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Broad rally helps boost S&P/TSX composite

Broad rally boosts markets

A broad-based rally on the Toronto Stock Exchange helped boost Canada's main stock index, while U.S. stock markets rose in the wake of a stronger-than-expected jobs report.

The S&P/TSX composite index was up 188.12 points at 15,703.34.

In New York, the Dow Jones industrial average was up 181.7 points at 25,916.67. The S&P 500 index was up 22.63 points at 3,138.49, while the Nasdaq composite was up 84.68 points at 10,239.31.

The Canadian dollar traded for 73.52 cents US compared with 73.38 cents US on Tuesday.

The August crude contract was down seven cents at US$39.75 per barrel and the August natural gas contract was up four cents at nearly US$1.72 per mmBTU.

The August gold contract was up US$8.40 at US$1,788.30 an ounce and the September copper contract was down less than a penny at US$2.73 a pound.





Trade deficit narrowed in May as exports rose and imports fell

Trade deficit narrows

Statistics Canada says the country's merchandise trade deficit narrowed in May as exports and oil prices climbed while imports fell.

The agency says the deficit contracted to $677 million in May compared with a deficit of $4.3 billion in April when exports and imports both plunged due to the COVID-19 pandemic.

Total exports rose 6.7 per cent in May to reach $34.6 billion, however Statistics Canada noted that they were down 34.1 per cent compared with a year ago.

Meanwhile, imports fell 3.9 per cent in May to $35.3 billion, despite the partial reopening of the economy.

Imports were down by nearly a third compared with year ago.

In volume terms, exports were up 3.8 per cent in May, while imports fell 6.7 per cent.



Canada's five big banks join anti-hate advertising boycott of Facebook

Banks join Facebook boycott

TORONTO - All five of Canada's biggest banks are joining an international boycott of Facebook over concerns that the platform is complicit in promoting racism, violence and misinformation.

Scotiabank, RBC, CIBC, BMO and TD have pledged to stop purchasing ads on the site for the month, aligning themselves with brands such as Lululemon Athletica and MEC in signing onto the #StopHateForProfit campaign.

The initiative, spearheaded by organizations like the NAACP and the Anti-Defamation League, began in response to growing anti-Semitic and anti-Black rhetoric found on the social media platform.

Participating brands will suspend all advertising on the platform for the month of July.

Scotiabank announced its intentions on Tuesday, while the four others confirmed on Wednesday that they would follow suit.

A spokesman for RBC said the company understands that systemic racism has disadvantaged Black, Indigenous and People of Colour and the bank intends to combat that.

"One way we can do that is by standing against misinformation and hate speech, which only make systemic racism more pervasive," AJ Goodman said.

Facebook has come under fire in recent months for what critics say is an indifference when it comes to policing their platform for individuals and groups espousing hateful ideology.

They've also been criticized for a lack of action on disinformation.

For instance, last month, U.S. President Donald Trump posted a doctored video featuring fake CNN footage on both his Twitter and Facebook accounts, in which a CNN logo appears over footage of a Black toddler running away from a white toddler.

The footage is then followed by another clip from a different angle — this time without the CNN watermark — in which it becomes clear the two toddlers are friends.

The parents of the two toddlers later told ABC News that they were "appalled" and "disgusted" by the video.

Initially, only Twitter flagged the video as misleading, with Facebook resisting public pressure to enforce their own labelling system.

However, after numerous brands began pulling advertising from the platform, the company reversed its decision at the end of June and began taking down some political posts deemed to be fake or misleading.

Criticism against Facebook has come from inside the company as well.

At the beginning of June — shortly after Trump threatened via social media to order the military to shoot anti-racism protestors — hundreds of Facebook employees staged a virtual walkout to protest the company's refusal to label the post as hate speech.

A spokesman for Facebook noted that the company has suspended more than 250 white supremacist groups from the platform but did not specifically comment on the boycott.

More recently, Friends of Canadian Broadcasting called on the federal government to drop hosting its virtual celebration on Facebook.

But Prime Minister Justin Trudeau's address to Canadians went ahead on the platform — along with YouTube, CBC, CPAC and Radio-Canada — on Wednesday.





Mexico's legacy airline Aeromexico files for bankruptcy

Aeromexico files bankruptcy

Mexico’s oldest legacy airline, Aeromexico, said Tuesday it has filed for Chapter 11 reorganization, a form of bankruptcy in which the carrier can keep operating while its debts and obligations are sorted out.

The airline said “this legal process will not interrupt the airline’s operations” and that all tickets, reservations and bonus points would continue to be honoured.

Like many airlines throughout the world, Aeromexico has been squeezed by a decline in travel due to the coronavirus pandemic.

Aeromexico General Director Andrés Conesa said “the COVID-19 pandemic has had an unprecedented impact on the global economy and travel industry.”

