TSX Closes Flat To Slightly Lower Despite Higher Commodity Prices, And a 30%+ Jump In Nuvei — TradingView News
The resources heavy Toronto Stock Exchange (TSX) lost a modest dozen points on Monday despite higher commodity prices and a jump of more than 30% in Nuvei Corp. (NASDAQ and TSX: NVEI). Still, Canada’s main stock market remains within about 250 points of all time record highs.
On Nuvei, it announced overnight Sunday that it is aware of recent media reports speculating as to a potential going-private transaction involving the company. This came after Reuters on Saturday cited a source familiar with the matter as saying private equity firm Advent International is in advanced talks to buy Nuvei, a Canadian payments technology company that has received financial backing from actor Ryan Reynolds. The Wall Street Journal first reported about Advent’s talks with Nuvei.
In looking for mention of factors that might have held the overall TSX back from making further gains, National Bank noted momentum in the other sectors of the S&P/TSX — outside of commodities — has been “muted” and it also noted the Federal Government may have to use its upcoming Budget on April 16 to attract the attentions of existing and potential stock buyers by outlining plans for dealing with declining productivity. Meanwhile, ahead of Canadian February CPI data due tomorrow, Desjardins said the Bank of Canada is “misjudging” core inflation, which could weigh on sentiment among investors.
More sectors closed lower than higher today, although none lost more than 1%, while both Health Care and Battery Metals gained near 3.7% each.
Among commodities today, West Texas Intermediate crude oil rose to the highest in nearly five months as Ukraine stepped up attacks on Russian refineries while China reported better than expected economic data. WTI crude for April delivery closed up $1.68 to settle at US$82.72 per barrel, the highest since Oct.27. May Brent crude, the global benchmark, was last seen up $1.54 to US$86.88 per barrel.
Also, gold edged higher, holding its own even as the dollar and treasury yields advanced ahead of this week’s meeting of the Federal Reserve’s policy committee. Gold for April delivery closed up $2.80 to settle at US$2,164.30 per ounce.
For its part, National Bank in highlights from its ‘Monthly Equity Monitor’ for March 2024 said March has been a good month for the S&P/TSX “so far”, with the Canadian benchmark up 2.3% by mid-month, more than half of its year-to-date advance. National noted strong gains in Energy and Materials reflect rising commodity prices against a backdrop of more resilient global inflation and geopolitical uncertainty. But it also noted momentum in the other sectors of the S&P/TSX has been “muted” as the Canadian economy has shown “clear signs of weakness against a backdrop of declining productivity”. National added: “A friendlier business environment is urgently needed in Canada for output per worker to resume. In our opinion, the upcoming federal budget on April 16 will be important for the future direction of the economy and Canadian equities.”
Also, despite another month of positive returns in global equity markets, National continues to believe that economic growth and corporate profitability will surprise to the downside in the coming months. The bank maintains its defensive asset allocation, with equities underweight and fixed income and cash overweight.
Ahead of Tuesday’s key domestic economic data, Desjardins in the summary of a recent ‘Economic Viewpoint – The Bank of Canada Is Misjudging Core Inflation’ noted that since CPI common was “summarily dismissed” during the pandemic, officials have relied heavily on CPI median and CPI trim when making policy decisions. According to Desjardins, the problem is that “those measures have become biased, likely overestimating the true underlying inflation rate”.
“After accounting for these biases,” Desjardins said, “we find that core inflation has continued its downward trend and is now below 3%. This conclusion is consistent with a host of other indicators, but it’s in contrast to the Bank of Canada’s characterization of inflation.”
Desjardins added: “The Bank of Canada ignores our findings officials risk leaving monetary policy restrictive for too long, inflicting unnecessary pain on households and businesses. Central bankers should consider bias-corrected versions of CPI median and CPI trim when taking policy decisions. Given the tightrope Canadian central bankers are walking, they can’t afford any missteps.”
