s assets.

A throne speech from Smith’s government on Monday did not mention the proposed withdrawal, and the premier said a promised referendum might not happen if public consultation suggests the idea isn’t popular.

The Alberta government has been advertising the benefits that it says could come to Albertans with a transfer out of the CPP, but economists and the Canada Pension Plan Investment Board say the amount Alberta would get would be half of what is being advertised, at best.

Freeland says in the letter that some estimates note an analysis using the same formula would predict that Ontario, Alberta and British Columbia combined are entitled to 128 per cent of CPP assets — an outcome she calls “untenable” and “absurd.”

“For six decades, the CPP has been the bedrock of a secure and dignified retirement for Canadians, very much including the people of Alberta,” Freeland said at a news conference in Ottawa on Tuesday.

“Protecting the pensions of all Canadians is a priority for our government. And I look forward to an important conversation about this with my counterparts from across the country on Friday.”

The Canadian Press

3:52 p.m.

No more carve-outs when it comes to carbon tax, Trudeau says

Prime Minister Justin Trudeau says there will be no further carbon tax carve-outs, including for natural gas heating, as criticism mounts of his decision to temporarily exempt home heating oil from the policy.

The promise is landing with a political thud, with both Conservative and NDP leaders accusing Trudeau of regional favouritism to save his political skin in Atlantic Canada, and former Bank of Canada governor Mark Carney saying he would have found a different way to ease the rising cost of living.

Trudeau and multiple ministers, including those in charge of environment and energy, are defending the three-year home heating oil exemption today as a policy intended to ensure that Canadians who use the fuel have the time and money needed to transition to electric heat pumps.

They also say that home heating oil users are more likely to have lower incomes and live in rural areas without any other options for heating their homes.

The Liberals are feeling intense heat after Rural Development Minister Gudie Hutchings implied on CTV Question Period on Sunday that Prairies provinces should elect more Liberals if they want their voices heard on the need for carbon taxing relief.

Housing Minister and Nova Scotia MP Sean Fraser says this carbon tax pause is not about politics and that many policies affect different regions of the country differently.

The Canadian Press

1:48 p.m.

First Quantum shares drop another 15% on Panama uncertainty

First Quantum Minerals Ltd. plunged by another 15 per cent as uncertainty deepens over the future of the company’s Panama copper mine, which is set to face a referendum that would also have sweeping implications for the country’s economy and global copper supply.

The latest drop brings the company’s losses this week to 39 per cent, as investors assess the outlook for First Quantum’s most important asset. Cobre Panama, one of the world’s biggest and newest copper mines, has generated the bulk of the company’s revenue since it opened in 2019. The operation is projected to account for almost half of the company’s operating revenue next year if it stays fully operational.

The future of the mine has been cast into uncertainty after weeks of civil unrest over its new operating contract, which would extend the company’s mining license by 20 years. The government says it plans to hold a referendum on Dec. 17 for voters to decide whether to extend or revoke First Quantum’s licence, though it is still not clear if the referendum can take place.

Bloomberg

1:31 p.m.

OSC halts hedge fund’s trades after losses, manager’s death

Ontario’s securities regulator barred a Toronto-based hedge fund from trading after its lead manager died and dealers were hit with large losses on the firm’s trades.

The Ontario Securities Commission (OSC) issued the temporary order as it investigates the financial condition of Traynor Ridge Capital Inc. and a series of failed trades that saddled three brokerage firms with losses, the regulator said in an Oct. 30 filing. The firms were left with losses ranging from $85 million to $95 million after completing trades for Traynor during the week of Oct. 23.

Christopher Callahan, the fund’s chief compliance officer and its ultimate designated person, was reported dead Oct. 28, the OSC said.

Traynor’s website describes Callahan as the firm’s founder and lead portfolio manager. His LinkedIn profile says he had worked there for nearly four years following stints at other firms since he graduated from Queen’s University in 2014.

