Today’s news: Trending business stories for February 12, 2024

The latest business news as it happens

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CPA Canada cuts 20% of workforce ahead of split with Ontario and Quebec

Chartered Professional Accountants of Canada is cutting 20 per cent of its workforce ahead of a move by provincial oversight bodies in Ontario and Quebec to split from the national organization.

The organization, which represents chartered professional accountants across Canada, has about 400 employees across the country.

CPA Canada chief executive Pamela Steer says CPA Ontario and CPA Quebec’s pending withdrawal triggered a review, which resulted in the decision to streamline the organization.

CPA Ontario and CPA Quebec announced in June last year they would be exiting their agreement with CPA Canada, triggering an 18-month countdown to a split.

In a memo to staff last week that was obtained by The Canadian Press, Steer said despite many discussions and ongoing efforts, it has become clear that Ontario and Quebec will not change their current path, which means they will leave CPA Canada as of December.

CPA Canada was created in 2013 to unify the various professional accounting organizations and designations.

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— The Canadian Press

Read the full story here

4:40 p.m.

Market close: TSX posts small gain as U.S. stock markets mixed

stock chart

Canada’s main stock index rose modestly, led by gains in energy stocks, while U.S. markets were mixed as the S&P 500 hovered near the record high it hit Friday.

The S&P/TSX composite index closed up 57.70 points at 21,067.30.

In New York, the Dow Jones industrial average was up 125.69 points at 38,797.38. The S&P 500 index was down 4.77 points at 5,021.84, while the Nasdaq composite was down 48.12 points at 15,942.54.

The Canadian dollar traded for 74.35 cents U.S. compared with 74.31 cents U.S. on Friday.

The March crude contract was up eight cents at US$76.92 per barrel and the March natural gas contract was down eight cents at US$1.77 per mmBTU.

The April gold contract was down US$5.70 at US$2,033.00 an ounce and the March copper contract was up four cents at US$3.72 a pound.

The Canadian Press

2:43 p.m.

Ontario projects $4.5B deficit this year in final update before new budget

Revised Ontario deficit chart

Ontario is projecting that it will end this fiscal year with a $4.5-billion deficit, while also so far hanging onto a large contingency fund.

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Finance Minister Peter Bethlenfalvy released the province’s third-quarter finances today, the last major fiscal update he’s set to provide before introducing the budget by the end of March.

The current deficit projection for 2023-24 is $4.5 billion, which is $1.1 billion lower than the forecast in Bethlenfalvy’s fall economic statement, but still significantly higher than the $1.3 billion he was eyeing at the time of last year’s budget.

The government says the $1.1 billion improvement is due to higher revenue, including money from taxes and transfers from the federal government, and lower interest costs on the province’s debt due to rosier interest rate forecasts.

Ontario has added some new spending since the fall economic statement, including $1.7 billion to the health sector and more than $700 million in supports for the city of Toronto.

The province is using its contingency fund to pay for some of those new expenses, and the fund that sat at $5.4 billion at the time of the fall economic update, is now at $3.3 billion.

— The Canadian Press

1:20 p.m.

WestJet confronts indefinite delays on dozens of aircraft deliveries 

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A Westjet passenger plane in flight over Winnipeg.
A WestJet passenger plane in flight over Winnipeg. Photo by Winnipeg Sun files

The fallout from a mid-flight panel blowout on a Boeing Co.-made 737 Max plane last month has reached Canada, as WestJet confronts indefinite delays on dozens of aircraft deliveries.

The Calgary-based carrier bought 42 Boeing 737 Max 10 jetliners in 2022, with options for 22 more — on top of nearly two dozen earlier Max orders still in the pipeline.

The multibillion-dollar deals were slated to bolster WestJet’s fleet by at least 65 planes — 50 of them Max 10s — by 2029 in a move the airline called a “game-changer” that would reduce fuel costs and “underpin” its growth.

However, the Max 10 has yet to receive final certification, and after the panel incident, regulators said they would halt any production expansion at Boeing until a full investigation was complete — a process that could take over a year.

