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Teck Resources Ltd. is cutting its copper production forecast and hiking its costs just weeks after the Canadian miner’s focus narrowed significantly to rely only on metals.

Vancouver-based Teck on Thursday lowered its full year copper forecast by seven per cent to about 468,000 tonnes as it rolled out its second quarter financial results. The company also reduced its molybdenum forecast by 19 per cent.

Teck increased its copper cost forecast by two per cent to roughly US$2.10 a pound.

Teck’s copper issues stem mainly from challenges in the ongoing ramp up of its giant QB2 mine in Chile. The company is experiencing grade problems because it isn’t able to access certain areas of QB2 because of geotechnical issues and pit dewatering.

Teck put the copper mine in the high mountains of northern Chile into production last year after an arduous and expensive construction period. Teck’s costs ended up spiralling to about US$8.7-billion, or 85 per cent higher than a 2019 estimate.

Teck earlier this month closed the US$6.9-billion sale of 77 per cent of its metallurgical coal business to Glencore PLC of Switzerland. Teck had earlier sold the other 23 per cent of its coal segment to Japan’s Nippon Steel and South Korea’s POSCO.

Despite generating billions in free cash flow every year, over time fewer investors were willing to put money into Teck any more because of its exposure to coal. That’s because of ESG mandates that forbids many big investors from investing in fossil fuels. By focusing solely on metals such as copper, which doesn’t have the same dirty image as coal, Teck hopes to appeal to a wider class of investors.

The company’s B shares closed at an all-time high in May of $73.22 a share but have since pulled back by about 15 per cent. On Wednesday the shares were trading down by about 1.2 per cent in early trading on the Toronto Stock Exchange.

Glencore originally proposed buying all of Teck early last year, including the company’s copper and zinc mines, in a US$23.1-billion transaction. But Teck repeatedly rejected Glencore’s advances. Controlling Teck shareholder Norman B. Keevil said he was opposed to Glencore buying all of Teck, telling The Globe that “Canada is not for sale.”

Earlier this month, as Federal Industry Minister François-Philippe Champagne approved the Glencore takeover of Teck’s coal business, he sent a stern message that essentially echoed Mr. Keevil’s comments.

From now on, Mr. Champagne said he will only approve the acquisition of Canadian miners with significant critical minerals operations under the most exceptional of circumstances. That means that Teck and other big Canadian critical minerals miners are essentially takeover-proof.

 Rogers Communications Inc. reported its second-quarter profit rose to $394 million from $109 million a year ago, in part due to lower restructuring and acquisition costs related to its purchase of Shaw Communications last year.

The company says the profit amounted to 73 cents per diluted share for the quarter ended June 30, up from 20 cents per diluted share in the same quarter last year.

Revenue totalled $5.09 billion, up from $5.05 billion a year earlier, helped by growth in its wireless and media businesses.

Rogers says wireless revenue totalled $2.47 billion in the quarter, up from $2.42 billion a year earlier, while media revenue rose to $736 million from $686 million a year ago.

On an adjusted basis, Rogers says it earned $1.16 per diluted share in its latest quarter, an increase from its adjusted profit of $1.02 per diluted share in the same quarter last year.

President and chief executive Tony Staffieri says Rogers’ strong results for the quarter come amid the backdrop of a growing market and healthy competition in the telecommunications sector.

This report by The Canadian Press was first published July 24, 2024.

The Bank of Canada lowered its benchmark interest rate for the second consecutive time on Wednesday and said that it is now putting more emphasis on downside risks to economic growth, rather than focusing mainly on the risk of a rebound in inflation.

The widely anticipated move brings the bank’s policy rate to 4.5 per cent from 4.75 per cent. This is the second cut in a long-awaited monetary policy easing cycle, and comes after the bank raised interest rates 10 times in 2022 and 2023 to tackle the most serious bout of inflation in a generation.

Price pressures have eased over the past two years, as global supply chains have improved, economic growth has stalled and restrictive interest rates have curbed consumer spending. That’s led the bank to adopt a more balanced approach to monetary policy in its latest rate decision, teeing up additional interest rate cuts later this year.

