Good morning!
Back from Thanksgiving, and markets have less appetite for interest rate hikes as Friday’s weak jobs report came in.
MTY Food Group is serving up buybacks after its sale review ended without a deal, while McCain Foods has an Indian potato deal on its plate.
Plenty to catch up on after the long weekend!
Let’s dig in.
MARKET RUNDOWN
Yesterday’s Close
TSX and CA / US 10Y bond figures reflect Oct. 9’s close due to holiday closures; all other data reflect Oct. 12’s close
The TSX, which was closed on Monday for Thanksgiving, rose 1.5% on Friday - its best day in five weeks - as surprise Canadian job losses reduced expectations for Bank of Canada rate hikes.
On Monday, reports of Chinese memory chip advances and warnings from Broadcom / Intel that limited financing could slow AI data centre expansion weighed on chipmakers and the Nasdaq.
Weekend Houthi attacks on Riyadh’s airport in Saudi Arabia raised oil supply fears, lifting crude prices and U.S. energy shares.
BRIEF OF THE DAY
Canada Loses 68,300 Jobs, Lowering Expectations for a Bank of Canada Rate Hike
Chart by Bloomberg; Data by Statistics Canada
The news: Friday’s labour report showed Canada lost 68,300 jobs in September - far worse than the 9,200 gain economists expected. It was the 2nd straight monthly decline. The unemployment rose to 6.5% from 6.4%.
Where jobs fell: Job losses were concentrated in the public sector: education lost 35,000 positions, while health care and social assistance lost 23,000. Fewer international students may be weighing on education employment. Health care’s monthly decline was its first since December 2022, as part of the broader public sector decline. Private sector employment was little changed.
The market reaction: Traders cut the odds of a 25-bp Bank of Canada rate hike (at its next rate decision on October 28) to ~25%, from ~40% before the labour report. The TSX rose 1.5% on Friday as these reduced rate hike expectations helped support stock valuations.
💼 Why this matters: The Bank of Canada faces a policy dilemma. Weaker employment strengthens the case for holding its policy rate at 2.25%, but annual inflation was still 3% in August (above its 2% target). Policymakers must weigh the risk of elevated energy costs driving broader price increases against the risk that raising rates would further weaken the economy.
What’s next: September inflation data and the Bank of Canada’s business and consumer surveys arrive on October 19, ahead of its rate decision on October 28.
HEADLINE RECAP
In Canada
Canada loses 68,300 jobs in September - far worse than expected - as unemployment rises to 6.5% (BBG)
Montréal-based MTY Food Group (TSX:MTY) ends strategic review without a sale / take-private; raises dividend and plans share buybacks instead (G&M)
Chinese automaker Geely announces Canadian market entry, plans first vehicle sales in 2027 (BBG)
Canadian steel producer Stelco says it will proceed with hundreds of layoffs as Ottawa reaffirms legal threat (BBG)
Carney reportedly warns U.K. against utility giant Thames Water’s nationalization as Canadian investors face exposure (G&M)
France signals openness to Canadian defence deals despite push for European-made weapons (G&M)
NATO tests emerging defence technologies in Nova Scotia, with 30 Canadian companies participating (G&M)
DEALS WITH CANADIAN PARTIES
M&A & Investments
Rocscience: The Toronto-based geotechnical software company agreed to be acquired by global industrial technology company Hexagon at a US$535M (~$763M) enterprise value, with PE firm TA Associates exiting.
Lazard advised TA Associates on the sale.
Alimentation Couche-Tard (TSX:ATD) agreed to buy 52 retail fueling sites it already operates in Québec and Ontario from New Brunswick-based energy company Irving Oil, plus 18 cardlock operations and fuel supply agreements for 71 additional stores.
Shell Canada Energy agreed to buy 30% of Norwegian energy company Equinor’s Bay du Nord offshore oil project - located 500 km east of Newfoundland and Labrador - with Equinor retaining 70% and operatorship.
Decart: The San Francisco-based AI model developer, backed by Toronto-based VC firm Radical Ventures, is reportedly in talks to be acquired by Amazon at a valuation of ~US$7B (~$10B).
Discovery Mining (TSX:DSV) agreed to pay US$55M (~$78M), mostly in shares, for McEwen’s (TSX:MUX) Fuller gold property and the remaining 60% of the Paymaster mine, in Timmins, Ontario.
Franco-Nevada (TSX:FNV) agreed to pay Discovery Mining (TSX:DSV) US$8M (~$11M) to expand its Porcupine royalty to the Fuller and Paymaster interests which Discovery is acquiring in Timmins, Ontario.
McCain Foods: The Toronto-based frozen food group agreed to acquire Falcon Agrifriz Foods’ frozen potato processing business in Gujarat, India.
Absolute Security: The Vancouver- and Seattle-based cybersecurity company acquired FirmGuard (California-based Phoenix Technologies’ firmware security and management business).
Boston Meridian Partners was exclusive financial advisor to Phoenix Technologies.
Immutable Holdings (Cboe CA:HOLD): The digital assets nano-cap company agreed to an all-share reverse takeover by Gamebred FC, Jorge Masvidal’s U.S. bare knuckle MMA promoter; Gamebred shareholders would own ~76.1% before concurrent financing.
DCM & Credit
Government of Canada raised $2B through its 7th Canadian-dollar green bond, a new 10Y offering that attracted over $3.6B of orders and brought total green bonds issued since 2022 to $19.5B.
East Side Games Group (TSX:EAGR): The Vancouver-based mobile game developer secured $4M of receivables-backed credit from National Bank and a US$4M term loan from Export Development Canada (EDC) for future game development; part of the proceeds will repay its RBC credit line.
BAY STREET TRIVIA
Which Canadian tech company began because its founders were trying to sell snowboards online?
FOR THE GROUP CHAT
