Canada Stocks Taxiing On The Back of the Airlines; Chorus Aviation and Other Airlines On the Runway

Friday, October 23, 2020 4:10 PM | MT Newswires

The main stock market, the Toronto Stock Exchange, on Friday gained a modest 24.7 points at 16,304, after taxiing upward late in the session on Canada's airline stocks, and particularly Chorus Aviation (CHR.TO). It added to the near 50 points gained yesterday, while also buoyed by lingering hopes around a fresh stimulus bill in the United States, which is Canada's largest trading partner.

Action Economics noted White House Chief of Staff Meadows hopes for a deal in the "next day or so," in a Fox interview. He and Treasury Secretary Mnuchin are "making adjustments and trying to look at language to reach a compromise."

Stories of the day may well have involved Chorus and other players in the beleagured airline industry. For its part, and in response to a request from IIROC, Chorus confirmed Friday that it has received a preliminary, non-binding acquisition proposal from a third party that is subject to a number of significant conditions. It said there can be no assurance that any transaction will occur, or as to the timing, structure or terms of any transaction. Chorus does not intend to make further comment unless or until there is a transaction to announce.

Chorus closed up 34% at $3.18 on the news. It had been up just 6.75% when trade in its stock was halted ahead of the news. It has jumped from $2.26 at the open of trade on Thursday, October 22.

The Chorus bid news comes after Air Canada, Canada's biggest airline, recently cut its offer to buy Transat (TRZ.TO) by nearly 75% to about $188.7 million, down from $720 million, as COVID-19 weighs on travel demand.

It also comes as both Air Canada and WestJet (WJA.TO) were this Friday afternoon involved in a war of words on Twitter about their respective refund policies.

And it comes as a study released Friday by Statistics Canada said restrictions imposed to slow the spread of coronavirus are expected to cost the country between 400,000 and 500,000 jobs in 2020. The reduction in travel will shave off as much as $37.1 billion or 1.7% from total economic output during the year, the agency added. Prime Minister Justin Trudeau was cited in a Bloomberg News report saying his government is in "continual discussions" with airlines over aid for an industry buckling under the financial strain caused by COVID-19.

Outside of the airlines, among heavyweight sectors, Financials gained 0.6%. But Energy lost 0.7% and Materials lost 0.6%.

Of commodities, gold eked out a small gain on Friday even as the U.S. dollar recovered from earlier lows and investors shed risk. Gold for December delivery closed up $0.60 to US$1,905.20 per ounce in Comex trade.

But West Texas Intermediate (WTI) crude oil fell nearly 2% on Friday as talks over a new U.S. fiscal stimulus package continue and new supply from Libya threatens to boost global inventories. WTI crude for December delivery closed down $0.79 to US$39.85 per barrel, Marketwatch reported. December Brent crude, the global benchmark, was last seen down $0.72 to US$41.74 while Western Canada Select was down $0.84 to US$29.30 per barrel.

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