“As inflation gets closer to the 2-per-cent target, the risk that inflation comes in higher than expected has to be increasingly balanced against the risk that the economy and inflation could be weaker than expected,” Bank of Canada Governor Tiff Macklem said, according to the prepared text of his press conference opening statement.

He said that it is “reasonable” to expect additional rate cuts if inflation continues trending lower, as the central bank is forecasting. But he said that the bank’s governing council will be “taking our monetary policy decisions one at a time.”

The annual rate of consumer price index inflation has been below 3 per cent since the start of year, coming in at 2.7 per cent in June, down from a peak of 8.1 per cent in 2022. The bank’s updated forecast sees inflation falling below 2.5 per cent in the second half of the year and settling “sustainably” at 2 per cent next year.

Muted demand for goods and services, alongside rising unemployment and a weakening labour market, is pulling inflation lower.

However, there are still some areas where price pressures remain, including for rent, mortgage interest costs and services that are sensitive to wage increases. And the bank warned geopolitical turmoil, trade disruptions and political risks, such as new tariffs, could put upward pressure on inflation.

“We are increasingly confident that the ingredients to bring inflation back to target are in place. But the push-pull of these opposing forces means the decline in inflation will likely be gradual, and there could be setbacks along the way,” Mr. Macklem said.

So far, inflation has returned to normal levels without the Canadian economy falling into a recession. That looks like a soft-landing, which many economists thought was impossible a year ago.

However, the country’s positive gross domestic product growth is largely a result of a rapid increase in population. On a per-person basis, GDP has declined for the past year-and-a-half.

GDP growth came in weaker-than-expected in the first half of the year. In its quarterly Monetary Policy Report (MPR), published Wednesday, the bank chalked this up to slowing demand for vehicles and travel, as well as muted consumer spending on discretionary goods as households put more money towards servicing their debt.

The MPR sees economic growth picking up in the second half of the year and through 2025. Annual GDP growth is expected to be 1.2 per cent this year, before rising to 2.1 per cent in 2025 and 2.4 per cent in 2026.

“This reflects stronger exports and a recovery in household spending as borrowing costs ease. Business investment is also expected to strengthen as demand picks up, and residential investment is forecast to grow robustly,” Mr. Macklem said.

“Over all, with the economy strengthening, excess supply will be absorbed next year and into 2026.”

Wednesday’s rate cut will be welcomed by homeowners with variable rate mortgages, which track changes in the central bank’s policy rate. Interest rates for fixed-rate mortgages, which are based on yields in bond markets, may move less.

Either way, housing affordability will remain stretched until interest rates fall further, and analysts are not expecting an immediate rebound in the housing market.

Canadian National Railway Co. says it earned $1.11 billion in the second quarter, though it lowered its forecast for earnings growth as it faces the threat of a worker strike.

The Montreal-based railway says its net income was five per cent lower than the $1.17 billion in the same three months of 2023.

On an adjusted basis, the Montreal-based railway says it earned $1.17 billion in the second quarter of 2024, or $1.84 per share compared with $1.76 per share in the prior year’s quarter.

The railway reported revenues of $4.33 billion, a seven per cent increase year-over-year.

But CN said it is lowering its forecasted adjusted earnings per share growth for the year to the mid to high single-digit range, compared to an earlier forecast that predicted earnings per share growth of approximately 10 per cent.

The company attributed the revised forecast to continued uncertainty in light of a recent move by the Teamsters Canada Rail Conference union to reject CN’s offer to enter into binding arbitration, a development that heightens the risk of a work stoppage.

This report by The Canadian Press was first published June 23, 2024.

By Renju Jaya   ✉  | Published: 7/22/2024 2:07 AM ET | 

China lowered its short-term policy rate as well as benchmark lending rates on Monday, in order to prop up growth.

The People’s Bank of China cut the interest rate on seven-day reverse repos to 1.7 percent from 1.8 percent.

The action was aimed to strengthen counter-cyclical adjustments to better support the real economy, the central bank said.

On Monday, the PBoC conducted CNY 58.2 billion of seven-day reverse repos. The operation will help to keep reasonable and ample liquidity in the banking system, the bank added.

