Everything You Need to Know on Monday: Cleveland-Cliffs Set to Acquire Stelco for $2.8 Billion
Good morning mooers! Here are things you need to know about today's market:
● S&P/TSX 60 Index Standard Futures are trading at 1,356.00, down 0.15%
● Markets react to Trump attack with bullish trades
● Cleveland-Cliffs set to acquire Canadian steelmaker Stelco for $2.8 billion
● Alamos up slightly in U.S. pre-market after eliminating majority of Argonaut hedge book
● Corus Entertainment reports increased loss and revenue dip, forecasts ad revenue decline
Market Snapshot
Today, the Canadian dollar is trading at 73.26 cents US, a slight decrease from previous close.
S&P/TSX 60 Index Standard Futures are trading at 1,356.00, down 0.15% from previous close.
Trending Topic
Markets React to Trump Attack with Bullish Trades
Following the attempted assassination of Donald Trump, financial markets have been invigorated by what's known as the 'Trump trade'. Investors are betting on the Republican's potential policies like tax cuts, higher tariffs, and deregulation, especially after President Biden's recent debate performance cast doubt on his re-election. Post-attack sympathy and support for Trump have intensified these trades.
As markets opened on Monday, Treasury bonds dipped, with long-term yields climbing, suggesting expectations of growth from Trump's fiscal and trade policies. The dollar strengthened, the Mexican peso dropped, and Bitcoin surged, alongside modest gains in S&P 500 futures.
Investment experts predict a steeper yield curve under a Trump presidency, but warn that the U.S. election race's uncertainty could drive volatility and a flight to safe assets. Despite the rally, some investors remain cautious, given the political risks and the potential for profit-taking.
The stock market is expected to withstand the shock in the long term, but may see increased short-term fluctuations. Financial, healthcare, and oil stocks are among those anticipated to gain if Trump wins. The incident has reignited volatility similar to the one sparked by the first presidential debate, and could influence the Fed's interest rate decisions.
Stocks to watch
Cleveland-Cliffs Set to Acquire Canadian Steelmaker Stelco for $2.8 Billion
Cleveland-Cliffs Inc. has reached an agreement to acquire Canadian steelmaker $Stelco Holdings Inc(STLC.CA$ for C$3.85 billion ($2.8 billion), offering a significant premium to Stelco shareholders of about C$70 per share, which is 87% above the closing price on the preceding Friday. This acquisition marks a strategic expansion for Cliffs, particularly following its failed attempt to purchase United States Steel Corp. last year.
Under the leadership of CEO Lourenco Goncalves, Cleveland-Cliffs has transformed from an iron ore miner into a leading force in the U.S. steel industry, now set to increase its presence in the flat-rolled steel market with Stelco's operations. Stelco, with a storied history and a recent turnaround led by CEO Alan Kestenbaum, has the support of key shareholders and the United Steelworkers union for this transaction.
The deal, anticipated to finalize in the fourth quarter of 2024, is contingent on the approval of Stelco's shareholders, regulatory clearances, and other standard conditions. Advising on the deal, Wells Fargo, J.P. Morgan, and Moelis & Company are serving Cliffs, while BMO Capital Markets, McCarthy Tétrault LLP, and A&O Shearman LLP are advising Stelco. Additionally, RBC Capital Markets and Stikeman Elliott LLP are consulting the special committee of Stelco's board.
Alamos Up Slightly in U.S. Pre-Market After Eliminating Majority of Argonaut Hedge Book
$Alamos Gold Inc(AGI.CA$ has significantly reduced the hedge book it acquired from Argonaut Gold, cutting future gold sale commitments by over half and thus bolstering its potential gains from rising gold prices. By delivering gold under a prepayment agreement, Alamos generated $116 million, which it used to clear Argonaut's forward contracts for 179,417 ounces. Plans are in place to assess options for the remaining 150,000 ounces hedged for 2026 and 2027. Alamos' President and CEO John McCluskey highlighted the improved positioning for taking advantage of gold's positive market trends. Following the news, Alamos' stock saw a pre-market uptick of 0.7% on the NYSE.
Corus Entertainment Reports Increased Loss and Revenue Dip, Forecasts Ad Revenue Decline
$Corus Entertainment Inc(CJR.B.CA$ announced an expanded third-quarter net loss of $769.9 million, with a per-share loss of $3.86, worsened from last year's $2.48 per share loss, influenced by a $960 million impairment charge. Quarterly revenues fell 16% to $331.8 million, missing projections. The company also experienced a 30% drop in segment profit and warned of further TV advertising revenue slumps in the coming quarter due to market disruptions and competitive pressures. Despite cost-cutting efforts and an anticipated 20% decrease in TV program rights amortization, Corus anticipates a continued decline in advertising revenues, similar to the third quarter. The company remains cautious about short-term visibility despite expecting medium-term economic improvements.
Source: Bloomberg
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