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5:15 p.m.

TSX closes down more than 300 points, U.S. stock markets mixed

Canada’s main stock index closed down more than 300 points today as utility and energy stocks led widespread losses, while U.S. markets were mixed.

The S&P/TSX composite index ended down 364.09 points at 19,177.18.

In New York, the Dow Jones industrial average was down 74.15 points at 33,433.35. The S&P 500 index was up 0.34 points at 4,288.39, while the Nasdaq composite was up 88.45 points at 13,307.77.

The Canadian dollar traded for 73.66 cents U.S., according to XE.com, compared with 73.96 cents U.S. on Friday.

The November crude oil contract was down US$1.97 at US$88.82 per barrel and the November natural gas contract was down nine cents at US$2.84 per mmBTU.

The December gold contract was down US$18.90 at US$1,847.20 an ounce and the December copper contract was down 10 cents at US$3.64 a pound.

The Canadian Press

1:22 p.m.

Arajet enters Canada’s crowded budget airline market

Arajet, a discount airline based in the Dominican Republic, says it will launch flights between that country and Toronto and Montreal this fall.

The announcement by the year-old carrier marks the latest entrant to an already crowded field of low-cost airlines, and comes two weeks after U.S. budget carrier Breeze Airways made a pitch to Quebecers bound for Florida.

Unlike many low-price players, Arajet chief executive Victor Pacheco says his will bank on a hub-and-spoke model that connects passengers from far-flung airports via the airline’s hub of Santo Domingo, his home country’s capital.

As proof, he says well over half of the 10,000-plus Arajet tickets sold to Canadians so far are for other destinations in the Caribbean and Central and South America, to be reached via connecting flights from the Dominican Republic.

Though no other airlines fly direct between that country and Canada, Air Canada, United Airlines and American Airlines all touch down there regularly, while rapidly expanding discount carriers such as Flair Airlines and Lynx Air try to woo Canadians with cheap flights to an array of sunny destinations.

Backed by majority investor Bain Capital, the 10-aircraft Arajet will launch direct routes to Santo Domingo from Toronto and Montreal on Oct. 24 and Nov. 7, respectively, with one-way trips starting at $98.

The Canadian Press

1:19 p.m.

Canadian home prices are too rich for higher interest rates, Paul Beaudry says

Current home prices in Canada can’t be justified if medium-term interest rates stay elevated, a former Bank of Canada official said, underscoring the risk to one of the country’s most important sectors.

Paul Beaudry, who spent four years on the central bank’s rate-setting committee, said the outlook for the housing market remains highly dependent not only on the policy rate, but on longer-term fixed rates. If they don’t come down, “then it becomes much more difficult to support these valuations,” he said on BNN Bloomberg Television.

The benchmark price of a home in Canada was $757,600 in August, up 40 per cent in five years — with most parts of Ontario and Quebec seeing much larger price increases. Canadian homeowners, unlike their U.S. counterparts, don’t have the option of locking in rates for 30 years. Most borrowers have rates that are fixed for five years or fewer, or they have floating-rate mortgages that rise and fall with the Bank of Canada rate.

That has left many households stretched after rates jumped in the past 18 months. The five-year Canada government bond yield has risen nearly 150 basis points since hitting its 2023 low in March, putting significant upward pressure on mortgage rates. Royal Bank of Canada economists wrote last week the overall cost of home ownership in Vancouver, Toronto, Montreal and other cities is “still near all-time worst levels.”

Beaudry, who left the central bank in July, said his former colleagues will remain worried about core measures of inflation until they ease closer to the two per cent target. “If they don’t come down, that really brings a danger that maybe there is a point where the Bank of Canada will need to tighten more,” he said.

Bloomberg

12:09 p.m.

TSX lower as crude loses ground

Canada’s TSX is down almost 300 points at midday on losses in utility and energy sectors as oil dropped below US$90 a barrel.