Last month, PBOC Governor Pan Gongsheng said the seven-day reverse repo would gradually become the main policy rate.

After cutting seven-day reverse repo rate, the central bank lowered the one-year loan prime rate to 3.35 percent from 3.45 percent.

Similarly, the five-year LPR, the benchmark for mortgage rates, was trimmed to 3.85 percent from 3.95 percent. The five-year LPR was last lowered by 5 basis points in February.

The PBoC fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.

The reduction in LPR came as a surprise as the PBoC last week maintained the rate on the medium-term lending facility, which is considered as guide to the LPR fixing, at 2.50 percent.

The policy easing measures came a week after official data showed that economic growth softened to 4.7 percent in the second quarter on weaker consumption and property market downturn.

“If the PBOC is serious about monetary stimulus, it should cut rates much more substantially,” Capital Economics’ economist Julian Evans-Pritchard said. “However, efforts to stabilise long-term yields and keep currency depreciation in check mean that large scale rate cuts still seem unlikely,” he added.

The economist expects one more 10 basis point cut this year.

Although the weakness of the Chinese yuan held back the PBoC from monetary policy easing earlier, the recent dovish developments in the US and the slight softening of the dollar over the past month may have created a suitable window from the central bank to cut rates today, ING economist Lynn Song said.

The economist forecasts at least one more rate cut in the coming months as China will have a more challenging second half if it is to maintain 5 percent growth for the full year.

Monday July 22

Earnings include: Cleveland-Cliffs, Verizon, Nucor

Tuesday July 23

Euro area consumer confidence

830 am ET: Canada new housing price index for June

10 am ET: U.S. existing home sales for June

Earnings include: Canadian National Railway, Alphabet, Tesla, Visa, Coca-Cola, Texas Instruments, Danaher, General Electric, Philip Morris International, Comcast, United Parcel Service, Lockhead Martin, Sherwin-Williams, Moody’s, Freeport-McMoRan, Spotify, Capital One, General Motors, Kimberly-Clark, MSCI, PulteGroup, KB Financial, Mattel

Wednesday July 24

Japan manufacturing PMI

Euro area manufacturing PMI. Germany consumer confidence

830 am ET: U.S. goods trade deficit.

830 am ET: U.S. wholesale and retail inventories for June.

945 am ET: S&P Global PMIs

10 am ET: U.S. new home sales for June.

945 am ET: Bank of Canada policy announcement and monetary policy report. Press conference at 1030 am.

Earnings include: A&W Revenue Royalties, Aecon Group, Athabasca Oil, Celestica, Methanex, Rogers Communications, Suncor Energy, Teck Resources, Tilray, West Fraser Timber, Whitecap Resources, IBM, AT&T, Boston Scientific, Waste Management, General Dynamics, Chipotle Mexican Grill, CME Group, Ford Motor, Newmont, Las Vegas Sands, KBR, Thermo Fisher, Whirlpool

Thursday July 25

Germany and France business confidence

830 am ET: Canada payroll survey and job vacancy rate for May

930 am ET: U.S. initial jobless claims.

830 am ET: U.S. real GDP for the second quarter. Consensus is for expansion of 1.9% annualized.

830 am ET: U.S. durable goods orders for June. Consensus is for a rise of 0.4%.

Earnings include: Bombardier, Baytex Energy, Canfor, Cenovus Energy, Eldorado Gold, Loblaw, MEG Energy, Mullen Group, AstraZeneca, Union Pacific, Unilever, Honeywell International, British American Tobacco, Northrop Grumman, Norfolk Southern, Valero Energy, Vale, Weyerhaeuser, Southwest Airlines, Lear, American Airlines

Friday July 26

China industrial profits. Japan CPI

European Central bank 3-year CPI expectations. France and Italy consumer confidence

Canadian budget balance.

830 am ET: U.S. personal spending and income.

830 am ET: U.S. core PCE price index for June. Consensus is for a monthly rise of 0.2%, or 2.6% from a year ago. In May it rose 0.1%.

10 am ET: U.S. University of Michigan consumer sentiment.

