Today’s top headlines
Market close: TSX gains more than 100 points as U.S. markets also rise
Canada’s main stock index gained more than 100 points, led by strength in energy, technology and base metals, while U.S. markets also rose.
The S&P/TSX composite index closed up 108.26 points at 19,246.07.
In New York, the Dow Jones industrial average was up 288.01 points at 33,407.58. The S&P 500 index was up 50.31 points at 4,308.50, while the Nasdaq composite was up 211.51 points at 13,431.34.
The Canadian Press
UAW skips expansion of strike, wins key concession from GM
UAW president Shawn Fain said today his union was prepared to expand its strike to a GM plant making high profit margin SUVs in Arlington, Texas, but reached a last-minute deal with the carmaker to include battery plant workers in a new national labour contract.
The trio of automakers have joint ventures with battery suppliers that aren’t accounted for in the contract that expired last month.
“GM has agreed to lay the foundation for a just transition” to the age of electric vehicles, Fain said in a livestreamed briefing.
Brookfield Property risks being cut to junk on refinancing needs: S&P Global
S&P Global Ratings said it is considering cutting Brookfield Property Partners LP to junk status because the commercial property company has “substantial” amounts of maturing debt to refinance during a time of higher interest rates and lower property values.
The commercial property unit of Brookfield Corp., the Canadian alternative asset manager, mostly owns high-quality office properties in major U.S. cities and class-A malls. The value of these types of properties has dropped since the pandemic, according to real estate analytics firm Green Street.
Borrowing costs have soared since the U.S. Federal Reserve started raising interest rates last year to control inflation, driving down commercial property prices. Office prices have declined 31 per cent from their 2022 peak, according to Green Street.
S&P had cut Brookfield Property’s issuer credit rating to BBB-, just one rung above junk, in July 2021.
The ratings company has placed it on credit watch with negative implications, which means that there’s a 50 per cent chance the rating could change within 90 days.
“The CreditWatch placement reflects the company’s deteriorating interest coverage metrics, continued secular challenges facing the company’s office properties, and a capital structure with a material amount of near-term, floating-rate debt,” S&P analysts Michael Souers and Ana Lai wrote.
A further rating reduction would increase the cost of future borrowing, because lenders would demand higher compensation for the added risk.
“This designation relates to a specific entity and has no impact on either the pricing or ability of Brookfield to access the real estate capital markets,” Kerrie McHugh, a Brookfield spokesperson, said in an email. Read the full story here.
Online News Act not perfect but necessary: Heritage Minister
Heritage Minister Pascale St-Onge says that while the Online News Act isn’t perfect, the media landscape is changing too fast for the government to wait any longer.
Speaking at the MINDS international news agency conference in Toronto, St-Onge said that the government intends to stand firm with the law that will force Facebook and Google to pay for news links on their websites.
She says Facebook is using intimidation tactics by removing all news links in Canada before the act is even in force, and encouraged other countries to also take action against tech giants to protect news.
Facebook parent company Meta has maintained that the legislation is based on the false premise that Meta and others unfairly benefit from news content, and that the only way it can reasonably comply with the law is to end news availability in Canada.
Google has kept a more open dialogue with the government, and St-Onge said she had heard the company’s concern about knowing how much they’ll have to pay under the law.
St-Onge says that part of the challenge is that the government waited too long to regulate digital platforms, so it’s starting with this law and can adapt it over time.
The Canadian Press
Enbridge CEO calls for national Indigenous loan guarantee program
The chief executive of Enbridge Inc. is calling for the creation of a federal Indigenous loan guarantee program.
Greg Ebel told the Toronto Region Board of Trade that Canadian energy companies are increasingly willing to offer equity ownership stakes to Indigenous communities whose traditional lands are crossed by pipelines and other infrastructure projects.
But he said Indigenous communities often don’t have the necessary access to capital.
Ebel said Alberta, Saskatchewan and Ontario all have programs offering financing to Indigenous communities for commercial partnerships.
But he said these programs aren’t enough in the case of large-scale infrastructure projects that span provincial boundaries.
Last fall, Enbridge sold an 11.57 per cent interest in seven northern Alberta pipelines to 23 First Nation and Metis communities — a $1.1-billion deal that was backed by a loan guarantee from the Alberta Indigenous Opportunities Corp.
Earlier this week, Cynthia Hansen, executive vice-president responsible for Enbridge’s natural gas pipeline and midstream business across North America, also urged the need to create a federal loan guarantee program for Indigenous groups.
The Canadian Press
Midday markets: Stocks erase losses
North American stock markets settled down in midday trading at midday, erasing earlier losses after looking into the nuances of a surprisingly strong report on the U.S. job market.
