\u0027If that happens, this market is set to get back to work.\u0027 Read more here
“Between job losses and companies reducing earnings estimates, that will give the financial authorities — in Canada, the U.S. and globally — the ability to start saying they’ve increased rates enough,” Daviau said in an interview. “That will let them stop pursuing the aggressive hiking strategy they’ve been on. If that happens, this market is set to get back to work.”Article content
But the current rally in stocks, which started in June, is built on expectations that central banks will start moving even sooner and “is not sustainable,” Daviau said. The decline in investor interest in new equity has started to take a toll on Canaccord’s results. The firm last week reported fiscal first-quarter profit excluding some items of 11 cents a share, trailing analysts’ 31-cent average estimate. The net loss for the quarter was $12.6 million, compared with net income of $69.7 million a year earlier.
Revenue tumbled 39 per cent to $317.4 million in the quarter ended June 30. Leading the decline was a 90 per cent plunge in investment-banking revenue, to $18.7 million, as new-issue volumes dried up. About $38 million of the drop in revenue was due to declines in the market value of shares and warrants Canaccord was selling as part of its investment-banking activities, the company said.