Canadian Market Update – October 20, 2023 (IMO:TSX) (QBR-B:TSX) (SU:TSX)

Stock Market & Ratings Roundup for Wednesday December 6th

Market Update: TSX

Friday, October 20, 2023

Top News

Simmering Tensions Between India and Canada Not to Imperil Trade, Investments – Sources Simmering diplomatic tensions between India and Canada do not appear to be negatively impacting trade and investments. Two senior government sources in New Delhi have indicated that India has no plans to impose measures to curb imports or investments from Canada. This news brings relief to those concerned about the potential economic fallout from the ongoing diplomatic dispute.

Elon Musk’s X to Launch Premium Subscriptions Soon In an interesting development, Elon Musk has announced that his social media platform, X (formerly known as Twitter), will soon introduce two new tiers of premium subscriptions. This move adds a layer of intrigue to the ever-evolving world of social media.

SLB Profit Beats on Strength in Global Drilling Activity Schlumberger Limited (SLB) has exceeded profit estimates for the quarter, thanks to resilient offshore and overseas drilling activity, which boosted demand for its equipment. This success in the energy sector bodes well for Canada, a nation heavily invested in the oil and gas industry.

AmEx’s Third-Quarter Profit Beats Estimates on Buoyant Spending Credit card giant American Express reported a third-quarter profit that surpassed expectations. The robust performance was driven by wealthy customers who continued spending, despite concerns about a potential economic downturn. This trend hints at consumer confidence and may have implications for the Canadian economy.

Toyota to Adopt Tesla EV Charging Standard from 2025 In a noteworthy agreement, Japan’s Toyota Motor, the world’s largest automaker, has announced plans to adopt Tesla’s electric-vehicle charging technology from 2025. This decision reflects the ongoing transformation of the automotive industry towards electric vehicles (EVs), which could have ripple effects on Canadian EV markets and manufacturers.

Before the Bell

Futures for Canada’s main stock index mirrored Wall Street futures and moved lower as the yield on 10-year government bonds surged, following the hawkish tone set by Federal Reserve Chair Jerome Powell. Meanwhile, European shares were poised to post their most significant weekly loss in three months due to underwhelming earnings reports, making investors risk-averse. In Asia, Japan’s Nikkei also ended in the red, mirroring overnight declines on Wall Street.

Oil prices rose due to fears that an escalating regional conflict in the Middle East could disrupt supplies, which has implications for Canada as a significant oil producer. Gold prices scaled a fresh 3-month peak as investors sought safe-haven assets. The U.S. dollar remained subdued against its major peers, suggesting market sentiment that could impact Canadian exports and trade.

Analysts Ratings

  • Imperial Oil Ltd: ATB Capital Markets has raised the target price to C$85 from C$80. This decision follows the rise in oil prices and a slight increase in natural gas prices, indicating optimism in the energy sector.
  • Quebecor Inc: CIBC has cut the target price to C$38 from C$43, reflecting a potential decline in the company’s telecom performance. This move suggests some headwinds in the Canadian telecommunications industry.
  • Suncor Energy Inc: JPMorgan has resumed coverage with a neutral rating and a target price of C$58. This is due to higher royalty fees in upstream operations and lower capture rates in downstream activities. The energy sector’s dynamics continue to evolve.

Economic Events

  • Retail Sales (Month-over-Month): Retail sales are expected to decrease by 0.3% following a 0.3% increase in the prior period. This metric reflects consumer spending trends and can be a crucial indicator of economic health.
  • Retail Sales Ex-Autos (Month-over-Month): Excluding automobile sales, retail sales are expected to remain flat at 0.0% following a 1.0% increase in the previous period. This figure offers insights into consumer behavior and preferences.

Companies Reporting Results

On October 23, two notable Canadian companies are expected to report their results:

  • Prairiesky Royalty Ltd: Expected Q3 earnings of 23 Canadian cents per share. Investors will be keen to see how this company is faring in a dynamic energy market.
  • TFI International Inc: Expected Q3 earnings of C$1.72 per share. This report will provide insights into the transportation and logistics sector, a vital component of the Canadian economy.

In conclusion, the Canadian market finds itself in a state of flux, with several factors at play – from geopolitical tensions to evolving economic conditions. Investors and businesses in Canada will need to closely monitor these developments as they navigate the ever-changing landscape of the global and domestic economy.

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