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Weakness in energy and mining stocks outweighed strength elsewhere on Canada’s main stock index today, which lost just a handful of points, while U.S. markets fell near the end of the day after the U.S. Federal Reserve chose to hold on interest rates.
In New York, the Dow Jones industrial average was down 76.85 points at 34,440.88. The S&P 500 index was down 41.75 points at 4,402.20, while the Nasdaq composite was down 209.06 points at 13,469.13.
The S&P/TSX composite index closed down 4.20 points at 20,214.69.
The Canadian Press
Canada’s biggest airline says an unauthorized group briefly breached an internal system linked to the personal information and records of some employees.
Air Canada Inc. says in a statement today that no customer information was accessed in the cyberattack.
The Montreal-based company says flight operation systems and public-facing platforms were unaffected.
It says it has contacted people whose information was involved and has notified relevant authorities.
— The Canadian Press
Royal Bank of Canada pushed ahead with a round of job cuts in its capital markets operations, part of broader reductions announced in August that may climb above 1,000 positions and are aimed at helping the bank deal with a challenging economic environment.
Lawrence McKean, who was an asset-backed securities trader, and Diana Di Luca, a preferred share and convertible bond trader — both based in Toronto — are among the departing staff, according to people with knowledge of the matter. Melissa Primrose, a leveraged finance salesperson in New York and Vancouver-based Miles Kirkwood also recently left the bank, said the people, who asked not to be named discussing moves.
— Bloomberg
Canada is a “decade or two” ahead of other western countries when it comes to addressing climate change, Rio Tinto Ltd.’s chief executive Jakob Stausholm said.
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The head of one of the world’s largest mining companies said he hopes to further invest in Canada’s critical minerals sector as the company tries to meet its goal of reducing its carbon emissions by 50 per cent by 2030.
“We have to admit we have a significant carbon footprint, and we need to address that,” Stausholm said. “I just think Canada is an amazing opportunity. You have got, historically, a significant amount of renewable energy. You have a very high content of green energy in your electricity. That’s interesting for us.”
Read on for the full story by Financial Post’s Naimul Karim.
A growing number of forecasts are calling for the return of US$100 oil before the end of the year.
Andrew Botterill with Deloitte Canada says triple-digit crude prices this fall are a growing possibility due to surging global energy demand and decisions by Saudi Arabia and Russia to extend their recent oil production cuts to the end of the year.
If crude breaks the US$100 mark, it will put growing pressure on consumers at the gasoline pumps.
Higher energy prices will also make it more expensive for Canadians to heat their homes this winter.
A spike in fuel prices could also make it harder for the Bank of Canada to rein in inflation.
The price for benchmark crude West Texas Intermediate has jumped 30 per cent since June 1 and is hovering this week around US$90 per barrel.
– The Canadian Press
Four First Nation chiefs want a face-to-face meeting with Ontario Premier Doug Ford at Queen’s Park on Sept. 26 in an effort to get him to end mining activity on their lands against their will.
“We are deeply concerned about encroachment by the mining industry on our homelands which you and your government have encouraged against our will,” the four chiefs said in a statement. “You want to open up our homelands to mining, but you won’t meet with us. You won’t even look us in the eye.”
One of their complaints is that the Ford government has reportedly handed out thousands of mining claims — which can now be applied for digitally as opposed to the past when people would have to be physically present at the region — without their consent.
Members of the First Nations will take part in a march in Toronto on Sept. 27 to protest Ford’s policies.
— Naimul Karim
The United States Federal Reserve kept interest rates on hold on Wednesday, but indicated one more additional hike is on the way this year.
Rates are currently in a range of 5.25 per cent to 5.5 per cent — a 22-year high.
The decision to pause signals the Fed thinks it has time to wait and see if the 11 rate hikes it unleashed starting in March 2022 will continue to cool rising prices.
Consumer inflation has dropped from a year-over-year peak of 9.1 per cent in June 2022 to 3.7 per cent last month. Yet it’s still well above the Fed’s two per cent target, and its policymakers made clear Wednesday they aren’t close to declaring victory over the worst bout of inflation in 40 years.
Besides forecasting another hike by year’s end, their projections showed they envision keeping rates high deep into 2024. They expect to cut interest rates just two times in 2024, down from four rate cuts they had envisioned back in June.
The policymakers’ inclination to keep rates high for an extended period suggests that they remain concerned that inflation might not be falling fast enough toward its two per cent target.
Chair Jerome Powell will hold a press conference at 2:30 p.m.
— The Associated Press
Bank of Canada policymakers concluded at their latest meeting that earlier interest rate hikes were beginning to have an effect on the economy, meeting minutes reveal.
“Members agreed that data since their last decision had shown more clearly that demand was slowing, and excess demand was diminishing as monetary policy gained traction,” said a summary of those deliberations released Sept. 20.
“In particular, demand had levelled out in several industries in the services sector, suggesting that the impact of higher interest rates had broadened.”
However, the central bankers continued to view the lack of progress on tackling underlying inflation as a significant concern, and they considered raising the key overnight rate yet again before ultimately deciding to leave it at five per cent.
The summary of deliberations also shows that Governing Council was concerned the pause in September would convey the message that rate hikes were done and cuts would follow, a view they hoped to blunt by pointing out that their decisions are meant to balance the risks of over-tightening and under-tightening.
“They agreed that they did not want to raise expectations of a near-term reduction in interest rates, given that they only considered keeping the policy rate where it is or raising it further,” the summary of deliberations said.