Earnings include: Canfor Pulp Products, George Weston, Bristol-Myers Squibb, Southern Copper, Colgate-Palmolive, 3M, Royal Caribbean Cruises

The number of Americans filing new applications for unemployment benefits rose more than expected last week, but there has been no material shift in the labour market and the data is typically noisy in July because of summer breaks and temporary factory closures.

Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 243,000 for the week ended July 13, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week.

Claims dropped in the prior week, pulling further away from a 10-month high touched in early June.

Some of that decline was attributed to difficulties adjusting the data around holidays, like the U.S. Independence Day. In addition, auto makers typically shut down assembly plants starting the July 4 week to retool for new models.

But the shutdown schedules are different for every manufacturer, which can throw off the model that the government uses to smooth out the data for seasonal fluctuations. Claims rose in July last year through the first half of August, before fully reversing course by early September.

Disregarding the volatility, the labour market is cooling as the Federal Reserve’s interest rate increases in 2022 and 2023 slow demand. The unemployment rate rose to a 2-1/2-year high of 4.1 per cent in June.

The Fed’s “Beige Book” report on Wednesday showed “employment rose at a slight pace” in early July, but noted a decline in manufacturing employment.

It said supply had improved and “labour turnover was lower, which reduced demand to find new workers,” adding that businesses “in several districts expect to be more selective on who they hire and not backfill all open positions.”

The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of July’s employment report. Nonfarm payrolls increased by 206,000 jobs in June.

Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will shed more light on the state of the labour market in July. The so-called continuing claims increased 20,000 to a seasonally adjusted 1.867 million during the week ending July 6, the claims report showed.

It is getting harder for the unemployed to land new jobs relative to last year. The U.S. central bank has maintained its benchmark overnight interest rate in the current 5.25 per cent-5.50 per cent range for the past year. It has hiked its policy rate by 525 basis points since 2022 to tame inflation.

Financial markets are expecting a rate cut in September followed by additional cuts in November and December.

U.S. crude oil stockpiles last week fell more than expected, while gasoline and distillate inventories rose, the Energy Information Administration (EIA) said on Wednesday.

Crude inventories fell by 4.9 million barrels to 440.2 million barrels in the week ending July 12, the EIA said, compared with analysts’ expectations in a Reuters poll for a 33,000-barrel draw.

Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. futures fell by 875,000 barrels last week, the EIA said.

Brent crude and U.S. West Texas Intermediate crude(WTI) futures were little changed following the report.

“The positive element was the large crude inventory draw,” said UBS analyst Giovanni Staunovo. “But implied demand and builds in gasoline and distillate inventories were disappointing,” Staunovo added.

Gasoline stocks rose by 3.3 million barrels in the week to 233 million barrels, the EIA said, compared with expectations for a 1.6 million-barrel draw.

Distillate stockpiles, which include diesel and heating oil, rose by 3.5 million barrels in the week to 128.1 million barrels, versus expectations for a 800,000-barrel drop, the EIA data showed.

U.S. diesel and gasoline futures pared gains after the report.

Refinery crude runs fell by 181,000 barrels per day, and refinery utilization rates fell by 1.7 percentage points in the week.

Some refiners along the U.S. Gulf Coast and offshore producers were impacted last week by Hurricane Beryl, which knocked out power and brought heavy rain and wind.

“The refineries, despite the widespread power outages, seem to have held up,” said John Kilduff, partner at Again Capital. Net U.S. crude imports rose last week by 312,000 bpd, the EIA said.

Canada’s annual inflation rate cooled more than expected to 2.7% in June, largely due to softer growth in gas prices, while core inflation measures were marginally down, Statistics Canada said Tuesday in a report.

Financial analysts were expecting an inflation rate of 2.8 per cent.

All eyes are now on the Bank of Canada, which announces its next policy rate decision on July 24.

Canada’s main stock index hit a record high on Tuesday after domestic annual inflation eased more than expected in June, boosting hopes for another rate cut by the Bank of Canada.

At 11:10 a.m. ET, the S&P/TSX composite index was up 171.31 points, or 0.75%, at 22,922.99, set for its fifth straight session of gains.

The country’s annual inflation rate cooled a tick more than expected to 2.7% in June, largely due to softer growth in gas prices, Statistics Canada data showed. Meanwhile, core inflation measures were marginally down,

Month-over-month, the consumer price index was down 0.1%, compared with a forecast for no change.