“It appears to the Commission that Traynor is in serious financial difficulty,” the regulator said in its filing. “Further investigation of these events is required.”

CIBC World Markets Inc., Traynor’s prime broker, terminated its prime brokerage service agreement with the fund because it became unresponsive, OSC said in the filing. Representatives for Traynor and CIBC didn’t immediately respond to requests for comment.

The TR1 Fund, one of three investment vehicles operated by Traynor, uses what it called an event-driven, market neutral strategy that aims to capitalize on market inefficiencies in publicly-traded securities.

Callahan had been at Traynor since January 2020 after working for another Toronto-based firm — HGC Investment Management Inc. — for less than four years, according to his LinkedIn profile.

HGC president Brett Lindros said he had not seen much of Callahan in recent years and didn’t know much about the investment strategy he used at Traynor. He said Callahan spent much of his time at HGC working as an analyst.

“I liked Chris a lot. He was a good guy,” he said. “It’s very said news.”

Bloomberg

Read the full story here.

12:47 p.m.

Mark Carney questions Liberals’ carbon tax retreat on home heating oil

Mark Carney pressed for Canada to stick with predictable climate policy as he questioned the federal government’s move to lift the carbon tax on home heating oil.

The former central banker, who has long been rumoured to be a possible future Liberal leadership candidate, says he would have looked for different ways to provide financial support to Canadians other than the government’s chosen path.

But Carney, the United Nations special envoy on climate action and finance who was speaking at a net-zero conference in Ottawa, also says no other government and prime minister in Canadian history has done more on climate and he applauds parallel moves to help households transition to greener heating alternatives.

Prime Minister Justin Trudeau’s announcement last week to increase the carbon price rebate for rural Canadians and lift the price on home heating oil for the next three years marks the first time the Liberals have retreated in any way on their carbon tax policy.

Affordability concerns have hit the party’s polling numbers in four Atlantic provinces, where about one-third of homes still use heating oil, a far higher proportion than the rest of Canada, but Trudeau has denied the change was about saving Liberal seats.

The government also announced it was expanding incentives for home heat pumps, which is set to begin as a pilot project in Atlantic provinces.

The Canadian Press

12 p.m.

Markets at midday

Wall Street is paring its gains on mixed earnings reports from big companies like bellwether Caterpillar. The heavy equipment maker’s stock sank after reporting a slowdown in orders.

Canada’s TSX was up, helped by energy and telecom stocks.

11:21 a.m.

BHP approves $6.4-billion second stage of Jansen potash project in Saskatchewan

BHP Group Ltd. says it has approved a plan to spend $6.4 billion for the second stage of its Jansen potash mine that it is developing in Saskatchewan.

The decision comes as the company is still building the first stage of the project, which is expected deliver first production in 2026.
The company says the first stage is 32 per cent complete and on schedule.

BHP says the additional investment will make Jansen one of the world’s largest potash mines, doubling production capacity to about 8.5 million tonnes per year.

The company says the decision to go ahead with the second stage while it is still building the first stage will allow it to take advantage of the current project team and continued use of existing contractors.

BHP also says it will mean reduced overhead and savings on mobilization and demobilization costs.

The Canadian Press

Read the full story here.

Related: BHP CEO aims to dominate potash globally through Canada

11 a.m.

Cameco shares shoot up on profit, brighter outlook

Shares in Cameco Corp. rose nearly 10 per cent after it raised its revenue outlook for 2023 and reported a profit of $148 million in its latest quarter compared with a loss a year ago.

The uranium miner says profit was 34 cents per diluted share for the quarter ended Sept. 30 compared with a loss of $20 million or five cents per diluted share a year earlier.

Revenue for the quarter totalled $575 million, up from $389 million in the same quarter last year.

On an adjusted basis, Cameco says it earned 32 cents per diluted share, up from an adjusted profit of three cents per diluted share a year earlier.

In its updated outlook, Cameco says it now expects consolidated revenue between $2.43 billion and $2.58 billion for 2023, up from its earlier expectations for between $2.38 billion and $2.53 billion.

