HEADLINES

Economy Ticks Along After GDP Grew 0.5% in April

Canada's economy emerged from a rough winter on firmer footing, springing back to growth with a slight rise in activity last month on the heels of the strongest growth in nine months in April.

The rebound puts the economy on track to resume growing this quarter, following back-to-back contractions that raised concerns the country might be on the brink of recession.

Industry-level gross domestic product rose 0.5% from the month before in April, and Statistics Canada's advance data indicates output ticked up a further 0.1% in May.

Pressure Eases on Bank of Canada to Cut Rates With April's Solid GDP Report

April GDP Shows Canada Faced 'False Alarm' on Recession Watch

Positive Canada GDP Data Marred By Prospect of Permanent Trade Uncertainty

Alberta to Unveil This Weeks Plan for New Crude Pipeline

The oil-rich Canadian province of Alberta intends to unveil this week its proposal for a new pipeline designed to carry about 1 million barrels of crude oil a day to the Pacific Coast.

Alberta Premier Danielle Smith had previously said the province would submit to federal officials by Wednesday, or July 1, its plan for a new energy corridor, and she tries to capitalize on Prime Minister Mark Carney's eagerness to both position Canada as an energy superpower and sell more goods to non-U.S. markets.

A spokesman for Smith said the province would share its new details on Thursday. The spokesman provided no further details, such as whether Smith was able to find private-sector investors to back the project.

Carney Pushes Environmental-Policy Pivot Amid Energy Uncertainty

Great-West Lifeco Buys Milliman's Retirement Plan and Benefits Admin Business for $340 Million

Great-West Lifeco is buying actuarial and consulting firm Milliman's retirement plan and benefits administration business for $340 million, a move that will add about $130 billion in client assets and 1.5 million plan participants.

The Canadian financial services company said its Empower wealth management subsidiary reached a definitive agreement to buy the operations from Milliman to strengthen its ability to compete across a range of retirement products by bringing a defined-benefit platform in-house.

With the acquisition, Empower's workplace platform will expand to $2 trillion in client assets on a pro forma basis, with 21 million participants.

Conduent to Sell Tolling Business to Quarterhill for $70 Million

Conduent said it agreed to sell its tolling business to Quarterhill for $70 million in cash.

Quarterhill shares rose 39.5% to C$2.40 in Toronto.

As part of the transaction, digital business-solutions provider Conduent would receive a 7% interest in Quarterhill, a Toronto provider of intelligent transportation systems. Conduent would also get registration rights and board observer rights.

Quarterhill said that, following the acquisition, it and the tolling business--which provides end-to-end tolling solutions for government transportation agencies--would together have approximately $2 billion of combined backlog. Quarterhill also expects the transaction to roughly triple its tolling revenue.

ADF Shares Surge on New U.S. Steel Contracts

ADF Group's shares rallied after the Canadian company lined up C$127 million of new contracts for various steel structures and heavy steel components.

Shares jumped 13.7% to C$17.11.

The new contracts are each in the U.S., with the largest in value for the fabrication of a large surface building in the Midwest region.

The other projects include a contract for the fabrication of various steel structures and heavy steel components as part of a project to rehabilitate transportation infrastructure in a major metropolis area in the Great Lakes region, ADF said, as well as contractual changes to a deal announced in recent months.

Canada Farmers Planting Fewer Acres of Wheat But More Canola, Soybeans

Canadian farmers planted more acres of canola and soybeans for this year but less wheat.

Planting has been slower than normal on the Canadian prairies but was largely complete by the end of May, while seeding in central Canada progressed at a normal pace despite wetter than usual conditions in some areas, Statistics Canada said Tuesday.

Provincial crop reports indicate seeding in Alberta began later than usual, though it was largely in line with the average by end-May, while in Saskatchewan planting rose significantly toward the end of May yet remained behind five- and 10-year averages, the data agency said. Manitoba farmers saw a slow start but were able to finish seeding in line with historical averages.

