Home sales in Canada's largest market absolutely cratered from last year in February as higher rates took a toll on activity. Sales in the month were basically cut in half (on a seasonally-adjusted basis) year-over-year, which is notable just given the timing of things – February of last year was the last month before the Bank of Canada started its rate hiking cycle, which has brought the benchmark borrowing rate up a full four per cent. That's also raised the stress tests for mortgages, which run at 200 basis points above the contract rate, which can tamp down demand as more buyers have trouble qualifying. On the price front, things were down almost 18 per cent – average prices fell to $1,095,617 – while still well above income fundamentals, that's also a factor of 57 per cent of sales coming in below a million bucks, rather than the 38 per cent a year earlier.
SUNCOR BAILS ON NORTH SEA
Bit of a retrenchment for Suncor, which is selling its U.K. assets to Equinor (your former Statoil, the Norwegian state-owned energy producer) for $1.2 billion. It's about 15,000 barrels of oil per day worth of production from the operational Buzzard field, along with a 40 per cent interest in the development-stage Rosebank project. For Suncor, it says the deal has the right 'fit and focus' for its other offshore projects, mostly off the coast of Newfoundland – it's got Hebron, West White Rose and Hibernia there to deal with, albeit in joint ventures.
NORDSTROM BEATS RETREAT FROM CANADA
Nordstrom's adding to the trend of U.S. retailers throwing in the towel on Canada, announcing plans to exit and lay off 2,500 employees. It's shades of Target's departure, albeit at a lower capital and employment cost (though let's not understate the latter – it's still people losing their jobs, which is painful) – when Target shut down, it cut 17,000 jobs, with Nordstrom it's more like 2,500 positions. There's also a thorny problem here for pensioners – Ontario Teacher's Pension Plan's Cadillac Fairview is the anchor landlord for Nordstrom, and we don't know the financial impact of this loss just yet (though it should be noted tenants usually sign at least a five year lease and are responsible for finding a subletter if they need to move out.)
OTHER NOTABLE STORIES
- Martinrea posted record sales in its fourth quarter, up about 23 per cent as supply constraints eased.
- Ritchie Bros. says dissident shareholder Luxor's goals don't align with those of shareholders in the latter's fight against the takeover of IAA – though worth noting the two sides have been at it for some time about the US$7.3 billion takeover.
NOTABLE RELEASES/EVENTS
- Notable data: Toronto Regional Real Estate Board (TRREB) home sales, Labour Productivity, Building Permits, ISM Services PMI
- Notable earnings: SNC Lavalin, Martinrea International, Crescent Point Energy, Canadian Natural Resource
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