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Inside the Market

Up-to-the-minute insights
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At midday: TSX falls despite earnings beats for big banks

Canada’s main stock index erased early gains in late morning trading on Thursday, boosted by sharp gains for shares of major banks whose quarterly earnings impressed investors.

The country’s biggest bank, Royal Bank of Canada, rose 1.2 per cent to $94.07 after reporting an 11-per-cent profit increase, beating market forecasts, on strong performances in its capital markets and wealth management businesses.

Canada’s second-largest lender, Toronto-Dominion Bank , was up 1.4 per cent at $63.93. Its earnings also exceeded expectations, helped by a strong performance at its retail and investment banking businesses.

No. 5 bank Canadian Imperial Bank of Commerce slipped 0.7 per cent to $105.59 after reporting a softer beat than its two larger peers.

At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 24.59 points, or 0.16 per cent, at 15,394.90.

Six of the index’s 10 main sectors were higher, with five gainers for every two decliners overall.

The financials group, which accounts for a third of the index’s weight, rose 0.5 per cent.

Manulife Financial Corp, Canada’s biggest life insurer, erased early gains and sat flat after it named Roy Gori, an executive from its Asia division, to replace the retiring Donald Guloien as chief executive officer.

Forestry products company Tembec Inc jumped 39.2 per cent to $4.11 after accepting a buyout offer from Rayonier Advanced Materials Inc for $4.05 a share.

The energy group fell 1.1 per cent after a delegate of the Organization of the Petroleum Exporting Countries said the producer group had decided to extend cuts in oil output to March 2018.

Editor’s picks: Thursday's analyst upgrades and downgrades;

Scott Barlow: Get ready for the ‘natural gas apocalypse;

Thursday's small-cap stocks to watch.


The S&P 500 and Nasdaq Composite were in record territory in late morning trading on Thursday, buoyed by strong earnings from the embattled retailer sector.

Sentiment also got a boost after the minutes of the Federal Reserve’s latest meeting showed policymakers expected the economy to pick up momentum and an interest rate hike would come sooner rather than later.

While gains were broad based, the consumer discretionary index’s 0.83-per-cent surge was easily the highest among the 11 major S&P sectors.

Best Buy surged as much as 17 per cent to a record high of $58.99, making it the top gainer on the S&P, as its comparable sales unexpectedly rose last quarter.

Tommy Hilfiger-owner PVH was second-biggest gainer with a 7-per-cent jump to a near 6-month high on strong results. Sears soared as much as 32 per cent after posting its first quarterly profit in nearly two years.

Analysts also said the S&P 500 being able to break through and stay above the 2,400 level for the third straight session has also provided technical support.

“Breaking through 2,400 on the S&P 500 is a bit of a technical help, so you’re getting the benefit of people coming into the market since that level was such a staunch resistance for so long,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

The Dow Jones Industrial Average was up 81.44 points, or 0.39 per cent, at 21,093.86.

The S&P 500 was up 11.22 points, or 0.46 per cent, at 2,415.61, easing a bit after touching a record of 2,415.86.

The Nasdaq was up 36.52 points, or 0.59 per cent, at 6,199.54. The index hit an all-time high of 6,202.50.

The only S&P index in the red was energy, off 0.11 percent as crude oil prices fell after the OPEC agreed to extend output cuts, but not by as much as investors had hoped for.

Minutes of the Fed’s latest meeting, released on Wednesday afternoon, showed that while policymakers backed a rate hike, they also agreed to hold off until it was clear a recent slowdown in the economy was temporary.

More »

11 companies insiders are buying and selling

JENNIFER DOWTY

Featured below are 11 companies that have experienced recent insider buying and selling activity in the public market through their direct and indirect ownerships.

Keep in mind, when looking at transaction activities by insiders, purchasing activity may reflect perceived value in a security. Selling activity may or may not be related to a stock’s valuation; perhaps an insider needs to raise money for personal reasons. An insider’s total holdings should be considered because a sale may, in context, be insignificant if this person has a large remaining position in the company. I tend to put great weight on insider transaction activity when I see multiple insiders trading a company’s shares or units.

More »

Loonie pulls back from five-week high as oil prices slide

Fergal Smith

The Canadian dollar weakened against its U.S. counterpart on Thursday, pulling back from a five-week high as oil prices fell after OPEC signalled it would go no further with production cuts than markets previously expected.