“The progress (disflationary trend) is not quite as swift as it was early in the year, but the Bank of Canada is still getting what it needs to greenlight a fresh rate cut next week,” said Kyle Chapman, FX markets analyst at Ballinger Group.

With the BoC set to host its next monetary policy meeting on July 24, markets are pricing in a likelihood of about 92% of a 25 basis points (bps) rate cut.

“As inflation continues to fall, you will see interest rates cut perhaps as many as two more times before the end of the year,” said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth.

The yield on the Canadian 10-year benchmark notes fell 6 bps following the inflation data.

Tech shares topped the benchmark index with a 1.6% rise, boosted by Shopify stock, which jumped 5% after BofA Global Research upgraded it to “buy.”

On the flip side, energy shares led the sectoral losses with a 0.5% fall as oil prices dropped on concerns about crimping demand in China after data showed slower-than-expected economic growth in the world’s second-largest economy.

Barrick Gold shares rose 0.7% after the Canadian miner’s second-quarter gold output climbed almost 0.9% from a year earlier.

U.S. stocks are flirting again with their records on Tuesday after several big companies delivered better profits reports for the spring than Wall Street expected.

The S&P 500 was 0.3% higher in early trading and on track to top its all-time high set in the middle of last week. The Dow Jones Industrial Average was up 209 points, or 0.5%, a day after setting its own record. The Nasdaq composite was 0.4% higher.

UnitedHealth Group helped push the market higher after reporting stronger results for the spring than analysts expected, despite losses it took due to a massive cyberattack. Its stock rose 2.8%, and the health care company reported growth in people served at both its Optum and UnitedHealth businesses.

Bank of America added 2.3% after it likewise reported stronger profit for the latest quarter than forecast. It benefited from growth at its investment banking business.

They helped offset a 1.4% drop for Morgan Stanley, which also reported stronger results for the latest quarter than expected. The financial company’s stock had already rallied more than 8% this month heading into its profit report, which may have raised the bar of expectations further. Analysts also pointed to some softer-than-expected results within its wealth-management business.

Several big winners from the day before, which benefited from heightened expectations for former President Donald Trump to retake the White House, also gave back some of their immediate jumps following Trump’s dodging of an assassination attempt over the weekend.

Trump Media & Technology Group fell 8.1%, a day after leaping 31.4%. Shares of the company behind Trump’s Truth Social platform regularly swing by big percentages each day, up or down.

In the bond market, some of the prior day’s moves also reversed themselves. Longer-term yields receded, while shorter-term yields rose after a report showed that sales at U.S. retailers held firm last month despite economists’ expectations for a decline.

The yield on the 10-year Treasury edged down to 4.20% from 4.23% late Monday. It’s fallen from 4.70% in April, which is a major move for the bond market, and that has given a solid boost to stock prices.

Yields have fallen on rising expectations that inflation is slowing enough to convince the Federal Reserve to begin cutting interest rates soon. The Fed has been keeping its main interest rate at the highest level in more than two decades in hopes of slowing the economy just enough to get inflation fully under control.

Tuesday’s stronger-than-expected data on retail sales may give Fed officials some pause, because too-strong activity could keep upward pressure on inflation. But traders are still betting on a 100% probability that the Fed will cut its main interest rate in September, according to data from CME Group. A month ago, before some encouraging data on inflation, they saw a 70% chance.

Even though the economy’s growth is slowing, the hope on Wall Street is that the Federal Reserve can pull off an odds-defying tightrope walk. The goal is to grind down on the economy with high interest rates but then to ease rates at the right time by the right amount so that it can avoid a recession. Tuesday’s resilient data on retail sales points to an economy that can continue to grow.

Risks lie on both sides of the Fed’s tightrope, though. While cutting rates too late could result in unnecessary economic pain that throws workers out of their jobs because of a recession, cutting too early could allow inflation to reaccelerate.

In stock markets abroad, indexes were lower across much of Europe. Asian indexes were mixed, with the 1.6% drop for Hong Kong’s Hang Seng a big mover.

Reuters and The Associated Press