Everything You Need to Know on Thursday: RBC Restructures, Divides Key Banking Division into Two
Good morning mooers! Here are things you need to know about today's market:
● S&P/TSX 60 Index Standard Futures are trading at 1,338.10, down 0.16%
● Bank of Canada urged to act swiftly as unemployment may reach 7%, economist warn
● Canadian telecom shares set for recovery as pricing war eases: Analysts
● RBC restructures, divides key banking division into two
● MAG Silver climbs 1.8% in US pre-market despite halting utah operations due to wildfire
Market Snapshot
Today, the Canadian dollar is trading at 73.38 cents US, a slight increase from previous close.
S&P/TSX 60 Index Standard Futures are trading at 1,338.10, down 0.16% from previous close.
Macro
Bank of Canada Urged to Act Swiftly as Unemployment May Reach 7%, Economist Warns
Federal Reserve Chair Jerome Powell's recent comments have acknowledged a cooling labor market alongside inflation concerns, particularly after a third consecutive month of increased unemployment figures. This shift in focus has sparked speculation about potential rate cuts.
In Canada, similar job market weaknesses are emerging, with a rise in the unemployment rate to 6.4% and a slight drop in employment figures. Despite hotter-than-expected inflation in May, National Bank economist Taylor Schleich suggests the Bank of Canada should not overlook the weakening labor market and consider action at its next meeting on July 24.
Sector
Canadian Telecom Shares Set for Recovery as Pricing War Eases: Analysts
Canadian telecom giants, trading at multi-year lows due to unimpressive wireless strategies, now present a buying opportunity according to analysts. The S&P/TSX Composite’s communications index, including Rogers, Telus, and BCE, has dropped nearly 16% this year, with stocks hitting lows not seen since 2013-2016.
Analysts attribute the decline to aggressive pricing following mergers like Rogers-Shaw and Quebecor's acquisition of Freedom Mobile. National Bank's Adam Shine notes this has stunted growth and share value. Despite recent losses— $BCE Inc (BCE.CA)$ down 30%, $TELUS Corp (T.CA)$ 23%, and $Rogers Communications Inc (RCI.A.CA)$ 20%—RBC's Drew McReynolds anticipates a sector rebound, especially with upcoming Q2 reports signaling potential for stable pricing and around 3% revenue growth.
Analysts from Canaccord Genuity also see recovery potential if telecoms manage costs and digitize. They maintain buy ratings for key players despite cutting some price targets due to the competitive market, which intensified after Quebecor's Videotron acquired Freedom Mobile.
Despite margin hits from price wars, TD Bank's Vince Valentini observes positive pricing trends, with Bell and Telus recently raising their base rates, suggesting a market stabilization that could lead to a sector recovery.
Stocks to watch
RBC Restructures, Divides Key Banking Division into Two
$Royal Bank of Canada (RY.CA)$ is undergoing a significant reorganization under CEO Dave McKay, including a leadership shakeup and the division of its primary personal and commercial (P&C) banking unit. Neil McLaughlin moves from leading P&C to heading wealth management, while Erica Nielsen will now lead personal banking and Sean Amato-Gauci will take over commercial banking.
Following the acquisition of HSBC Canada, which brought in additional branches and staff, RBC will now report its operations across five segments: personal banking, commercial banking, wealth management, insurance, and capital markets, reflecting its C$213 billion market value.
MAG Silver Climbs 1.8% in US Pre-Market Despite Halting Utah Operations Due to Wildfire
$MAG Silver Corp (MAG.CA)$'s shares increased by 1.8% in pre-market trading in the US, despite the temporary suspension of its Deer Trail project in Utah because of a wildfire. The company assured that the site is secure and all staff are safe, and it does not foresee any significant impact on its operations. MAG Silver is closely monitoring the situation and will adhere to local guidelines. The stock was trading at $13.50 in the NYSE pre-market, following a 7% rise in the previous regular session. On the TSX, the shares went up by 7.05% to $18.07 yesterday.
Source: Bloomberg, Financial Post
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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