U.S. crude prices were down 0.84 per cent at $50.93 a barrel even as Organization of the Petroleum Exporting Countries delegates said that the producer group had decided to extend cuts to March. Some investors have been hoping it would reduce output even further to drain stocks more quickly.

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At the open: TSX rises as trio of banks beat earnings expectations

Canada’s main stock index opened higher on Thursday, boosted by earnings that beat market expectations at three of the country’s biggest banks.

The Toronto Stock Exchange’s S&P/TSX composite index was up 38.67 points, or 0.25 per cent, to 15,458.16 shortly after the open. The financials group gained 1.0 per cent.

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Thursday's analyst upgrades and downgrades

DAVID LEEDER

Inside the Market’s roundup of some of today’s key analyst actions

Bank of Montreal (BMO-T, BMO-N) may continue to see “slightly weaker” contributions from its personal and commercial banking business moving forward, said RBC Dominion Securities analyst Darko Mihelic.

However, he said the Street’s reaction to the bank’s second-quarter results were both “severe” and “somewhat overdone.”

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Get ready for the ‘natural gas apocalypse’

Scott Barlow

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading this morning on the Web

OPEC leaders are expected to announce the continuation of production quotas, but markets didn’t like the news very much as crude prices turned sharply lower. This could just be the usual "buy the rumour, sell the news" or a sign that major speculative market players were hoping for deeper production cuts. Energy consulting firm Wood Mackenzie was expecting the negative reaction,

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Thursday's small-cap stocks to watch

Brenda Bouw

Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.

Tembec Inc. (TMB-T) has received a friendly takeover offer from Rayonier Advanced Materials Inc. (RYN-N) of Jacksonville, Fla.

Rayonier’s offer values the Quebec-based lumber, paper and pulp producer at $807-million (U.S.), including $487-million of debt that will be assumed by the new owner.

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Premarket: Stocks hit record after Fed minutes, oil rises as OPEC meets

Nigel Stephenson

World stocks hit record highs on Thursday and the dollar dipped after the U.S. Federal Reserve signalled caution in raising interest rates, while oil prices rose in anticipation of top producers agreeing to extend output cuts for up to a year.

European shares opened higher, but quickly dipped into negative territory. The pan-European STOXX 600 index was last down 0.3 per cent, led lower by resources companies after a 4 per cent drop in iron ore on China’s Dalian Commodity Exchange Earlier, Asian stocks, as measured by MSCI gained almost 1 per cent to a two-year high after the U.S. S&P 500 index hit a closing record on Wednesday. This helped push MSCI’s 46-country world stock index to a record high of 464.38 per cent, up 0.3 per cent on the day.

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These stocks are set for big moves Thursday

TIM SHUFELT

The big banks will likely be the focus of Canadian trading on Thursday, as the two largest of the group are due to report second-quarter performance.

This latest round of bank earnings got off to a lacklustre start on Wednesday, with Bank of Montreal missing forecasts on some key performance metrics, despite posting a healthy profit increase over the previous year. BMO’s stock declined by 3.3 per cent on the day.

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The close: TSX falls as BMO earnings weigh on banks

Canada’s main stock index fell on Wednesday, with an earnings miss from Bank of Montreal weighing on that stock and also putting pressure on other big banks yet to report quarterly earnings.

The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed down 57.45 points, or 0.37 per cent, at 15,419.49. Financial stocks lost 0.8 per cent overall, while the energy sector fell 1 per cent.

Bank of Montreal fell 3.3 per cent to $91.81 after reporting profits which were slightly below expectations, hit by a decline in income in the United States.

BMO was the first of Canada’s big banks to report quarterly earnings, with Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank all due to report on Thursday.

Home Capital Group Inc, Canada’s biggest non-bank lender, lost 2.7 per cent to $8.99 after saying late on Tuesday that said it had drawn down an additional $250-million from a high interest credit line


Editor’s picks: 15 companies insiders are buying and selling;

Gordon Pape’s mailbag: The worth of robo-advisers, unused RRSP room and more;

Wednesday's analyst upgrades and downgrades.