The U.S. Federal Aviation Administration temporarily grounded the 737 Max 9 and launched a probe after a panel known as a door plug tore away from the fuselage of an Alaska Airlines plane at 16,000 feet on Jan. 5, leaving a refrigerator-sized hole in the cabin wall and prompting an emergency landing.

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WestJet says it continues to work closely with Boeing on delivery timelines and believes the growth plan for its fleet has some flexibility.

The Canadian Press

12:15 p.m.

Midday markets: TSX rises more than 100 points

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Canada’s main stock index was up more than 100 points in early-afternoon trading, helped by strength in the base metal and energy stocks, while U.S. stock markets also climbed higher.

The S&P/TSX composite index was up 127.90 points, 0.60 per cent, at 21,137.50.

In New York, the Dow Jones industrial average was up 202.81 points, 0.51 per cent, at 38,869.42. The S&P 500 index was up 20.58 points, 0.41 per cent, at 5,047.16, while the Nasdaq composite was up 59.88 points at 16,047.32.

The Canadian dollar traded for 74.43 cents US, 0.20 per cent, compared with 74.31 cents US on Friday.

The March crude contract was down 12 US cents, 0.29 per cent, at US$76.62 per barrel and the March natural gas contract was down two cents at US$1.82 per mmBTU.

The April gold contract was down US$12.80, 0.44 per cent, at US$2,029.80 an ounce, and the March copper contract was up two cents at US$3.70 a pound.

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— The Canadian Press

12:05 p.m.

Canadian drivers likely to pay higher insurance premiums for EVs, report shows

Electric cars parked at an EV charging station in Corte Madera, California.
Electric cars parked at an EV charging station. Photo by Justin Sullivan/Getty Images files

A new report suggests drivers may see higher premiums for their electric vehicles as the insurance industry adjusts to the shift from gas-powered cars to electric alternatives.

Costly EVs and higher costs of repairs are likely going to lead the insurance industry to adjust their premiums, similar to a trend in the United Kingdom, the report by Morningstar DBRS says.

In some instances, insurers prefer totalling EVs over repairs or replacing expensive battery packs, something that is likely going to be more common and drive up insurance rates in Canada, the debt rating agency says.

However, the pace of potential rate increases may be slower in Canada amid moderate uptake for EVs and a lack of better claims data, it adds.

The report also suggests Canada’s regulated automobile insurance could mitigate drastic rate increases, especially when an EV is registered for the first time.

Morningstar DBRS says changes to claims on EVs are not going to affect insurers’ profitability or credit ratings in the near to medium term as the industry remains well funded.

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— The Canadian Press

10:10 a.m.

Markets open: Wall Street cautious after big finish last week, TSX rises

S&P 500 chart

Wall Street is holding relatively steady Monday following its latest record-setting week.

The S&P 500 was virtually unchanged in early trading after closing Friday above the 5,000 level for the first time. The Dow Jones industrial average was flat, and the Nasdaq composite was down 0.03 per cent.

Conditions are calm across markets, with yields also moving relatively little in the bond market. The next big event in the United States for the market could be Tuesday’s update on inflation, which economists expect to show a drop back below the three per cent level.

In Toronto, the S&P/TSX composite index was up 0.34 per cent 21,072.59.

— The Associated Press

9:31 a.m.

Fairfax Financial calls short seller report false and misleading

Fairfax Financial stock chart

Fairfax Financial Holdings Ltd.

is calling the allegations in a short sellers report on the company false and misleading.

After reviewing the 72-page report by Muddy Waters Research, Fairfax says it denies and refutes all of the allegations and insinuations made by the United States-based firm.

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In a report last week, Muddy Waters, which said it was short Fairfax, alleged the company manipulated asset values. It said it believed a conservative adjustment-to-book value for the company should be 18 per cent lower than reported.

Short sellers make money when the price of a stock they have sold short falls.

Fairfax shares fell more than 10 per cent the day the Muddy Waters report was released, however, they recovered some of the decline the next day.