China to Impose Antidumping Duty on Canadian Pea Starch

TALKING POINT

Gold is on the Verge of a 'Death Cross' That Could Surprisingly Foreshadow Gains

By Myra P. Saefong, MarketWatch

Gold's stunning climb to record highs in January caught many investors off guard - as did its more than 20% plunge during the Iran war. Now, the precious metal has reached "death cross" territory.

Investors tend to keep a close eye on death crosses, which occur when an asset's short-term 50-day moving average crosses below its long-term 200-day counterpart. Their formation in markets often suggest further price declines lurk on the horizon.

A death cross in gold could spell further trouble for the battered asset because it could "trigger trading from programmed algorithms, and lead to additional selling," said Chris Gaffney, president of World Markets at EverBank.

In other words, gold tripping that technical level could prompt prices to fall even further as some traders use the indicator as a signal to sell. However, Gaffney told MarketWatch that the latest pullback in gold might simply reflect the market reaction to the U.S.-Iran cease-fire agreement announced about two weeks ago, which trigged a drop in oil prices.

Gold was propelled to record highs this year by a powerful mix of individual speculators and robust central-bank buying, with one group looking to profit from the upswing in gold prices and the other looking to diversify its dollar reserve holdings. That worked until the Iran war threw a wrench in gold's momentum, with rising oil prices raising worries about inflation and expectations for Federal Reserve interest-rate hikes. Progress on ending the conflict could be another pivotal moment for gold.

"The death crossover sounds scary, but it is merely a reflection of what has been happening to gold prices over the past few months," Fawad Razaqzada, market analyst at FOREX.com, told MarketWatch.

More often than not, gold death crosses in recent years have actually led to gains for prices in the months that followed, according to analysis by Dow Jones Market Data.

Still, the last few months of losses have left gold on the verge of another death cross, its first since 2023. As of Monday's settlement, gold futures had dropped about 23% from Feb. 27, the last trading day before the start of the Iran war. Prices are trading roughly 7% lower year to date, and are on track to post a nearly 14% loss for the quarter. That would be gold's worst quarterly performance since the second quarter of 2013.

Gold's 50-day moving average was $4,474.16 an ounce on Tuesday, slightly above its 200-day moving average of $4,471.53.

When the short-term moving average moves above a long- term counterpart, some technical traders would rather sell into the rallies than buy the dips, Razaqzada at FOREX.com noted.

"This may mean increased selling pressure in the near term, but this has no impact on the longer-term direction of gold, which is driven by fundamentals," he said.

Gold's kryptonite

It's been a wild year in markets, with hot parts of the stock market surging and oil prices now back down near $70 a barrel - defying even President Trump's initial expectations upon the start of the U.S.-Israel war against Iran in late February.

Yet persistent inflation, which has kept interest rates elevated, along with a stronger U.S. dollar have led to lower prices for gold, said Edward Egilinsky, head of global sales, distribution and alternatives at Direxion. U.S. bonds became a more attractive "flight-to-safety" option for investors, as elevated yields offered returns that gold does not provide, he said.

The short-term 2-year Treasury yield was at 4.13% on Tuesday, off its recent 4.28% peak but still well above the 3.75% upper limit of the Federal Reserve's policy range. That points to the elevated risk of Fed rate hikes under new Fed Chair Kevin Warsh.

Gold on Monday was almost 25% below its record-high settlement of $5,354.80 on Jan. 29.

The Iran conflict is a "perfect paradox," said Adam Koos, president and portfolio manager at Libertas Wealth Management Group.

"Geopolitical tension should drive safe-haven buying, but when it spikes oil, it stokes inflation, which pushes the Fed to tighten - and that's gold's kryptonite," he said, referring to gold's weakness. Gold is nonyielding, so rising real rates and a stronger dollar are direct headwinds, Koos noted.

Gold through past death crosses

Death crosses can suggest losses to come for some assets - but that's not necessarily the case when it comes to gold's past performance, particularly since 2016, as the below chart shows.

Dow Jones data over the past 45 years suggest a mixed picture for gold prices following a death cross, but with the trend mostly positive three, six and 12 months later in the past decade.