“They decided to stress that they will pay close attention to the evolution of data as they balance the risks of over-tightening and under-tightening monetary policy. Governing Council will continue to focus on the assessment of the dynamics of core inflation and the outlook for CPI inflation.”
— Barbara Shecter
The Teranet-National Bank composite house price index rose by 1.6 per cent in August, a fourth-straight monthly increase that brings the index just 2.1 per cent shy of the record peak, reached in April 2022.
“The widespread nature of August’s rise is noteworthy,” the Sept. 20 report said. “This is the first time since March 2021 that monthly increases have been observed in all the CMAs included in the composite index.”
The price rally, however, was met with some caution by the report’s authors.
“There is reason to believe that this strength is likely to be short-lived,” they said, referencing the recent slowdown in the resale market that has followed the Bank of Canada’s renewed monetary tightening cycle.
National Bank is forecasting that prices could decline in the coming months due to interest rate changes and a softer economic outlook. However, any property price reductions are expected to be moderate, buoyed by consistent demographic growth and an ongoing lack of housing supply.
— Shantaé Campbell
FTX has sued the parents of Sam Bankman-Fried, claiming they enriched themselves by siphoning off millions of dollars in “fraudulently transferred and misappropriated funds” from the cryptocurrency exchange their son founded.
In a court filing this week, the FTX debtors said Joseph Bankman and Barbara Fried, both of whom are tenured professors at Stanford Law School, used their influence to funnel money from the business to their pet charitable causes.
Bankman, a tax lawyer, also lavished gifts upon his friends and family using FTX funds, they alleged, including, in one instance, flights and tickets to the Formula One Grand Prix in France.
Bankman and Fried have denied the claims.
Their son Sam Bankman-Fried, 31, was extradited to the United States last December from the Bahamas to face charges that he stole billions of dollars in FTX customer deposits, spending tens of millions on his businesses, speculative investments, charitable donations and campaign contributions meant to influence cryptocurrency regulation in Washington. His trial starts in two weeks.
— The Financial Times
As the 24th World Petroleum Congress continues in Calgary, the Financial Post looks at what the energy transition will mean for Canada’s oil and gas sectors, which have long been a powerhouse of the country’s economy.
FP’s Gabriel Friedman talks to economist Aaron Cosbey on Down to Business about what will happen to demand for fossil fuels in the next decade, and how Canada can navigate the transition to minimize economic disruption.
FP Video brings you the latest from the Congress live from Calgary. Watch International Energy Forum secretary-general Joseph McMonigle as he speaks with Financial Post’s Larysa Harapyn about the future of hydrocarbons and managing the clean energy transition.
Stocks are ticking higher as markets wait to see the Federal Reserve’s latest forecasts for where interest rates may be heading. The S&P 500 was up 0.2 per cent in early trading, continuing a quiet run this week where markets have made few big moves. The Dow rose 68, and the Nasdaq composite was up 0.1 per cent. The TSX was up 82.77 points. It’s nearly a foregone conclusion among traders that the Fed will say in the afternoon that it’s keeping its main interest rate steady. The question is what Fed officials say in updated projections they’re releasing about where they see rates heading in upcoming years.
— The Associated Press
Inflation in the U.K. unexpectedly dropped to its lowest since Russia invaded Ukraine, data showed, just a day before the Bank of England decides on rates.
The consumer prices index moderated to 6.7 per cent in August, down from 6.8 per cent in July. That’s still very high — highest in the G7 and much higher than the Bank’s target rate of two per cent, but analysts say the surprise decline was encouraging.
Sterling took a beating, falling as much as 0.5 per cent against the U.S. dollar to its lowest level since May as traders bet that the Bank of England is nearing the end of its hiking cycle.
— Bloomberg and The Associated Press
Workers at Ford Motor Co.’s Canadian unit avoided a strike, reaching a tentative agreement late Tuesday after extending negotiations by 24 hours from a previous deadline.
The three-year deal still has be ratified by Unifor members.
In the United States, Ford, General Motors Co. and Stellantis NV face the threat of larger strikes by the United Auto Workers. Nearly 13,000 workers walked off jobs at factories in Michigan, Missouri and Ohio, and UAW President Shawn Fain said the walkouts will expand Friday if “serious progress” isn’t made in negotiations.
— Bloomberg
U.S. futures are treading water and global shares are mixed this morning as markets wait for the Federal Reserve’s rate decision.
Contracts for both the S&P 500 and the Dow industrials were up less than 0.1 per cent.
Oil took a step back after a blistering rally that pushed prices to US$95 a barrel yesterday. Brent crude fell about 1 per cent to near US$93 a barrel and WTI dropped to US$90.
It’s Fed Day! The United States Federal Reserve is widely expected to pause interest-rate hikes when it announces its decision at 2 p.m. ET, but there will still be plenty to absorb.
Investors will be watching chair Jerome Powell’s press conference at 2:30 p.m. and the Fed officials’ projections in the “dot plot” for hints on whether the central bank will hike again.
Economists surveyed by Bloomberg expect the median projection will show one more increase this year and several of them expect a trimming of the number of cuts for 2024.
The Bank of Canada will publish its summary of deliberations over its decision to hold its benchmark interest rate at 5 per cent on Sept. 6. That will be released at 1:30 p.m.
Additional reporting by The Canadian Press, Associated Press and Bloomberg
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