A survey of North American equities heading in both directions
On the rise
Shares of Nuvei Corp. (NVEI-T) jumped 6.3 per cent with the premarket announcement that Microsoft Corp. (MSFT-Q) will start using its customizable and agile payments technology in the Middle East and the Africa region.
“Other benefits of Nuvei’s global payments capabilities Microsoft is harnessing include optimized authorization rates through local acquisition and superior risk management that minimize false declines, as well as Nuvei’s ability to offer all of the relevant local alternative payment methods (APMs) to each market through a single integration,” the Montreal-based company said.
Russel Metals Inc. (RUS-T) rose 5.5 per cent after announcing it has signed a deal to buy seven service centre locations from Samuel, Son & Co. Ltd. for about $225-million.
The agreement covers five locations in Western Canada and two in the United States.
Russel Metals chief executive John Reid says the acquisition is complementary from both geographic and product mix perspectives.
The metals distribution company will acquire Samuel’s metals service centres in Winnipeg, Calgary, Nisku, Alta., Langley, B.C., Surrey, B.C., Buffalo, N.Y., and Pittsburgh.
The company says Samuel will keep its location in Delta, B.C., and conduct an orderly shutdown of that facility.
The deal is subject to regulatory clearance as well as other customary closing conditions. It is expected to close in the first or second quarter of 2024.
Music streaming giant Spotify (SPOT-N) surged 7.5 per cent after it said on Monday that it will lay off around 1,500 employees, or 17 per cent of its workforce, to bring down costs, after letting 600 of its staff go in January, and 200 more in June.
After a round of job cuts at the start of the year by tech companies, some have begun reducing their workforce again, with announcements coming from Amazon to Microsoft-owned LinkedIn.
In a letter to employees, Spotify CEO Daniel Ek said the company hired more in 2020 and 2021 due to the lower cost of capital and while its output has increased, much of it was linked to having more resources.
Spotify will incur about 130 million euros to 145 million euros in charges in the fourth quarter due to the layoffs, the company said, adding that majority of the cash component of the charges will be recorded in the first and second fiscal quarters of 2024.
The firm said it now expects fourth-quarter operating loss between 93 million euros and 108 million euros, compared with its prior forecast of an operating profit of 37 million euros.
Stocks and exchange-trade funds, including the Purpose Bitcoin ETF (BTCC.B-T) and ProShares Bitcoin Strategy ETF (BITO-A), related to bitcoin soared on Monday after the world’s biggest cryptocurrency briefly surpassing US$42,000 for the first time since April 2022, in a new surge of momentum fueled by the possibility of U.S. interest rate cuts and traders betting that the U.S. will soon approve exchange-traded bitcoin funds.
Bitcoin hit as high as US$42,162 on Monday, its highest since April 2022, seemingly casting off the funk that had settled over crypto markets following the collapse of FTX and other crypto-business failures last year.
Its 50-per-cent rally since mid-October has “seemed to mark a decisive shift away from the bearishness of 2022 and early 2023,” said Justin d’Anethan - head of business development for Asia-Pacific at Keyrock, a digital assets market making firm.
Shares of cryptocurrency firms such as Coinbase Global (COIN-Q), Riot Platforms (RIOT-Q) and Marathon Digital (MARA-Q) also saw big gains.
International Business Machines (IBM-N) was higher by 0.3 per cent after it showed a new quantum computing chip and machine on Monday that it hopes will serve as the building blocks of much larger systems a decade from now.
Researchers around the world are trying to perfect quantum computing, which relies on quantum mechanics to reach computing speeds far faster than classical silicon-based computers. The challenge has been to create quantum computers that are reliable enough in the real world to consistently beat conventional computers.
Microsoft, Alphabet’s Google and China’s Baidu, along with startups and nation states, are all racing to develop quantum machines.
As quantum researchers have made the machines big enough to outpace classical computers, they have struggled with data errors. On Monday, IBM showed what it says is a new way of connecting chips together inside machines and then connecting machines together which, when combined with a new error-correction code, could produce compelling quantum machines by 2033.
