By Ketki Saxena
Investing.com -- At 10:10 a.m in Toronto, the S&P/TSX Composite was at 19,781.35 points, down 1.03% in the day’s trading. Equities suffered a shock from the morning’s higher-than-expected US CPI data, which cements bets for a 75 bps hike later this month and raising the case for aggressive rate hikes from the Fed subsequent to September.
The consumer price index rose 8.3%year-over-year in August, higher than estimates for an 8.1% increase. Although the reading edged lower from July’s 8.5% reading, core inflation, which excludes highly volatile items such as food and energy, also rose.
The commodity-heavy Canadian index was also pressured by losses in crude, as expectations for Fed hikes boosted the dollar and further fanned flames of demand destruction driven by a cooldown in economic activity.
OPEC+ however remains bullish on the forecast for crude, reiterating its growth for 2022-2023 forecasts earlier today. OPEC+ expects Oil demand to rise by 3.1 million barrels per day (bpd) in 2022 and by 2.7 million bpd in 2023, unchanged from last month. Crude investors will also be awaiting the American Petroleum Institute’s weekly US inventory reports later in the session.
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Canadian retailer Roots released Q2 results before the opening bell, reporting a net loss of $3.2-million or 8 cents a share in the second quarter, compared to a loss of $1.2-million or 3 cents a year earlier. On a positive note, sales rose 22.9% in the latest quarter to $47.8-million driven by corporate retail store and e-commerce sales, partner and other sales, and higher in-store traffic. Roots also announced that it has proactively taken steps to reduce the impact of industry-wide supply snarls to consolidate a robust inventory position for the remainder of the year.
Dye and Durham (TSX:DND) meanwhile is facing yet another obstacle from UK regulators in its proposed acquisition of Australia’s Link Administration Holdings, related to Link’s liabilities stemming from its role in the 2019 collapse of Woodford’s Equity Income Fund. The UK regulator will not approve the deal unless Dye and Durham agrees to cover restitution to a maximum of £306 million (US$358 million) on Link’s behalf. Dye and Durham announced yesterday that it is considering the terms, but if it is unable to accept them, it will need to step back from the US $1.7 billion acquisition.
Topaz Energy Corp had its price target raised by a number of analysts after Topaz’s announcement yesterday of a $265.3-million acquisition of a newly created 5-per-cent gross overriding royalty on current and future oil production from Deltastream Energy Corp.’s holdings. The company also announced a 7% increase to its quarterly dividend (to 30 cents per share). The deal immediately followed Tamarack Valley’s acquisition of Deltastream and “provides TPZ with a significantly expanded position in the fastest-growing oil play in western Canada”, as per iA Capital Markets’ Matthew Weekes. Other analysts bullish on the stock include Desjardins Securities’ Chris MacCulloch and CIBC (TSX:CM) World Markets’ Jamie Kubik.
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In Canadian Economics
Later today, Prime Minister Justin Trudeau is expected to unveil a plan to reduce inflation pressures on low-income Canadians. The plan is expected to include a doubling of GST rebate cheques for six months, expanded housing allowance payments, and a temporary dental-care benefit for some eligible with young children.
The announcement was to have happened last week during a cabinet retreat in Vancouver but was delayed following the death of Queen Elizabeth II.