By Ketki Saxena
Investing.com -- At 11:20 a.m in Toronto, the S&P/TSX Composite Index was at 20,087.69 points, down 0.88% in the day’s trading.
The Canadian index tracked U.S. equities lower on hawkish Fed Speak and disappointing earnings from major manufacturer Deere & Co, which contributed to risk-off sentiment (as did the sell-off in meme stocks and cryptocurrencies).
Following yesterday’s release of the Fed Minutes, rate-hike bets got a boost from hawkish Fed Speak. St. Louis Fed President James Bullard yesterday said that he leaned towards a third consecutive 75-basis-point rate hike in September, while Kansas City Fed President Esther George said the Fed will continue to tighten policy until it is “completely convinced” inflation is normalizing. San Francisco Fed President Mary Daly meanwhile supported a 50 or 75 basis point hike next month.
The commodity-heavy Canadian index meanwhile gained some support from the morning’s reversal in crude on the prospect of tightening Russian supply once the EU’s sanctions kick in on the 5th of December.
Crude is also being supported by the possible revitalization of the Iran Nuclear deal and the lifting of sanctions on the country that would enable it to export crude to global markets once more. Demand concerns - for the moment - also appear to be receding, with Haitham Al Ghais, the secretary general of OPEC+ stating that he was optimistic about oil demand into 2023.
The Biggest Stories on Bay Street
Canada's oil sands mining industry outlined proposals to release treated water from tailings ponds into northern Alberta's Athabasca River, a move environmental groups say risks damaging one of the world's largest freshwater deltas. Unlike other extractive industries in Canada, oil sands firms are not allowed to release treated tailings water but that is expected to change with new federal regulations, expected to be finalized in 2025 that will govern how tailings could be safely drained into the Athabasca.
Canada’s big six banks had profit forecasts revised downwards, ahead of earnings calls next week from Canaccord Genuity (TSX:CF). Analyst Scott Chan revised his adjusted earnings-per-share estimates for the banks down by an average of 5% as they face macroeconomic headwinds including high inflation, a housing slowdown and recession fears. Canaccord maintained its buy recommendations on Bank of Montreal (TSX:BMO), Bank of Nova Scotia (TSX:BNS) and Canadian Imperial Bank of Commerce and hold ratings on National Bank, Royal Bank of Canada (TSX:RY) and Toronto-Dominion Bank (TSX:TD).
Canadian Stocks Moving Markets This Morning
Top Losers:
- Ballard Power Systems Inc (TSX:BLDP) (-8.57%)
- Aurora Cannabis Inc (TSX:ACB) (-6.07%)
- Shopify Inc (TSX:SHOP) (-5.55%)
Top Gainers:
- OceanaGold Corporation (TSX:OGC) (+2.37%)
- Brookfield Infrastructure Partners LP (TSX:BIP_u) (+1.42%)
- Birchcliff Energy Ltd . (TSX:BIR) (+0.93%)
Today’s TSX Analyst Recommendations
- Canadian Solar Inc (NASDAQ:CSIQ) JPMorgan (NYSE:JPM) raises target price to $48 from $42, after the company reported upbeat second-quarter results and increased revenue guidance for FY2022.
- Crew Energy Inc (TSX:CR) Stifel FirstEnergy (NYSE:FE) raises target price to C$10 from C$8, after the company announced the sale of certain non-core lands north of the Peace River to an undisclosed buyer for $130 million in cash.
In Canadian Economics
Canadian retail sales rose 1.1 percent in June, surpassing analyst expectations. However, in volume terms, sales grew only 0.2 percent in volume terms, implying that the growth in retail sales is largely due to an increase in prices rather than the result of Canadian consumers significantly increasing retail shopping. Statistics Canada’s flash estimate for July estimates a 2 percent drop.
German Chancellor Olaf Scholz will be arriving in Canada on Sunday, on a trip likely to focus on a stronger partnership between the countries on liquefied natural gas, hydrogen and critical minerals. Germany is currently struggling to reduce its reliance on Russian energy imports. However, Canada’s ability to help replace that Russian supply remains hindered by its lack of operational export terminals for LNG.