In a statement, Aeromexico wrote that “many leading airlines throughout the world have used Chapter 11 to strengthen their financial position, and they continue to be solid companies that serve passengers across the world now. That is what we intend to do.”

Mexico's government has refused to bail out large private companies, even those battered by the pandemic.

Mexico's other legacy airline, Mexicana, went into a Mexican bankruptcy proceeding in 2010 and never re-emerged.



TSX has best quarter in more than a decade

Best quarter in over a decade

Canada's main stock index ended its best quarter in more than a decade as the price of gold reached its highest level since 2011.

The S&P/TSX composite index closed up 125.50 points at 15,515.22 to finish 2.1 per cent higher in June and ahead nearly 16 per cent over the last three months.

The unprecedented gains follow a disastrous March, which still leaves the Toronto stock market about nine per cent down for the year.

"It's obviously been a tumultuous quarter to say the least," said Allan Small, senior investment adviser at HollisWealth.

"I think most people came into this quarter coming out of March afraid, nervous, feeling as though they couldn't see the light at the end of the tunnel. And I think we're leaving this quarter with a lot more optimism."

Small said he went into Tuesday's session before the Canada Day holiday skeptical about the outcome after last week's pullback as infection rates surged in several southern and western states.

Unlike initial infections, however, the latest increases haven't been accompanied by as many hospitalizations and deaths.

Stock markets have swung wildly with the impact of the COVID-19 pandemic that's caused mass lockdowns, high unemployment and extensive fiscal and monetary stimulus.

In New York, the Dow Jones industrial average was up 217.08 points at 25,812.88 as it ended its best quarter since 1987. The S&P 500 index was up 47.05 points at 3,100.29, while the Nasdaq composite was up 184.61 points at 10,083.64, a record close.

The partial market recovery has exposed a disconnect within the economy which continues to struggle as reopenings are staggered and constrained to prevent new infections.

The stock market gains came amid strong consumer confidence numbers and Congressional testimony by Federal Reserve chairman Jerome Powell.

He said the economic outlook remains uncertain with output and employment still far below their pre-pandemic levels.

"A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities," he said, adding that all levels of government need to provide relief to support the recovery for as long as needed.

Investors in the market drop have been rewarded, while those who were scared onto the sidelines have been left behind, suggested HollisWealth senior investment adviser Small.

He expects stock markets will move in fits and starts depending on virus headlines, but tread higher in the third quarter and surge into the final months of 2020.

"I think the market is looking to the end of the year, and that's why you're seeing the gains today," he said in an interview.

"(It's) kind of bringing forward a lot of what we're going to see in the fall and into the start of the winter."

The materials sector gained more than two per cent on higher gold prices to lead the TSX. Iamgold Corp. and Hudbay Minerals Inc. rose 7.8 and 7.3 per cent respectively.

The August gold contract was up US$19.30 at US$1,800.50 an ounce and the September copper contract was up 3.6 cents at nearly US$2.73 a pound.

Industrials increased nearly one percentage point even though shares of Air Canada lost another three per cent.

The heavyweight financials sector was up 0.8 per cent.

Energy was one of four major sectors to fall as Tourmaline Oil Corp. dropped 3.5 per cent and Seven Generations Energy Ltd. was down 2.6 per cent on lower crude oil prices.

The August crude contract slid back 43 cents at US$39.27 per barrel and the August natural gas contract was up 4.2 cents at US$1.75 per mmBTU.

The Canadian dollar traded for 73.38 cents US compared with 73.09 cents US on Monday.



Air Canada cutting 30 domestic routes, closing stations at 8 airports

Air Canada cuts 30 routes

Air Canada is indefinitely suspending service on 30 domestic regional routes and closing eight stations at regional airports.

The airline says the cuts are being made as a result of continuing weak demand for both business and leisure travel due to COVID-19 travel restrictions and border closures.

The regional airports where Air Canada is closing its stations include four in Quebec and two in Ontario plus one in New Brunswick and one in Newfoundland and Labrador.

Air Canada also says other changes to its network and schedule, as well as further service suspensions, will be considered over the coming weeks.

The airline announced earlier this year that it would layoff about 20,000 workers or more than half of its staff as part of its plan to cut costs.

Air Canada says system-wide capacity is down about 85 per cent in the second quarter compared with the same quarter last year and expects capacity in the third quarter to be down 75 per cent compared with the third quarter of 2019.



Cineplex reopens some theatres after $178-million loss

Cineplex slowly reopens

Cineplex Inc. is reopening some of its theatres as the company struggles with the fallout of COVID-19 and the demise of its takeover deal.

The Toronto-based movie theatre company will open some theatres in British Columbia, Saskatchewan, Quebec, New Brunswick, Nova Scotia and Newfoundland on Friday.