The first machine to use them is called Quantum System Two, which uses three “Heron” chips. Dario Gil, IBM’s senior vice president and director of research, said that progress will appear fairly steady until 2029, when the full effect of the error-correction technologies come into play.
After that, the machines should see a sharp uptick in capabilities, similar to how AI systems that developed slowly for the past 15 years became vastly more sophisticated over the past year.
Shares of ride-hailing platform Uber Technologies Inc. (UBER-N) was higher by 2.2 per cent on news it will join the S&P 500, effective at the open of trading on Dec. 18, along with Jabil Inc. (JBL-N) and Builders FirstSource Inc. (BLDR-N).
As of Friday’s close, Uber’s market capitalization stood at about US$118-billion after its shares have jumped almost 132 per cent this year (versus a 20-per-cent gain in the broader index).
“We believe that Uber will transition from ‘nice to own’ by investors to an ‘allocation consideration’ now that it is included in the S&P 500,” said brokerage William Blair.
On the decline
Dye & Durham Ltd. (DND-T) and Telus International (Cda) Inc. (TIXT-T) both fell after S&P Dow Jones Indices announced late Friday that it is dropping the two prominent technology companies from the S&P/TSX Composite Index, the broadest measure of the Canadian market.
It will also remove Endeavour Silver Corp. (EDR-T) and funeral-services provider Park Lawn Corp. (PLC-T). It will add just two companies: Kelt Exploration Ltd. (KEL-T) and New Gold Inc. (NGD-T)
No changes are being made to the S&P/TSX 60, a selection of most of the largest companies in the composite.
Brookfield Asset Management Ltd. (BAM-T) dipped 1.3 per cent after saying its deal for Australia’s Origin Energy Ltd. has failed to achieve the required shareholder support.
The Canadian company says the offer it made with a consortium of investors and EIG garnered 69 per cent of the votes cast by Origin shareholders, falling short of the 75 per cent mark that was required.
Brookfield says it will evaluate its next steps, if any, in light of the vote.
The Brookfield-led consortium had made an offer valued at US$10.6-billion, excluding debt, that would have also allowed institutional shareholders to reinvest in the business.
However, pension fund manager AustralianSuper, the utility’s largest shareholder, had voiced opposition to the proposal.
It had called the bid a “lowball offer” that strengthens its view that it “remains substantially below” its estimate of Origin’s long-term value.
Shares of Alaska Air Group (ALK-N) dropped 14.3 per cent after the carrier said on Sunday it would acquire peer Hawaiian Holdings (HA-Q) for US$1.9-billion, including debt.
The combined company would maintain both airlines’ brands, an unusual move in an industry where waves of acquisitions have led to four big brands dominating the U.S. market. On Sunday, the companies said Alaska will pay US$18 in cash for each share of Hawaiian, whose stock closed Friday at US$4.86 after losing just over half its value in the year so far.
Officials from both companies called the deal a chance to combine two carriers with few overlapping routes, which they said would create a stronger company to compete with the nation’s Big Four: American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. It would also create a “clear leader” in the lucrative, $8 billion Hawaiian market, Alaska CEO Ben Minicucci said in a conference call with investors.
“We combine two companies with shared values that have competed and survived longer than most through many industry cycles, enhancing our differentiated business model and creating a stronger competitor to network carriers,” he said.
The deal includes US$900-million in Hawaiian debt, bringing the acquisition’s total value to US$1.9-billion. The combined airline would be based in Seattle, with Alaska’s Minicucci at its head. The companies forecast the acquisition will add to profits within two years of the deal closing, which is forecast to happen between 12 and 18 months from now.
The combined airline would participate in the oneworld Alliance, which includes American Airlines, British Airways and Cathay Pacific.
Alaska and Hawaiian are both smaller than the nation’s dominant carriers. They said the deal would meld two complementary networks, increasing connectivity to 138 destinations for passengers traveling through the continental United States and across the Pacific, including nonstop service to 29 international destinations in the Americas, Asia, Australia and the South Pacific.
With files from staff and wires
David Leeder