The S&P/TSX composite index rose 86.84 points at 19,224.65
In New York, the Dow Jones industrial average was up 340.38 points at 13,393.01. The S&P 500 index was up 46.37 points at 4,304.56, while the Nasdaq composite was up 173.18 points at 13,393.01
Stocks initially tumbled after a report showed U.S. employers added nearly twice as many jobs last month as economists expected. The strength raised worries that a too-hot job market could keep upward pressure on inflation, which in turn could force the Federal Reserve to keep interest rates higher than investors want.
The Associated Press
Another Fed interest rate hike looks likely after blowout jobs numbers
Nonfarm payrolls increased 336,000 last month after sizable upward revisions to the prior two months, a Bureau of Labor Statistics report showed Friday. The unemployment rate held at 3.8 per cent, and wages rose at a modest pace.
“This will keep the Fed very guarded and very much concerned about upside risk,” said Luke Tilley, chief economist at Wilmington Trust Corp., “because this plays into their concerns about a re-acceleration in the economy.”
Fed officials led by chair Jerome Powell are trying to decide whether they need to hike their benchmark lending rate again after raising it by more than five percentage points over the last 19 months. They left the rate unchanged at their last policy meeting in September, though 12 out of 19 officials signalled they would support another rate increase this year, according to projections released at the meeting.
Odds of an interest-rate hike by year’s end rose to 56 per cent following the jobs report, from 48 per cent, according to initial market pricing.
Fed officials believe the labour market remains overheated, contributing to price pressures that have pushed inflation well above the central bank’s two per cent goal.
“Reducing inflation is likely to require a period of below-trend growth and some softening of labour market conditions,” Powell said on Sept. 20.
At the same time, Powell and his colleagues on the Federal Open Market Committee have repeatedly said they will be cautious with additional moves as they near the end of their hiking cycle, suggesting some wariness about moving at the upcoming meeting that concludes Nov. 1.
Steve Matthews, Bloomberg
France blocks U.S. takeover of nuclear supplier, derailing Canadian, U.S. company merger
France has blocked the purchase of the French units of Canada’s Velan Inc. by United States-based Flowserve Corp., effectively scuppering a deal between U.S. and Canadian companies in the name of its own strategic autonomy.
The move highlights President Emmanuel Macron’s determination to secure key industries from foreign takeovers, even by U.S. companies; especially when it comes to the generation of nuclear power.
After months of deliberations, France decided to oppose the purchase of Velan SAS and Segault SAS by the Texas-based company because of their strategic importance to the French nuclear and defence industries, an official at the finance ministry said. Late Thursday, the management of Velan said Flowserve was ending the merger pact in the light of the French refusal. Bloomberg first reported in April that France was seeking to scupper the takeover. The decision was taken just days before the expiration of the merger agreement on Oct. 7.
Flowserve had agreed to buy the Quebec-based business for $329 million in February, but people familiar with the deal told Bloomberg that it could be scotched in the event of a French refusal. Segault and Velan are both deemed critical to France’s civil and military nuclear industries.
Macron hasn’t been shy about intervening in foreign acquisitions. His government derailed a merger between French and Italian automakers Renault SA and Fiat SpA in 2019, and the takeover of French grocery chain Carrefour SA by Canada’s Alimentation Couche-Tard Inc. in 2021.
It’s unclear whether or not Velan will seek another buyer. It said in a statement that it would continue operating as an independent business.
Stock markets are open: Strong jobs gains weigh on indexes
North American stocks quickly reversed course Friday morning from expected gains after the United States and Canada posted strong jobs growth in September.
In Canada, the S&P/TSX composite index was down 84.39 points to 19,053.42.
On Wall Street, the S&P 500 fell 19.92 points to 4,238.27, the Dow declined 98.17 points to 33,021.40 and the Nasdaq was down 61.15 points to 13,158.68.
The Associated Press
U.S. jobs numbers defy expectations in sign of economic resilience
Canada isn’t the only country to report surprise jobs gains this morning. The labour report in the United States also surprised to the upside, with employers adding 336,000 jobs in September. It’s an unexpectedly robust gain that suggests many companies remain confident enough to keep hiring despite high interest rates and a hazy outlook for the economy.
Friday’s report from the Labor Department showed that hiring last month jumped from a 227,000 increase in August, which was revised sharply higher. July’s hiring was also healthier than initially estimated. The economy has now added a healthy average of 266,000 jobs a month in the past three months.
The unemployment rate was unchanged at 3.8 per cent.
The job market has defied an array of threats this year, notably high inflation and the rapid series of United States Federal Reserve interest rate hikes that were intended to conquer it. Though the Fed’s hikes have made loans much costlier, steady job growth has helped fuel consumer spending and kept the economy growing.
The September hiring report comes at a time when the Fed is scrutinizing every piece of incoming economic data to decide whether it needs to raise its benchmark rate once more this year or instead just leave it elevated well into 2024.