U.S. stocks are also falling as investors react to a roundtable discussion including Federal Reserve chair Jerome Powell.

The selloff in global bonds has gathered momentum as the U.S. shutdown reprieve prompted traders to raise bets on a November rate hike from the Fed. They now see a roughly one-in-three chance of a November move, up from the 25 per cent likelihood priced on Friday.

Bloomberg

11:40 a.m.

Canada’s factory downturn deepens

The downturn in Canada’s factory sector deepened in September.

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) out this morning fell to 47.5 from 48.0 in August. Anything below 50 on this index is a contraction.

It’s the lowest reading since May 2020, the early days of the pandemic, and the fifth monthly decline in a row.

“The Canadian manufacturing sector continued to experience lacklustre performance during September,” Paul Smith, economics director at S&P Global Market Intelligence, said in the statement.

“Output and new orders both fell to steeper degrees amid evidence of slow market demand.”

Financial Post

9:45 a.m.

Stock markets are open: Here’s what’s happening at the bell

North American stocks were mixed in early morning trading, with most indexes pointing lower.

In Toronto, the S&P/TSX composite index was down 151.98 points to 19,389.20 at 9:45 a.m.

The S&P 500 was down 4.05 points to 4,284, the Dow Jones Industrial average was down 107.49 points to 33,400.01 and the Nasdaq was up 52.48 points to 13,271.80.

9 a.m.

Rogers expands TTC subway wireless access to customers of other carriers

Rogers Communications Inc. says customers of all of the major Canadian wireless carriers can now connect to its 5G wireless network in the busiest sections of the Toronto subway system.

The company says subway riders will be able to connect to its 5G network while in the Line 1 stations and tunnels in the so-called Downtown U from Union Station north to St. George and Bloor-Yonge, plus Spadina and Dupont stations. The area encompasses all of the subway stops in Toronto’s downtown core.

Users will also be able to access the network in 13 stations on Line 2, along Bloor Street from Keele to Castle Frank, plus the tunnels between St. George and Yonge stations.

Rogers acquired the cellular network in the subway system from BAI Canada earlier this year and has been working to upgrade it.

The service to all carriers comes after months of tense back-and-forth negotiations between Rogers and rivals Bell and Telus over the best technical approach, as well as financial terms, for providing the coverage.

The federal government had set a deadline of Tuesday for all passengers on the TTC subway system to have cellular connectivity, regardless of their carrier. It has also set a Dec. 20 deadline for the companies to negotiate commercial agreements to provide service on the subway over the long term.

The Canadian Press

All Toronto subway riders can now text, stream or call as Roger opens network to rivals

8:25 a.m.

Bank of Canada has no more reason to hike interest rates: David Rosenberg

Canada’s real gross domestic product growth was zero per cent in July and Statistics Canada’s estimate for August is just 0.1 per cent, according to the agency’s data released Sept. 29. Economist David Rosenberg points out the economy would be in even worse shape if not for a booming resource patch (1.9 per cent growth in July and 0.6 per cent in June).

“The year-over-year trend in the Canadian economy, which was running hot on the fumes of fiscal stimulus at 4.2 per cent this time last year, has wound all the way down to a mere 1.1 per cent this year, the weakest trajectory since February 2021,” he says in his Breakfast with Dave newsletter.

“Memo to the Bank of Canada: the lags from the prior aggressive rate hikes are kicking in to aggregate demand. There is no more reason to be tightening policy. The interest-sensitive segments of the economy sagged 0.7 per cent alone in July and have been negative in five of the past six months (roughly minus three per cent at an annual rate over that time frame).”

Financial Post

7:35 a.m.

Rania Llewellyn departs Laurentian Bank, Eric Provost named CEO

Laurentian Bank of Canada said chief executive Rania Llewellyn will leave the company immediately and will be replaced by personal and commercial banking chief Eric Provost.