U.S. stocks ended up slightly on Wednesday, with the S&P 500 hitting a record high close, after minutes of the Federal Reserve’s latest meeting showed policymakers view a rate hike coming soon.

More »

At midday: TSX slips as bank stocks weigh

Canada’s main stock index fell on Wednesday, weighed down by an earnings miss from Bank of Montreal and as investors assessed the latest monetary policy clues from the country’s central bank.

Bank of Montreal fell 3.1 per cent to $92.15 after reporting profits which were slightly below expectations, hit by a decline in income in the United States.

BMO was the first of Canada’s big banks to report quarterly earnings, with Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank all due to report on Thursday.

The broader financials sector fell 1 per cent.

Home Capital Group Inc, Canada’s biggest non-bank lender, lost 2.3 per cent to $9.03 after saying late on Tuesday that said it had drawn down an additional $250-million from a high interest credit line.

At 11:26 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 95.74 points, or 0.62 per cent, at 15,381.20.

Nine of the index’s 10 main groups were in negative territory. There were three declining issues for every two advancers.

The Bank of Canada held interest rates steady on Wednesday, as expected, saying that while economic growth is likely to moderate in the second quarter, government measures to rein in the housing market have not yet had a substantial cooling effect.

Investors are also looking for clues to U.S. monetary policy with the scheduled release this afternoon of minutes from the last Federal Reserve policy meeting.

Editor’s picks: Wednesday’s analyst upgrades and downgrades;

Wednesday’s small-cap stocks to watch;

Why investors should learn about probability, an energy stock to consider, and why fund fees are drawing new fire

U.S. stocks were modestly higher late on Wednesday morning, aiming for a fifth straight day of gains, as investors awaited Federal Reserve minutes of its May meeting that could cement the chances of an interest rate hike next month.

U.S. interest rates futures were steady. Fed funds futures implied traders priced in about an 83 percent chance of a rate hike in June, little changed from Tuesday’s close.

Investors are also awaiting more details regarding the Fed trimming its $4.5 trillion balance sheet, when the central bank releases the minutes at 2 p.m. ET.

“The real take from the Fed is that a June rate hike still seems to pretty much baked in the cake but I’m going to be looking at guidance as how they expect to start spending down their excess assets,” said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Mass.

While recent economic data has been mixed, with signs of a dip in consumer sentiment and spending, the job market continues to strengthen. That could give the Fed impetus to continue with its path of monetary tightening.

Data on Wednesday showed home resales fell more than expected in April as a tight supply boosted prices and sidelined prospective buyers. A tightening labour market and historically low mortgage rates have helped the housing market recovery.

Mr. McMillan said the recent mixed economic data did not concern him as a lot of it was due to from first-quarter seasonality issues and that he expected an improvement in the current quarter.

The Dow Jones Industrial Average was up 31.67 points, or 0.15 per cent, at 20,969.58, the S&P 500 was up 2.15 points, or 0.08 per cent, at 2,400.57 and the Nasdaq Composite was up 9.63 points, or 0.16 per cent, at 6,148.34.

Seven of the 11 major S&P 500 sectors were higher, led by the materials index’s 0.67-per-cent rise.

Financials, the index which will benefit the most from higher interest rates, was off 0.21 per cent after four days of gains.

The consumer staples index fell 0.12 per cent, weighed down by weak report from Lowe’s, the No. 2 U.S. home improvement chain.

Lowe’s dropped 4.3 per cent to $78.82 after it reported a lower-than-expected profit and comparable sales. Bigger rival Home Depot was off 0.2 per cent.

Jewelry retailer Tiffany sank 6.8 per cent after posting a surprise drop in comparable sales. Signet Jewelers , which reports on Thursday, was down 6 percent. The two were the biggest losers on the S&P.

At the other end was Intuit, which jumped 7.2 per cent after the tax-preparation software maker posted a profit topped estimates and also raised its revenue forecast.

More »

Gordon Pape’s mailbag: The worth of robo-advisers, unused RRSP room and more

Gordon Pape

The inbox has filled up again with your questions, some of which are extremely interesting. Here is the latest instalment.

Robo investing

Q - Can you give any information generally on ETF robo investing and on WealthSimple in particular (which I understand is a group that involves people from Power Financial). We have not yet invested in individual ETFs because of the profusion of choices and bells and whistles and thought robo's may be a way to buy and try them with a small amount, less than $20,000.

