Morning Markets for Monday, Feb. 23, 2026

Key Concepts

• Amara: Canadian energy company reporting weaker than expected Q4 results.
• Gilead Sciences: Acquiring Arsenal Biosciences for $7.8 billion to strengthen its oncology pipeline.
• Domino's Pizza: Exceeding Q4 revenue expectations with strong US sales and expansion.
• LoBlaw: Investing $2.4 billion in store expansion and supply chain improvements, focusing on discount banners.
• US Tariffs: Trump administration imposing new tariffs, impacting global markets and prompting EU response. KUZMA agreement provides some protection for Canada and Mexico.
• Puerto Vallarta Violence: Escalated violence following the death of a cartel leader, impacting tourism and travel.
• Canadian Bank Earnings: Preview of upcoming earnings reports, focusing on key factors like credit, capital markets, and wealth management.
• Critical Minerals & Mining: Discussion on demand, supply chain issues, and investment in the sector.

Market Overview & Corporate News (February 26, 2024)

The broadcast covered a range of market news, corporate earnings, and geopolitical factors impacting financial markets. Overall market sentiment was negative, with the TSX and major US indices experiencing declines driven by tariff uncertainty and tech sector weakness.

1. Corporate Earnings & Performance

• Amara: Reported Q4 results below analyst forecasts, attributed to underperformance in Nova Scotia Power, New Mexico Gas operations, and its Florida utility unit, Ramirez. Canadian electric utilities generally saw a profit decline year-over-year, despite revenue exceeding expectations.
• Gilead Sciences: Announced the acquisition of Arsenal Biosciences for approximately $7.8 billion (USD), paying $115 per share plus potential future sales-based payments. This acquisition aims to bolster Gilead’s oncology pipeline, specifically adding a promising cell therapy for multiple myeloma. Gilead is actively diversifying beyond its core antiviral medications.
• Domino's Pizza: Reported Q4 revenue of $1.5 billion (USD), surpassing analyst estimates and increasing by over 6% year-over-year. US same-store sales rose, with franchise locations outperforming company-owned stores. The company also demonstrated stronger store expansion. Shares were up approximately 2.8% during the broadcast.
• LoBlaw: Announced a $2.4 billion investment plan for 2026, encompassing the construction of 70 new stores, renovation of nearly 200 existing stores, and expansion of its supply chain capabilities. The plan includes new No Frills, Maxi, and Shoppers Drug Mart locations. Sylvain Charlebois (Dalhousie University) noted this investment is typical for LoBlaw, but the increased focus on discount stores (No Frills/Maxi) reflects adaptation to a more frugal consumer market. LoBlaw is optimizing supply chains, integrating Shoppers Drug Mart locations for synergies, and is expected to outperform key industry data in revenue. Charlebois highlighted that Canada isn’t an overstored market, but discretionary spending is tightening. Shares were up approximately 2% during the broadcast.

2. Geopolitical & Trade Concerns: US Tariffs & KUZMA

• Trump Tariffs: Following the Supreme Court’s decision, President Trump announced an increase in tariffs to 15% under Section 122. This move has fueled market uncertainty.
• KUZMA Agreement: The KUZMA agreement (Canada-United States-Mexico Agreement) currently provides Canada and Mexico with protection against these tariffs. However, the agreement is subject to review on July 1st, and the Trump administration has indicated potential investigations into trading partner policies, raising the possibility of future tariffs.
• EU Response: The European Union has suspended ratification of its trade deal with the US, seeking clarification on the new tariff program.
• Gavin Graham (Spire Wealth Management): Emphasized the importance of securing a deal with the US before KUZMA expires. He noted that while the current tariffs have limited direct impact on Canada due to KUZMA, the situation remains fluid. He also highlighted the surprising aspect of the Supreme Court ruling against Trump, demonstrating the US constitutional system is functioning.

3. International Situation: Puerto Vallarta Violence

• Cartel Violence: Following the death of a Jalisco New Generation Cartel leader (“El Mencho”) during a military operation, violence erupted in Puerto Vallarta and across the state of Jalisco. This resulted in road blockades, flight cancellations, and shelter-in-place orders.
• Travel Advisory: Global Affairs Canada advises Canadians to shelter in place, limit movements, and heed local authorities. Air Canada and WestJet have cancelled flights to Puerto Vallarta.
• Scott Hurst (CTV News): Reported on the impact on Canadian tourists and residents, emphasizing the volatile security situation.

4. Canadian Banking Sector Preview

• Upcoming Earnings: Canadian banks will begin reporting earnings this week, starting with Scotiabank.
• Matthew Lee (Canaccord Genuity): Anticipates a favorable earnings environment due to strong capital markets, wealth management performance, and relatively benign credit conditions. He noted that loan growth is currently lagging.
• Bank Specific Outlooks:
  • Bank of Montreal (BMO): Lee highlighted BMO’s improving Return on Equity (ROE) and potential for growth through US banking operations.
  • Bank of Nova Scotia (Scotiabank): Lee believes Scotiabank’s restructuring is progressing well, with potential for growth in international markets.
  • CIBC: Lee has a “Hold” rating on CIBC due to its valuation, despite strong execution.
  • National Bank: Also rated “Hold” due to valuation concerns.
  • Royal Bank: Lee maintains a “Buy” rating on Royal Bank, citing its strong performance and execution.
  • TD Bank: Lee also has a “Buy” rating on TD Bank, noting its strong market position and positive developments.

5. Metals & Mining Sector

• BMO Conference: BMO Capital Markets is hosting its 34th Annual Metals and Mining Conference, bringing together industry leaders and investors.
• Darryl Whyte (BMO CEO): Emphasized the importance of the conference given the confluence of forces driving demand for critical minerals, particularly related to AI and global resilience.
• Tariff Impact: Whyte noted that the market has largely priced in tariff uncertainty.
• Investment & Consolidation: He highlighted increased investor confidence and a trend towards consolidation in the sector.
• Government Intervention: Whyte discussed the potential for government intervention to expedite permitting and support domestic production.

Conclusion

The broadcast painted a picture of a complex and uncertain economic landscape. While some companies (Domino’s, LoBlaw) are demonstrating resilience, broader market concerns surrounding US tariffs, geopolitical instability (Puerto Vallarta), and potential economic slowdowns are weighing on investor sentiment. The Canadian banking sector is poised for a strong earnings season, but valuations remain a key consideration. The metals and mining sector is experiencing increased demand and investment, but faces challenges related to supply chain constraints and regulatory hurdles.