Everything You Need to Know on Tuesday: Canadian Consumer Confidence Hits 2-Year High as Pessimism Starts to Thaw

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,311.80, down 0.61%

● Trudeau to call vote on contentious tax change this week

● Canadian consumer confidence hits 2-year high as pessimism starts to thaw

● Stocks to watch: Tiny Ltd

Today, the Canadian dollar is trading at 72.57 cents US, a slight decrease from Monday.

S&P/TSX 60 Index Standard Futures are trading at 1,311.80, down 0.61% from previous close.

Prime Minister Justin Trudeau’s government will call for a vote this week on a planned hike in the capital-gains tax inclusion rate, a measure that would raise billions in additional government revenue and has attracted the ire of Canada’s business community.

But groups including venture capitalists, startup founders and junior mining companies will have to wait longer to learn if their specific concerns about the policy have been addressed, according to government officials who spoke with Bloomberg. The legislation to implement the tax change isn’t ready yet.

The main components of the capital gains changes will be unveiled in a motion published in Parliament on Monday, Finance Minister Chrystia Freeland said in a speech in Toronto on Sunday. She said the motion will stick to the “broad outlines” that were announced in April, including an implementation date of June 25.

“Tomorrow we will introduce changes that will result in a small number of Canadians paying a little more in tax,” Freeland said. The plans to increase the capital-gains tax on companies and on individuals in years when they record gains of more than C$250,000 ($182,000).

Currently, half of those gains are subject to corporate or personal income tax; that will rise to two-thirds. Exemptions and reductions are available for owners of certain small businesses, farms and fishing operations.

Pessimism about the Canadian economy is starting to thaw.

The Bloomberg Nanos Canadian Consumer Confidence index — a measure of economic mood — rose to 54 last week, the highest since May 2022. The index gained about three points in the last month. A reading above 50 indicates net positive sentiment.

Every week, Nanos surveys about 250 Canadians for their views on the current state of their personal finances and job security, as well as their outlook for the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 randomly sampled telephone responses.

Canadians felt better about all these topics last week, based on the net change between positive responses and negative responses. That helped lift the overall confidence index to its two-year high.

The Bank of Canada last Wednesday cut interest rates for the first time in four years, lowering its policy rate by 25 basis points to 4.75 per cent. Most survey responses predate the rate cut, but the central bank’s move was widely anticipated after several months of slowing deceleration.

Despite the recent improvement, views on the current state of affairs remain far bleaker than the average over the data’s history going back to 2008. Canadian households have been struggling, as the country has been in a per-capita recession since 2022 and consumer prices are more than 10 per cent higher than they would be if they’d stayed on their pre-pandemic trend.

Still, future expectations are more positive than average, largely due to widespread bullish real estate sentiment. Asked about the outlook for the economy, the largest group of respondents — 40.5 per cent — see it weakening over the next six months. That’s still pessimistic, but an improvement: the size of the cohort reached highs of 63.8 per cent in 2022 and 52.9 per cent in 2023.

Compared to the national measure, sentiment is more positive in Quebec and Atlantic Canada and weaker in British Columbia, Ontario and the Prairies.

Tiny mainly invests in internet companies. It said on Thursday that co-founders Andrew Wilkinson and Chris Sparling stepped down effective immediately to become co-chairmen, adding they’d remain “actively involved.”

Then on Friday, a filing showed Wilkinson intends to sell as many as 3.1 million shares, or about 1.7 per cent of the company, worth about $8.4 million based on Friday’s closing price of $2.7 per share. The disposal included a donation of shares to Wilkinson’s private foundation and gifts to family and former employees, according to a statement. Wilkinson still owns more than 60 per cent of Tiny, according to data compiled by Bloomberg.

The company lost about $80 million in market capitalization by the end of trading in Toronto on Monday, with trading volumes more than five times the three-month average.