More »

15 companies insiders are buying and selling

JENNIFER DOWTY

Featured below are 15 companies that have experienced recent insider buying and selling activity in the public market through their direct and indirect ownerships.

Keep in mind, when looking at transaction activities by insiders, purchasing activity may reflect perceived value in a security. Selling activity may or may not be related to a stock’s valuation; perhaps an insider needs to raise money for personal reasons. An insider’s total holdings should be considered because a sale may, in context, be insignificant if this person has a large remaining position in the company. I tend to put great weight on insider transaction activity when I see multiple insiders trading a company’s shares or units.

More »

Loonie holds on to recent gains ahead of Bank of Canada, OPEC decisions

Fergal Smith

The Canadian dollar was little changed against its U.S. counterpart on Wednesday, holding onto recent gains ahead of an interest rate decision by the Bank of Canada and a possible extension of oil production cuts by major producers.

U.S. crude’s price dipped 0.19 per cent to $51.37 a barrel as investors waited for news from Vienna, where ministers from the Organization of the Petroleum Exporting Countries and other nations were discussing whether to extend production cuts into the first quarter of 2018.

More »

At the open: TSX edges lower as BMO slides

Canada’s main stock index fell slightly in early trade on Wednesday, with Bank of Montreal shares off after the company’s earnings missed estimates and investors awaiting a Bank of Canada interest rate decision and minutes from the last U.S Federal Reserve meeting.

The Toronto Stock Exchange’s S&P/TSX composite index was down 12.98 points, or 0.08 per cent, at 15,463.96 shortly after the open. Its heavyweight financial group lost 0.6 per cent.

More »

Wednesday's analyst upgrades and downgrades

DAVID LEEDER

Inside the Market’s roundup of some of today’s key analyst actions

Brookfield Renewable Partners LP (BEP-N, BEP.UN-T) remains a “solid” long-term investment, according to BMO Nesbitt Burns analyst Ben Pham.

However, he downgraded his rating for the Bermuda-based utility to “market perform” from “outperform” based on price appreciation.

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‘High conviction’ new stock buys by prominent fund managers

Scott Barlow

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading this morning on the Web

Morningstar has published its list of U.S. fund managers’ “high conviction buys,"

“We focus on high-conviction purchases and new-money buys. We think of high-conviction purchases as instances where managers have made meaningful additions to their portfolios, as defined by the size of the purchase in relation to the size of the portfolio. We define a new-money buy strictly as an instance where a manager purchases a stock that did not exist in the portfolio in the prior period.”

More »

Wednesday's small-cap stocks to watch

Brenda Bouw

Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.

 

Home Capital Group Inc. (HCG-T) is hiking rates on its guaranteed investment certificates in a bid to attract depositors and replenish its cash base, weeks after the troubled lender was rattled by a surge of withdrawals.

More »

Premarket: Recent stock upturn fizzles after China rating downgrade

Jamie McGeever

World stocks inched lower on Wednesday after China’s sovereign credit rating was downgraded and as investors eyed a pause in Wall Street’s four-day winning streak, the longest in over three months.

The dollar and bond yields were steady, with investors growing gradually more confident that the Federal Reserve will raise U.S. interest rates next month, while oil rose for a sixth straight day in anticipation of an OPEC-led output cut on Wednesday that may be extended to the first quarter of 2018.

More »

These stocks are set for big moves Wednesday

TIM SHUFELT

A new earnings season for Canada’s big banks officially begins on Wednesday, with Bank of Montreal due to be the first of the group to report second-quarter financial results in the afternoon.

Like the broader Canadian financial sector in general, BMO shares have come under pressure in recent weeks, but a strong quarter could see some of those losses erased. A dividend hike should also help.

More »

The close: TSX rises as bank shares climb ahead of earnings, BlackBerry jumps

Canada’s main stock index rose on Tuesday, bolstered by bank stocks ahead of the release of earnings reports and a surge in BlackBerry Ltd shares, as trading resumed a day after the Victoria Day holiday.

The heavily weighted financials group rose 0.7 per cent, as investors braced for earnings reports this week from major banks.