Further analysis of the 28 death crosses for gold since January 1981 shows that the most active gold contract, one month after hitting that technical mark, has actually climbed 57% of the time. Six months later, prices were up 57% of the time, and one year later, they were up 46% of the time.

History isn't clear when it comes to suggesting what might happen next. A death cross in 2022 preceded a slide in prices, but in 2023, a death cross reversed within weeks, said Koos. The technical indicator for gold doesn't necessarily mean that a bearish trend for prices is on tap, he added.

Instead, EverBank's Gaffney thinks gold is experiencing a correction and "not the beginning of a new negative trend." This is a "good time for investors to be adding to their portfolios," he said.

"Historically high debt levels, higher inflation and continuing global uncertainty all make a good case for gold," Gaffney added.

Meanwhile, a death cross often confirms a trend that already existed, said Koos. It's like "announcing at halftime that the team is losing," he noted. "The crowd already knew."

The outlook for gold this time might actually be quite promising. Central banks are still buying at historically elevated levels, said Koos. That was key gold's climb to record highs earlier this year, and 45% of the global central-bank managers who responded to a survey conducted by the World Gold Council said they expect their own gold reserves to increase over the next year.

Yet for gold to see price moves higher, according to Koos, the Fed likely needs to pivot away from considering rate hikes, the U.S. dollar would need to soften and demand for the gold-backed SPDR Gold Shares exchange-traded fund needs to return.

When those factors align, perhaps late this year or into 2027, "gold could have the legs to run," he said. For now, "it's a patience game, but not a panic game."

Expected Major Events for Wednesday

00:30/JPN: Jun Japan Manufacturing PMI

05:00/JPN: Jun Consumer Confidence Survey

05:00/JPN: Jun Auto sales

06:00/UK: Jun Nationwide House Price Index

06:00/RUS: Jun Russian Manufacturing PMI

07:45/ITA: Jun Italy Manufacturing PMI

07:50/FRA: Jun France Manufacturing PMI

07:55/GER: Jun Germany Manufacturing PMI

08:00/ITA: 1Q General Government Quarterly Accounts

08:30/UK: Jun S&P Global UK Manufacturing PMI

08:30/UK: Jun Narrow money (Notes & Coin) and reserve balances

09:30/US: Jun Challenger Job-Cut Report

11:00/US: 06/26 MBA Weekly Mortgage Applications Survey

12:15/US: Jun ADP National Employment Report

13:45/US: Jun US Manufacturing PMI

14:00/US: Jun ISM Report On Business Manufacturing PMI

14:00/US: May Construction Spending - Construction Put in Place

14:00/US: May Metropolitan Area Employment and Unemployment

14:30/US: 06/26 EIA Weekly Petroleum Status Report

15:00/US: Jun Global Manufacturing PMI

20:00/US: Jun Domestic Auto Industry Sales

23:50/JPN: Jun Monetary Base

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Wednesday

Bassett Furniture Industries Inc (BSET) is expected to report $0.20 for 2Q.

BitMine Immersion Technologies Inc (BMNR) is expected to report for 3Q.

Culp Inc (CULP) is expected to report $0.23 for 4Q.

Factset Research Systems Inc (FDS) is expected to report $3.90 for 3Q.

Franklin Covey Co (FC) is expected to report $0.27 for 3Q.

General Mills Inc (GIS) is expected to report $0.81 for 4Q.

Greenbrier Cos Inc (GBX) is expected to report $0.62 for 3Q.

MSC Industrial Direct Co - A Share (MSM) is expected to report $1.26 for 3Q.

Richtech Robotics Inc (RR) is expected to report $-0.06 for 2Q.

Strata Skin Sciences Inc (SSKN) is expected to report for 1Q.

UniFirst Corp (UNF) is expected to report $1.88 for 3Q.

VivoSim Labs Inc (VIVS) is expected to report for 4Q.

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This article is a text version of a Wall Street Journal newsletter published earlier today.