Weaker oil prices should bring some relief to consumers in 2024: Analysts
Analysts say 2024 will be a year of weaker oil prices, something that should bring some relief to weary consumers after two years of soaring energy costs.
Oil prices were volatile in 2023, and have already declined approximately 16 per cent since October due to a combination of factors including growing global supply and slowing demand.
A new report by Deloitte Canada is forecasting the U.S. benchmark West Texas Intermediate oil price to average US$72 for the year ahead.
That’s more than seven per cent below 2023’s average, and a whopping 29 per cent below 2022, when Russia’s invasion of Ukraine pushed oil prices to record-setting levels.
Analysts say the lower prices mean Canadian oil producers will likely be cautious this year with their capital spending.
But they say consumers should benefit in terms of lower prices for home heating and at the gas pumps in 2024.
The Canadian Press
Market close: TSX posts gain despite energy losses, U.S. markets also rise
Canada’s main stock index rose despite losses in the energy sector, while U.S. markets also gained, led by a more than two per cent rise for the Nasdaq.
The S&P/TSX composite index closed up 137.36 points at 21,074.91.
In New York, the Dow Jones industrial average was up 216.90 points at 37,683.01. The S&P 500 index was up 66.30 points at 4,763.54,while the Nasdaq composite was up 319.70 points at 14,843.77.
The Canadian dollar traded for 74.78 cents U.S. compared with 74.92 cents U.S. on Friday.
The February crude oil contract was down US$3.04 at US$70.77 per barrel and the February natural gas contract was up nine cents at US$2.98 per mmBTU.
The February gold contract was down US$16.30 at US$2,033.50 an ounce and the March copper contract was up less than a penny at US$3.81 a pound.
The Canadian Press
Air Transat and CUPE reach new tentative contract for flight attendants
Air Transat and the union representing its 2,100 flight attendants say they have reached a new tentative agreement.
The proposed contract between the airline and the Canadian Union of Public Employees comes after the flight attendants rejected an earlier agreement reached in December.
Details of the new tentative deal were not immediately available.
The company says if the proposed agreement is approved it will be in place for the next five years.
The contract for Air Transat’s flight attendants based at airports in Montreal and Toronto expired on Oct. 31, 2022.
In November, Air Transat flight attendants voted to approve a strike mandate if a new contract could not be reached.
The Canadian Press
Shell signs 20-year supply deal with Canadian LNG upstart
Shell PLC signed a long-term deal to buy liquefied natural gas from a Canadian floating export facility to serve energy markets in Asia.
The deal, which calls for two million metric tons a year of LNG over 20 years, is the first binding agreement for the proposed Ksi Lisims project, the companies said Monday. The LNG would be lifted on a free-on-board basis by Shell Eastern Trading Pte Ltd. The estimated $9.9 billion project in remote British Columbia could be ready by 2030, pending a full investment decision.
Ksi Lisims LNG is backed by the Nisga’a Nation, a consortium of Canadian gas producers known as Rockies LNG, including Ovintiv Inc. and Tourmaline Oil Corp., and Houston-based Western LNG, led by a former Cheniere Energy Inc. executive.
The deal adds to Shell’s existing investment in the country. LNG Canada, of which Shell is a majority stakeholder, is expected to ramp up production by mid-decade as the first major exporter in British Columbia. The project’s partners have not yet decided on expanding to a second phase from the initial 14 million tons of capacity.
Midday markets: Nasdaq leaps on surging Nvidia, TSX gains despite energy stock weakness
A rally in big tech sent stocks on Wall Street higher at the start of a week that will bring key inflation data and bank earnings.
The Nasdaq 100 outperformed, rising 1.48 per cent with Nvidia Corp. surging after announcing new products to help the personal computer industry lure consumers with artificial-intelligence PCs.
The S&P 500 was up 0.58 per cent.
Boeing Co. sank as its 737 Max 9 model was temporarily grounded by authorities helping to pull the Dow Jones Industrial Average down 0.12 per cent. Treasury yields fell alongside the dollar. Oil slid to around US$70.
Equities rebounded after mixed U.S. economic data capped a week that saw equities sink the most since October on bets the Federal Reserve was in no rush to cut rates.
In Toronto, the S&P/TSX composite index was up 0.26 per cent as shares overcame a drop in energy stocks.
Wall Street mixed as crude oil prices tumble, Boeing pulls Dow down
Wall Street is mixed Monday, ahead of a week heavy with potentially market-moving reports.
The S&P 500 was 0.32 per cent higher in early trading, coming off its first losing week in the last 10. The Dow Jones Industrial Average was down 0.28 per cent, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 1.03 per cent higher.
Boeing Co. was the heaviest weight dragging the Dow lower in its first trading after one of its jets suffered an inflight blowout over Oregon. It fell 8.8 per cent. Spirit Aerosystems Holding Inc., which builds fuselages and other parts for Boeing, lost 13.3 per cent.
Stocks of oil-and-gas companies were also particularly weak after crude prices tumbled more than four per cent. Exxon Mobil fell 3.2 per cent, and Chevron lost 2.3 per cent. Weakness in energy stocks also pulled the the S&P/TSX composite index was down 0.04 per cent.