Llewellyn, the first woman to lead a major Canadian bank, departs after the Montreal-based lender concluded a review of strategic options without a sale. In September, it said it would try to ramp up its current strategy, which includes growth in commercial lending and technology upgrades.

Provost’s priority, according to a statement from the bank, will be to “rebuild trust” with customers and address the impacts of a mainframe outage that occurred last week. The outage occurred during a planned technology maintenance update, the bank said and added that customer data and financial information remained secure at all times.

“Eric is the right executive to lead the bank at this critical point in its evolution,” said Michael Boychuk, who was appointed chair of the board as Michael Mueller resigned. “We have experienced challenges recently and the board is confident that Eric will successfully focus the organization on our customer experience and operational effectiveness.”

Provost will implement a three-part plan to fully resolve any outstanding issues related to the outage, enhance communications with customers and launch a review of the technical issues.

As an initial step, the bank says it will reverse all monthly service fees for September as soon as possible.

Laurentian’s shares have fallen more than 15 per cent since the Sept. 14 announcement that the strategic review had ended without a deal.

Provost had been promoted to an expanded role last month by Llewellyn, adding personal banking to his responsibilities in a management shakeup that also saw Laurentian adopt a smaller executive team.

Llewellyn, a former Bank of Nova Scotia executive, was CEO for almost three years.

Bloomberg, with additional reporting from The Canadian Press

Laurentian Bank appoints Eric Provost as new CEO after computer outage

The Financial Post’s Barbara Shecter reported on Laurentian’s troubles earlier in August. Read her story: ‘The sick puppy’: Why Laurentian has struggled in a golden age for Canadian banks.

7:30 a.m.

Mortgage payment shock looms for Canadian homeowners

From ultra-low interest rates that led to a huge spike in real estate demand to the speed with which interest rates shot up to levels not seen in a generation, it’s been hard to keep up with the shifting landscape for mortgage borrowers.

Now, with interest rates increasingly expected to stay higher for longer, many of the homeowners who locked in low rates years ago are likely bracing themselves for financial pain as their mortgage comes up for renewal.

“Each month that passes, roughly two per cent of mortgage holders face renewal at sharply higher interest rates,” Royce Mendes, managing director and head of macro strategy at Desjardins, wrote in a Sept. 19 note to clients.

Borrowers with fixed rates are expected to see an average payment increase of between 14 per cent and 25 per cent next year compared with early 2022 costs, according to the Bank of Canada. In 2025 and 2026, payments should rise between 20 per cent to 25 per cent.

Those with full variable rates have already taken on the burden of higher rates, seeing their payments rise an average of 49 per cent as of this year.

Borrowers with variable rates but fixed monthly payments will face the greatest increases ahead as some have had their payments only cover the interest costs, or not even that. People with these products face an expected 44 per cent average rise in payments by 2026 as their mortgages reset.

The Canadian Press

Homeowners brace for mortgage payment shock amid higher-for-longer interest rates

Stock markets: Before the opening bell

Stocks were mostly lower in Europe and Asia Monday, even after the United States Congress averted a government shutdown with a last-minute compromise.

U.S. stock futures are higher this morning after the U.S. Congress approved the temporary funding bill late Saturday to keep U.S. federal agencies open until Nov. 17.

“Financial markets were bracing for a shutdown, so there’s an element of relief, but it’s only a temporary lifting of one of the clouds hanging over the markets now,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management. “Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks.”

In U.S. premarket trading, tech stocks led gains, with strategists at Goldman Sachs Group Inc. predicting the sector to do well, benefiting from lower valuations after the recent sell-off and a pullback in bond yields.

The S&P/TSX composite index closed in negative territory on Friday.

The Associated Press, Bloomberg

What to watch today

The National Day for Truth and Reconciliation is observed today. Stock markets will be open, but bond markets will be closed in Canada.

The S&P Global Manufacturing PMI for September will be released at 9:30 a.m.

United States Federal Reserve chair Jerome Powell will participate in a roundtable discussion in York, Pa., this afternoon.

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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