Chairman and chief executive Prem Watsa said Fairfax is a strong and enduring company built over 38 years, committed to integrity, customer service, employee welfare and the communities it operates in.

— The Canadian Press

7:30 a.m.

Diamondback to buy Endeavor for $26 billion in oil megadeal

The silhouette of a pumpjack is seen at dusk in the Permian Basin near Midland, Texas.
The silhouette of a pumpjack is seen at dusk in the Permian Basin near Midland, Texas. Diamondback Energy Inc. reached an agreement to buy fellow Texas oil-and-gas producer Endeavor Energy through a US$26-billion deal. Photo by Daniel Acker/Bloomberg

Diamondback Energy Inc. reached an agreement to buy fellow Texas oil-and-gas producer Endeavor Energy through a US$26-billion deal that will create the largest pure-play operator in the prolific Permian Basin.

Diamondback will fund the deal through 117.3 million shares and US$8 billion in cash, the two Midland, Texas-based companies said in a statement Feb. 12. Diamondback shareholders will own 60.5 per cent of the company after the deal closes, and Endeavor shareholders will own 39.5 per cent.

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The agreement is the latest in a string of massive deals transforming the U.S. energy landscape as companies push to line up future drilling sites and cut costs. Over the past four months, Exxon Mobil Corp. struck a deal to buy Pioneer Resources for about US$60 billion, Chevron Corp. agreed to buy Hess Corp. for about US$53 billion and Occidental Petroleum Corp. agreed to buy CrownRock LP for about US$10.8 billion.

“This is a combination of two strong, established companies merging to create a ‘must own’ North American independent oil company,” Diamondback chief executive Travis Stice said in the statement. “With this combination, Diamondback not only gets bigger, it gets better.”

Diamondback shares were unchanged before the start of regular trading in New York.

The consolidation marks a maturing of the long-fragmented shale industry, which has traditionally had few players of significant size and struggled to attract mainstream investors. It comes as publicly traded producers face pressure from investors to keep buybacks and dividends flowing even as many of the top drilling sites have been tapped.

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Acquiring Endeavor is a resounding coup for Diamondback. The company, founded by shale pioneer Autry Stephens, is one of the last remaining closely held producers in the Permian. It has attracted the interest of Exxon, Chevron and ConocoPhillips.

— Joe Ryan and Mitchell Ferman, Bloomberg

Read the full story here.

Stock markets before the opening bell

Stock markets February 12, 2024

Traders paused for breath after optimism about eventual United States Federal Reserve interest-rate cuts and easing inflation pushed the S&P 500 to a new record.

The rally in Big Tech that lifted the S&P 500 above 5,000 for the first time on Friday looked set to extend, as Inc. Nvidia Corp. and Tesla Inc. ticked higher in premarket trading. Moves beyond those standouts were muted, in S&P 500 and Nasdaq 100 futures trading as well as for U.S. Treasuries and the dollar.

The next pressure point for markets is Tuesday’s key consumer price index report, which has the potential to shape timing of a first Fed rate cut. The annual U.S. inflation rate is forecast to have dropped to 2.9 per cent in January from 3.4 per cent the prior month, according to consensus estimates of economists surveyed by Bloomberg. That would be the first reading below three per cent since March 2021.

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“The January CPI numbers are expected to be softening compared to December, but with Fed officials sticking to a cautious script lately, it is hard to think this week’s CPI will change the recent messaging,” said Paul Mackel, the head of global FX research at HSBC Bank PLC. “One would think that many within the Fed would be in favour of a strong dollar to help the disinflation process.”

The S&P/TSX composite index closed up 0.43 per cent on Friday.

— Bloomberg

What to watch today

The parliamentary budget officer will post a report entitled “Refocusing Government Spending in 2023-24” on the website at at 9 a.m.

PrairieSky Royalty Ltd. and Avis Budget Group Inc. are among companies reporting earnings today.

Recommended from Editorial

Need a refresher on Friday’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

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