But much of the rest of Wall Street was holding up better. Commercial Metals Co. rose 4.1 per cent after reporting stronger profit for the latest quarter than analysts expected. It said construction activity is healthy in North America, driving demand for steel and helping to offset weaker conditions in Europe.
More earnings results will be arriving at the end of the week, with Delta Air Lines Inc., JPMorgan Chase & Co. and UnitedHealth Group Inc. on Friday among those kicking off the S&P 500’s reporting season for the final three months of 2023.
The highlight of the week may be Thursday’s release of the latest inflation data for U.S. consumers. A cooldown there has helped ignite tremendous hope on Wall Street that the United States Federal Reserve will soon see enough improvement to not only halt its hikes to interest rates but begin cutting them.
The Associated Press
Gildan board calls campaign to reinstate ex-CEO misguided
The board of directors at Gildan Activewear Inc. says its ousted chief executive had no credible long-term strategy for the company and a campaign by shareholders to have him reinstated is misguided.
In an open letter, the board says Gildan co-founder Glenn Chamandy was the right leader for much of his tenure but that it had lost trust and confidence in his ability to grow an increasingly complex organization.
Gildan’s board replaced Chamandy late last year with former Fruit of the Loom executive Vince Tyra.
Chamandy has said he was terminated without cause after four decades with the company.
U.S. investment firm Browning West is seeking to replace five directors at Gildan, appoint Michael Kneeland as chair and reinstate Chamandy as chief executive.
The move by Browning West has been backed by other large Gildan’s shareholders including Jarislowsky Fraser, Turtle Creek Asset Management Inc. and Oakcliff Capital.
The Canadian Press
Read the full story here.
Lululemon lifts outlook on solid year-end sales
Lululemon Athletica Inc. raised its guidance for sales and earnings after a strong holiday period for the activewear maker.
The company said it expects net revenue of US$3.17 billion to US$3.19 billion for the fourth fiscal quarter, up from a previous range that topped out at US$3.17 billion. It now sees diluted earnings per share of as much as US$5, up from a previous high end of US$4.93.
With its strong end to the year, Lululemon has bucked trends affecting rivals such as Nike Inc., which said in December that it was looking for as much as US$2 billion in cost savings amid a weaker sales outlook in China and around the world.
Lululemon shares were 3.3 per cent lower in premarket trading as some investors expected a bigger upgrade.
Eric Pfanner, Bloomberg
Read the full story here.
Honda considering $18.4-billion electric vehicle and battery plant in Canada: report
Honda Motor Co. Ltd. could invest upwards of $18.4 billion in an electric vehicle plant in Canada, according to a report from a Japanese news outlet.
Nikkei Asia said on Jan. 7 that Honda is considering building both a vehicle and battery plant in the country as part of efforts to catch up in the electric vehicle market.
The report said Honda is looking at several sites, including next to its existing plant in Alliston, Ont., with a potential investment decision expected by the end of the year.
A Honda Canada spokesman said the company is looking at different initiatives to ramp up EV production, but he did not confirm the Japanese report.
“In order to achieve our 2040 electrification target of 100 per cent electrified vehicles, we are considering various options to increase local production capacity, however we have nothing further to share at this time,” John Bordignon said in an email.
A spokesperson for Industry Minister François-Philippe Champagne did not confirm whether any talks were going on between the company and the government.
The minister said in a statement that the report about Honda’s potential investment is a “testament to Canada’s growing reputation as a green supplier of choice and global EV leader.”
“Reports about Honda looking to make a significant investment in Canada speaks to the quality of workforce and the strength of our industry,” Champagne said in the statement.
Ian Bickis, The Canadian Press
Read the full story here.
Stock markets before the opening bell
United States stock futures edged lower on Monday and Treasuries held steady as traders recalibrated their bets in the wake of last week’s selloff. Brent crude fell below US$77 a barrel.
Contracts on the S&P 500 declined 0.2 per cent with Boeing retreating almost 10 per cent after a fuselage section on a 737 Max 9 aircraft ejected during a flight over the weekend. Spirit AeroSystems Holdings Inc., which installed the panel, slumped 21 per cent. Oil slid almost three per cent after Saudi Arabia cut official selling prices for all regions amid persistent weakness in the market. European stocks followed declines in Asia.
Markets are looking for direction after mixed U.S. economic data on Friday capped a week that saw global equities sink the most since October on speculation the United States Federal Reserve was in no rush to reduce interest rates. Further catalysts may come from the U.S. inflation print due Thursday and the earnings season kicking off Friday with U.S. financial names including JPMorgan Chase & Co. and Citigroup Inc.
“Multiples are already priced at rich levels,” BNP Paribas analysts including Calvin Tse and Sam Lynton-Brown wrote in a note. “With the probability of a disappointment in full-year earnings elevated, we believe that downside risks outweigh upside ones.”
What to watch today
U.S. consumer credit data for November will be released this afternoon.
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Additional reporting by The Canadian Press, Associated Press and Bloomberg
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