Author: Reuters

Canada’s main stock index fell nearly 1% on Wednesday after the Bank of Canada (BoC) ruled out rate cuts until there were visible signs of sustained inflation drop, while a hot inflation report in the U.S. further dampened the sentiment.

At 10:14 a.m. ET (14:14 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 207.18 points, or 0.93%, at 22,154.6.

The index is on track to log its worst day in nearly two months if declines hold.

BoC held its key rate at a near 23-year high of 5%, while Governor Tiff Macklem gave no sense of a timeline.

TSX pulls back from record highs to trade flat

Traders quickly dialed back their expectations for the timing of the next rate cut. Before the announcement, they saw an 84% chance of it coming in June but that fell to around 40%

Yield on the benchmark Canadian bond touched its highest since February at 4.35%.

Across the border, U.S. consumer prices increased more than
expected in March, data showed on Wednesday, casting further
doubt on the timing of rate cuts by the Federal Reserve.

The U.S. central bank will now wait until September before
starting to cut interest rates, traders bet after the hot data.

“Markets are nervous because we came into the year expecting
a lot of rate cuts and now reality’s setting in that there are
not going to be (as many”, said Greg Taylor, chief investment
officer at Purpose Investments.

The TSX saw a broad sell-off on Wednesday, with 10 out of 11
sectors trading in the red, and energy shares the only outliers with a 0.9% rise, tracking higher oil prices.

Private equity firm Advent International has agreed to buy Canada’s Nuvei in an all-cash deal that values the Ryan Reynolds-backed payments technology firm at $6.3 billion. The deal, announced on Monday, will take Nuvei private four years after it was listed on the Toronto Stock Exchange.

Before reports of a potential deal emerged in mid-March, the stock had lost nearly 15% this year. The company’s shares also trade on Nasdaq. At $34 per share, Advent will offer Nuvei shareholders a 56% premium to the stock’s last close on Nasdaq before media reports of a possible acquisition.

The buyout of Nuvei would make it one of the more sizable take-private deals at a time when private equity dealmaking has slowed. Current CEO Philip Fayer will continue to lead Nuvei and it will remain headquartered in Montreal, the company said.

Nuvei provides payments technology to businesses, allowing them to pay and accept transactions regardless of their customers’ location or preferred payment method. Existing shareholders – Fayer, private equity firm Novacap and Canadian pension fund CDPQ – are expected to indirectly own or control about 24%, 18% and 12%, respectively, of the equity in the private company after the deal closes.

Payments processors thrived during the COVID-19 pandemic as customers turned to digital payment methods, but some have since struggled to maintain growth as competition mounted and inflation took off. “We continue to believe that the combination of large markets with secular tailwinds, coupled with lower valuations, suggests continued consolidation within the payments and fintech space,” William Blair analysts wrote in a note.

The deal is expected to close in late 2024 or in the first quarter of 2025. Advent had $91 billion of assets under management as of Sept. 30. Its high-profile investments in the payments industry include Brazil’s Ebanx and UK’s Planet.

($1 = 1.3572 Canadian dollars)

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Canada’s main stock index traded flat on Monday, just below all-time highs, as gains in mining stocks were eclipsed by declines in communication services sector, while the latest US inflation print kept the bets of a June interest rate cut on the table.

At 10:13 a.m. ET (14:13 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 2.46 points, or 0.01%, at 22,164.57. Eight of the eleven sectors on the index slipped, with communication services down 1.4%.

“Markets were strong overnight that they’ve kind of been weakening. It’s not unusual (for markets) to change as the morning progresses when people get up and come into work”, said Colin Cieszynski, chief market strategist at SIA Wealth Management.

However, the materials sector, which houses Canadian miners and fertilizer companies, rose 1.2% as higher gold prices sent miners such as IamGold and SSR Mining up 6.6% and 3.2%, respectively. On the data front, the US personal consumption expenditures(PCE) price index showed a moderate increase on Friday, keeping alive hopes of an interest rate cut by the US Federal Reserve in June.

Federal Reserve Chair Jerome Powell said on Friday that he expects interest rates in the future will be lower than they are now but does not expect them to return to the levels from before the COVID pandemic.

“At this point, it looks like markets seem to be hanging a little bit more on Powell’s talk that maybe the Fed doesn’t have to cut interest rates so quickly”, Ciezynski added.

Toronto market notches second straight robust quarterly gain

Canadian manufacturing activity moved closer in March to ending a lengthy period of contraction, data showed on Monday.

Among individual stocks, Ballard Power Systems surged 12.7% to the top of the index after the fuel cell maker announced its largest order in history.