More »

Up close and personal with Home Capital GIC investors

ROB CARRICK

You’re not alone if you were scared senseless by the fact that your supposedly safe guaranteed investment certificates were issued by troubled Home Capital.

My interactions with readers in recent weeks suggest some investors were so jolted they looked into selling GICs with a penalty charge, even though they’re backed by Canada Deposit Insurance Corp. Here are a couple of examples:

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At midday: TSX rises on financials and BlackBerry as energy weighs

Canada’s main stock index rose on Tuesday after the Victoria Day holiday Monday, bolstered by bank stocks and a surge in BlackBerry Ltd shares.

BlackBerry Ltd stock jumped 8.8 per cent to $15.27, as investors raised expectations that the technology company’s cyber security and automotive software sectors will post strong growth, an analyst said.

More »

14 companies insiders are buying and selling

JENNIFER DOWTY

Featured below are 14 companies that have experienced recent insider buying and selling activity in the public market through their direct and indirect ownerships.

Keep in mind, when looking at transaction activities by insiders, purchasing activity may reflect perceived value in a security. Selling activity may or may not be related to a stock’s valuation; perhaps an insider needs to raise money for personal reasons. An insider’s total holdings should be considered because a sale may, in context, be insignificant if this person has a large remaining position in the company. I tend to put great weight on insider transaction activity when I see multiple insiders trading a company’s shares or units.

More »

Loonie notches 1-month high as Bank of Canada turns more upbeat

Solarina Ho

Canada’s dollar strengthened to a one-month high against its U.S. counterpart on Wednesday after the Bank of Canada was more upbeat about the economy than some investors had expected.

The Bank of Canada held interest rates steady at 0.50 per cent, as expected. It reiterated its position that excess capacity remains in the economy but dropped a reference to slack being “material” and noted strong spending by Canadians along with a housing boom and job growth.

More »

At the open: TSX starts higher as banks, BlackBerry lead gains

Canada’s main stock index opened higher on Tuesday, following the Victoria Day holiday on Monday, as financial stocks led broad gains and BlackBerry jumped more than 8 per cent.

The Toronto Stock Exchange’s S&P/TSX composite index rose 64.61 points, or 0.42 per cent, to 15,523.07 shortly after the open.

More »

Tuesday’s analyst upgrades and downgrades

DAVID LEEDER

Inside the Market’s roundup of some of today’s key analyst actions

The decline in valuations of Canadian banks amid housing concerns is overdone, according to Barclays analyst John Aiken.

In a research note previewing second-quarter earnings season, Mr. Aiken upgraded his rating for four of the Big 6 banks as well as one regional bank under the belief valuations now bring investors a “compelling entry point.” He also made several target price changes.

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Finance: 'The most overcompensated profession in the history of the universe'

Scott Barlow

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading this morning on the Web

Savita Subramanian, head of quantitative strategy at Merrill Lynch, published a highly useful report detailing the bull and bear cases for U.S. equity markets.

The bear case lists high valuations, the potential end of the market cycle, central bank monetary tightening, corporate debt leverage and rising wage costs.

More »

Tuesday's small-cap stocks to watch

Brenda Bouw

Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.

 

Home Capital Group Inc. (HCG-T) provided an update on its liquidity position after markets closed on Friday. As of Thursday, May 18 the company said its available liquidity and credit capacity sat at $1.47-billion, similar to the day before.

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Premarket: Buoyant data bolster euro rally, global shares climb

Marc Jones

The euro set a new six-month month high on Tuesday and the region’s shares made gains as the latest economic data made for some encouraging reading, especially in Germany.

Investors continued to grapple with U.S. uncertainty and a deadly bomb blast in Britain subdued the pound, but euro zone PMI surveys, showing the bloc’s firms on their strongest run since 2011, lifted the mood.

More »

What Inside the Market offers

Inside the Market provides up-to-the-minute insights on developing market news and trends for subscribers of Globe Unlimited. The section provides exclusive analysis from some of Canada’s most authoritative voices on finance, including The Globe’s in-house market strategist Scott Barlow, Globe investment analyst Jennifer Dowty, Globe personal finance columnist Rob Carrick, and outside finance experts such as investment newsletter writers Gordon Pape and The Contra Guys, economist David Rosenberg and strategist Don Coxe.


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