Financial Post, The Associated Press
Canada adds 64,000 jobs in September
The Canadian economy added 64,000 jobs in September as population growth continues to surge, Statistics Canada said Friday.
The unemployment rate stayed flat at 5.5 per cent, the third-month straight. Economists had expected the unemployment rate to tick up by 5.6 per cent.
On average, employment has grown by 30,000 per month since the beginning of the year, Statistics Canada said.
Average hourly wages rose five per cent on an annual basis, following increases of 4.9 per cent in August and five per cent in July. Wage growth has been a key concern for the Bank of Canada in its fight against inflation.
Gains in part-time work drove September’s job gains, Statistics Canada said. Educational services had the most job growth, followed by transportation and warehousing. But employment dropped in finance, insurance, real estate, rental and leasing, construction and information, culture and recreation.
Financial Post, with additional reporting from The Canadian Press
Canada welcomes NAFTA ruling on U.S. softwood lumber duties
Officials in Ottawa and British Columbia have welcomed a ruling under the North American Free Trade Agreement that found elements of the United States’ calculation of softwood lumber duties are inconsistent with its own law.
A statement from Mary Ng, Canada’s minister of international trade, says the government is pleased that the NAFTA dispute panel agreed with its challenge of American’s so-called “dumping determination.”
Under the U.S. Tariff Act, the Department of Commerce determines whether goods are being sold at less than fair value or if they’re benefiting from subsidies provided from other governments.
Ng’s statement says the duties on Canadian softwood lumber are “unwarranted” and “the only fair outcome” is for the U.S. government to revoke them right away.
The statement says the NAFTA panel directed the U.S. Department of Commerce to review key aspects of its dumping determination.
B.C. Forests Minister Bruce Ralston issued a statement saying it’s “encouraging” to see the panel agree with the “extensive evidence” supporting Canada’s claims.
“Today, a NAFTA panel determined that the U.S. Department of Commerce erred in how it calculated important aspects of the anti-dumping duties applied to Canadian softwood lumber exports,” he says in the statement released Thursday.
“Time and again, neutral third-party reviews of the softwood lumber dispute have confirmed these duties are unjustified,” Ralston says.
The minister says U.S. duties are hurting people on both sides of the border, increasing material costs for Americans, and creating uncertainty for forestry professionals and communities in Canada.
Ng says Canada will “continue to advocate for Canadian softwood lumber workers and industry as we pursue other legal challenges of unjustifiable U.S. duties.”
The Canadian Press
Unifor facing resistance from GM in talks as dissent grows within union ranks
Unifor says it is still facing resistance from General Motors Co. as an Oct. 9 deadline approaches for contract negotiations, while signs of dissent also rise within the union itself as bargaining with the three major automakers continues.
National president Lana Payne says some progress has been made in the talks with GM, but that there’s nothing automatic about having the company agree to the same terms the union reached with Ford Motor Co.
The union reached a last-minute deal with Ford on Sept. 19 that Payne said was “extremely good.” It’s now trying to get GM to agree to those terms in a tactic called pattern bargaining, where terms set at one automaker are repeated at the others as a way to make sure all members make equal gains.
“I would definitely say we’re meeting some resistance,” said Payne. “This is not surprising. The idea of pattern bargaining is not exactly something that these companies love.”
But it’s not just GM that Unifor has to bring onside. It also has to convince workers that the deal is good enough for them.
Union members at Ford voted just 54 per cent in favour of their deal, and it was voted down by skilled trades members in Windsor and Oakville.
Ian Bickis, The Canadian Press
Stock markets: Before the opening bell
Global stocks gained with United States index futures as traders prepared for a U.S. payrolls report that could potentially ease pressure on the United States Federal Reserve to raise interest rates again.
Insurers led gains in Europe’s Stoxx 600 index, after Aviva PLC was cited in a newspaper as a target for potential bidders. Prudential, Legal & General Group and Phoenix also rose.
U.S. equity futures ticked higher after the S&P 500 fell 0.1 per cent Thursday and the tech-heavy Nasdaq 100 slipped 0.4 per cent. Tesla Inc. slipped in premarket trading as the electric-vehicle maker cut prices on its most popular cars in the U.S.
In Canada, the S&P/TSX composite index closed up 103.00 points at 19,137.81. Find out the day’s top three performers here.
What to watch today
We’ll get fresh data on the state of the labour market when Statistics Canada releases its labour force survey for September. Economists expect the unemployment rate to have gone up to 5.6 per cent. The United States also releases its employment report for September this morning.
The Toronto Region Board of Trade hosts an event titled “Canada’s Energy – Living up to our Superpower.” Greg Ebel, chief executive of Enbridge Inc. will deliver the keynote address.
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Additional reporting by The Canadian Press, Associated Press and Bloomberg