Futures rip on US/China pact, Shopify goes NASDAQ 100, pharma falls, Air Canada upgraded, Hudbay surges on beat
The moms I have been in the trenches with the last few years had a chance to compare notes over the weekend. We all said similar things, it seems like job is getting harder as they get older not easier as many had promised. Instead of managing burps we are managing complex emotions, power struggles and experiencing a surge in activity creep. A stark truth dawned on us seemingly at the same time: what if the last few hardest years of our lives…were actually the easy part?
90-day fiancé: Futures are ripping higher this morning after the US and China agreed to a temporary trade deal for 90 days while they sort out permanent terms. Tariffs on Chinese goods into the US will drop from 125% to 30%, while tariffs on US goods into China will come down from 125% to 10%. Stocks are ripping higher, crude oil is up nearly 4% while safe havens like bonds and gold are under pressure. Morgan Stanley’s Michael Wilson isn’t convinced this is enough to see a sustained move higher. While clarity on trade is important, two other factors are necessary. “The other two items on our checklist — a more dovish Fed and the 10-year yield below 4% without recessionary data — have yet to materialize,” wrote Wilson’s team. Still, the rally in the futures mean the S&P 500 is poised to go back to where it was before the tariffs were announced while the NASDAQ 100 is poised to re-enter a bull market thanks to a rally in the Magnificent 7. The sell-off in gold (-3.5%) could crimp the TSX today as comes off a 5-week hot streak of gains (the longest since October 2024). However, oil has been the comeback kid with the price of crude up more than 8% since OPEC+ announced they were going to increase supply. The counterintuitive move higher has been reflected in oil producers with shares of the group up 8% since last Monday.
Warm embrace: Shopify (+11%) is getting swept away in the tech rally this morning in addition to the news that it will be added to the Nasdaq 100. It’s a monumental moment for the Canadian tech company, not just because hundreds of billions of passive money is indexed to the NASDAQ 100 and the company could see a huge influx of passive buying. But, it also marks the first time since Blackberry that a Canadian tech company has been part of the vaunted index. The only other Canadian company part of the index right now is retailer Lululemon. Shopify, which gets most of its revenue in the US and has about 2/3 of its investor base in the US, has been making deliberate moves that could eventually see it included in the S&P 500.
Prescription for the pain: Pharma stocks in the US are being left out of this morning’s trade enthusiasm after US President Donald Trump said he would sign an executive order this morning aimed at lowering the cost of prescription drugs. The details are scant but the plan involves ensuring that US drug prices are tied to what other countries pay for the same drugs. Drug prices outside of the US tend to be lower because a single-payer healthcare system negotiates the deals. Shares of Pfizer, AbbVie, Gilead, Merck, and Eli Lilly just to name a few are all down in the pre-market.
Notable call: Air Canada could trade higher today after RBC upgraded the stock to Outperform. Air Canada reported results last week and RBC’s James McGarragle says the results demonstrated that the company is navigating a significant drop in transborder demand “effectively.” “Key for us is that we expect Q1 performance to drive a re-rate in the shares,” wrote McGarragle in the upgrade, “and have therefore increased our target multiple to 4x (from 3.3x), a premium versus historical given solid performance in a tough backdrop.”
Beyond the base: Shares of Hudbay are surging 8% in the pre-market after profit came in well above expectations on the back of higher gold and copper production. A combination of higher gold production and higher gold prices helped to drive costs down much more than analysts were anticipating. “We expect a positive reaction to Hudbay’s Q1 results,” wrote RBC’s Sam Crittenden.