Cameco shares were up $4.85 at $57.21 in early Tuesday trading on the Toronto Stock Exchange.

The Canadian Press

10 a.m.

Canadian Tire buys out Scotiabank’s stake in its financial services

Canadian Tire Corp. is bringing its financial services unit fully in house.

The retailer announced today that it has struck a deal to buy Bank of Nova Scotia’s 20 per cent stake in Canadian Tire Financial Services (CTFS) for $895 million in an all-cash deal.

The agreement comes about 10 years after Scotiabank initially acquired its stake in the division for $500 million.

In a release, Canadian Tire chief executive Greg Hicks said that while the partnership was fruitful, both companies strategies had evolved over the past decade and it was time for the retailer to own the entirety of the unit.

“While we have appreciated partnering with Scotiabank over the past decade, with both Scotiabank and CTC having received significant strategic and financial benefits, concluding this partnership will give us much greater control and flexibility in building out our loyalty program,” he said.

The company will record a $328 million charge tied to the transaction — working out to $5.88 per share — in the third quarter, and is funding the deal through its short-term credit facilities along with a $400-million term loan from Desjardins Capital Markets.

While this does give Canadian Tire full control of the unit, the company said it has hired Goldman Sachs Group Inc. to conduct a strategic review of alternatives to determine the “optimal ownership structure” for the division.

Ian Vandaelle, Financial Post

8:50 a.m.

Canada’s economy on track for technical recession

Canada’s economy may have contracted in the third quarter, putting the country in a technical recession.

A preliminary estimate by Statistics Canada this morning suggests gross domestic product was unchanged for the third consecutive month in September. The three straight months of flat output since July point to a decline of 0.1 per cent annualized for the quarter, following a decrease of 0.2 per cent in the second quarter.

The latest estimates are weaker than the Bank of Canada’s forecast.

“The fact that the economy appears close to tipping into a mild recession already clearly reduces the likelihood of any further interest rate hikes, and will likely see financial markets pulling forward expectations for rate cuts which will weigh on the Canadian dollar,” said CIBC economist Andrew Grantham.

Canada’s stalling economy on track for technical recession

Read what the economists say.

Financial Post and Bloomberg

7:30 a.m.

Strikes cost Stellantis $3.2 billion

Stellantis NV said the prolonged strikes that curbed output at its North American facilities cost the Jeep maker around €3 billion (US$3.2 billion) in revenue.

Pre-tax operating profit during the walkout period was negatively impacted by under €750 million, Stellantis said Tuesday. It still reported better-than-expected third-quarter revenue, bolstered by stable pricing, improving logistics and robust demand for models such as the electric Jeep Avenger.

The “solid” earnings beat was aided by healthy volumes in North America, where pricing is stronger than in Europe, Bernstein analyst Daniel Roeska said in a note. Stellantis also confirmed its full-year guidance.

In the past few days, the carmaker reached tentative labour agreements with unions in Canada and in the United States, the group’s biggest profit pool. The latter deal with the United Auto Workers will bring the top wage to over $42 an hour by April 2028.

General Motors Co. reached a tentative contract agreement Monday with the United Auto Workers union, bringing an end to a six-week-old strike that had upended U.S. automobile production and cost the industry billions of dollars.

GM is the last of Detroit’s legacy automakers to reach an agreement with the union, which began its strike on Sept. 15.

Stellantis already cancelled plans for U.S. events including the CES show in January and will continue to cut costs to make up for the strike impact, said chief financial officer Natalie Knight.

Bloomberg

Stock markets before the opening bell

Stocks are on the move higher this morning, with U.S. futures on track to extend gains that saw the S&P 500 close 1.2 per cent higher Monday. Oil is also rebounding after a steep drop yesterday as investors tracked developments in the Middle East.

What to watch today

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Additional reporting by The Canadian Press, Associated Press and Bloomberg