The reopenings come as Cineplex vows to sue U.K.-based chain Cineworld PLC for calling off a $2.8-billion takeover of the company.

On Monday, Cineplex said the COVID-19 pandemic had a "material negative effect" on its operations and resulted in a $178.4-million loss in the first quarter.

The company lost $2.82 per diluted share for the three months ended March 31, compared with a loss of 12 cents per share or $7.36 million a year earlier.

Cineplex revenues tumbled to $282.8 million from $364.6 million, while attendance plunged to 10.7 million from nearly 15 million.



McDonald's Canada names Jacques Mignault as new CEO

McDonald's new CEO

McDonald's Canada says Jacques Mignault has been appointed as its next president and chief executive, effective Aug. 1.

Mignault has been serving as the managing director of McDonald's Switzerland.

He succeeds John Betts, who is retiring.

Betts, who began at McDonald's in 1970 and worked as a crew member in Southhampton, N.Y., held numerous roles in the U.S. before taking the top Canadian job at the chain in 2008.

During his tenure, McDonald's launched its the McCafe brand and introduced all-day breakfast.

McDonald's has 1,400 Canadian restaurants.



Statistics Canada says economy posted record 11.6 per cent plunge

Economy, record plunge

Statistics Canada says the economy saw its largest monthly drop on record in April as it came to a near standstill due to the pandemic, but early indications point to a rebound in May as businesses began to reopen.

The agency says gross domestic product fell 11.6 per cent in April with non-essential businesses shut for the full month following a 7.5 per cent decline in March.

However, Statistics Canada says its initial flash estimate for May points to growth of three per cent, which will be revised and finalized at the end of July.

Economists on average expect a drop of 13 per cent for April, according to financial markets data firm Refinitiv.

Manufacturing was down 22.5 per cent in April as many factories either shuttered or greatly reduced capacity in line with public health measures to slow the spread of COVID-19.

The output of the accommodation and food services sector dropped 42.4 per cent in April, as customers replaced eating out with staying in, hitting a sector that saw a 37.1 per cent decline in March.



Cineplex loses $178.4M in first quarter as revenues plunge

Cineplex bleeds $178.4M

Theatre operator Cineplex Inc. says the COVID-19 pandemic has had a "material negative effect" on its operations and resulted in a $178.4-million loss in the first quarter.

The Toronto-based company says in delayed results that it lost $2.82 per diluted share for the three months ended March 31, compared with a loss of 12 cents per share or $7.36 million a year earlier.

Revenues decreased 22.4 per cent to $282.8 million from $364.6 million as attendance plunged to 10.7 million from nearly 15 million.

The movie chain with 1,687 screens at 164 locations across Canada went dark March 16.

International movie theatre chain Cineworld PLC called off its deal to buy Cineplex for $2.8 billion earlier this month but the Canadian firm vows to sue over damages.

Cineplex says it was in compliance with all financial covenants as of March 31 but expects "a potential breach" of covenants within the next two quarters.



Lululemon buys in-home fitness company Mirror in $500-million deal

Lululemon buys Mirror

Lululemon Athletica Inc. has entered into an agreement to acquire in-home fitness company Mirror.

The deal is valued at $500 million and will see the Vancouver-based athleticwear brand take over New York-based Mirror, which runs an interactive workout platform that features live and on-demand fitness classes.

Lululemon says the purchase will be covered by the company’s primary sources of liquidity, which includes more than $800 million in cash, its existing $400 million revolving credit facility, and a new one-year, $300 million revolving credit facility.

Lululemon believes Mirror will help position the company to drive the business through virtual and in-person experiences and bolster the company’s digital offerings.

Following completion of the transaction, Mirror will operate as a standalone company within Lululemon and Mirror's founder Brynn Putnam will continue as its CEO.

The transaction is subject to conditions, but is expected to close in the second quarter of fiscal 2020.



Cirque du Soleil files for creditor protection, terminates 3,480 jobs

Cirque files for bankruptcy

The Cirque du Soleil, whose aerobatic shows have been halted by COVID-19, has filed for creditor protection while it develops a plan to restart its business.

The company says it will seek court protection from creditors under the Companies' Creditors Arrangement Act at a hearing Tuesday at Quebec Superior Court.

Cirque du Soleil also announced the termination of approximately 3,480 employees previously furloughed in March.

In connection with the filing, Cirque du Soleil says it has entered into a "stalking horse" purchase agreement with its existing shareholders TPG, Fosun and Caisse de depot et placement du Quebec as well as Investissement Quebec as a debt provider.

It says the sponsors' bid includes an intent to rehire a substantial majority of the terminated employees, business conditions allowing, when its operations can resume.

The company added that given that its resident shows in Las Vegas and Orlando are expected to resume before the rest of the its shows, the artists and show staff of the resident shows division are not affected.



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