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TSX Lower After Hawkish Fed; Stelco Soars After SIB; Housing Prices Moderate

Stock Markets Sep 22, 2022 11:17
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By Ketki Saxena 

Investing.com -- The Canadian index tracked Wall Street lower as yesterday’s 75 bp hike and hawkish commentary from the U.S. Federal Reserve continued to weigh on equities, with investors worrying that aggressive tightening from the world’s most powerful central bank could trigger a recession. 

While yesterday’s 75 bp move from the Fed brought no surprises, investor sentiment was soured by comments from Fed Chair Jerome Powell that “There’s a ways to go” in pushing deeper into restrictive territory.

At the press conference following the policy announcement, Powell stated “My colleagues and I are strongly committed to bringing inflation back down to our 2% goal. We have both the tools we need and the resolve that it will take to restore price stability”. 

Further losses on the commodity-heavy Canadian index were capped by gains in crude, as supply concerns outweighed worries of demand destruction following the Fed. 

Amongst other sanctions, the European Union is once again looking at an oil price cap, in response to what the West condemned as a new escalation in Moscow's war in Ukraine: Russia’s biggest conscription since World War Two. 

The Biggest Stories on Bay Street 

Canada’s budget watchdog provided its input on the federal government’s plan to implement a surtax and “Canada Recovery Dividend” payment on large financial institutions, including banks and life insurance companies. In the budget, the government indicated that the levies are expected to generate $6.1 billion in revenue over the next five years, whereas the regulatory body says they will generate a combined $5.3 billion. Draft legislation on the targeted measures was unveiled last month and is open to public comment until Sept. 30.

Pieridae Energy, one of the Canadian companies proposing a liquefied natural (LNG) gas terminal on Canada's east coast, has asked the federal government to help ensure pipeline operator TC Energy (TSX:TRP) would be able secure permits to expand gas supply pipelines in a timely fashion. Pieridae Chief Executive Alfred Sorensen says the LNG project can only go ahead if TC expands capacity on its existing pipeline network. "There's no other way. Without TC Energy there is no Goldboro LNG project," Sorensen told Reuters. TC meanwhile says that it has "virtually no spare capacity" on its pipelines due to high energy demand

De Havilland Aircraft of Canada Ltd. yesterday announced plans Wednesday to build a new aircraft manufacturing plant east of Calgary. De Havilland said it has acquired about 600 hectares of land in the area and said construction could begin as early as next year, with its first buildings operational by 2025, though the full buildout is expected to take longer. The plant will eventually employ up to 1,500 people.  

Stelco (TSX:STLC) Holdings is launching another substantial issuer bid under the same terms as another SIB that concluded on Sept. 12 (up to 30 million of its common shares for $35.00 apiece, although less than 5 million of those shares were tendered). The Board of Directors “Believes that the Offer is a prudent use of the Company's financial resources given the Company's business profile and assets, including its substantial level of cash-on-hand in excess of operating and capital requirements, and the current market price of the Shares.” 

Canadian Stocks Moving Markets This Afternoon

Top Gainers: 

  • Stelco +9.08% 
  • Teck Resources (TSX:TECKa)
  • TransAlta Corp (TSX:TA)

Top Losers: 

  • Nuvei (TSX:NVEI)
  • Canopy Growth (TSX:WEED)
  • Dye & Durham (TSX:DND)

In Canadian Economics

Statistics Canada today announced the Q2 natural resources indicator. Real gross domestic product (GDP) of the natural resources sector increased 1.8% in the second quarter. Meanwhile, the economy-wide real GDP rose 0.8% in the second quarter.

StatsCan also announced its Employment Insurance report for July 2022. In July, 506,000 Canadians received regular Employment Insurance benefits, up by 14,000 (+2.9%) compared with June.

StatsCan also released its new home price index for August today. New home prices for Canada increased 0.1% for the second consecutive month. Nationally, the year-over-year growth continued to moderate in August, with new home prices rising 6.9%, the smallest increase since January 2021.

TSX Lower After Hawkish Fed; Stelco Soars After SIB; Housing Prices Moderate
 

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