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CMHC expects lower demand for housing as economy takes COVID-19 hit – Yahoo Canada Finance

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CMHC expects uneven and uncertain recovery in country's housing market

OTTAWA — Canada’s housing market is headed into a period of “severe declines” in sales and construction, but the full effect of COVID-19 on real estate is far from certain at this point, according to a new report by the Canada Mortgage and Housing Corp.

CMHC deputy chief economist Aled ab Iorwerth described an uneven recovery that will “vary considerably” across different parts the country, and urged that forecasts be taken in the context of an “extreme uncertainty” that lies ahead.

Average home prices in Toronto, Montreal and Ottawa are expected to rebound sooner, starting in late 2020 and rolling into early 2021. Prices in Vancouver, Edmonton and Calgary may not bounce back until later in the forecast period, the report said.

Calgary and Edmonton will see average home prices decline due to uncertainty around oil prices and economic recovery in the region.

Volatile factors, such as a potential second wave of the virus, higher unemployment and the pace of an economic recovery, could influence the direction of the housing market in the coming months, ab Iorwerth explained.

“We are still at the early stage of understanding the impact of COVID-19 on the economy in general, and on the housing market in particular,” he said on Tuesday in a conference call.

“Limited data availability means we will remain in the zone of considerable uncertainty.”

He said the CMHC is relying on its own housing market outlook from late May as its central forecast for the coming months. It expects the housing market likely won’t see a return to pre-pandemic levels before the end of 2022.

Greater cultural shifts may also affect the speed of recovery, he said, and many of those developments are so recent that they’re hard to fully comprehend or quantify.

Cities which lend themselves to industries that allow for working from home, could prove to make those regions “more resilient,” which could have ripple effects on housing, ab Iorwerth said.

“We do not yet have a grasp on the answers to questions, such as the impact of greater work from home, differing impacts across industries, the effect of less mobility across provincial boundaries and the decline in immigration following cutbacks and international aviation,” he added.

There are also substantial questions about how rental markets will be affected.

He noted that a decline in immigration and interprovincial activity will lower demand for rental units, which combined with a “significant new supply in rental properties close to being completed,” could mean that vacancy rates are likely to jump.

“Such increases in vacancy rates, however, will be from historically low levels in Toronto and Vancouver, in particular,” he noted.

Earlier this month, CMHC reported the annual pace of housing starts, excluding Quebec, fell 20.4 per cent in May compared with April.

The Canadian Real Estate Association reported in May that home sales had their worst April in 36 years, with home sales falling 57.6 per cent from a year earlier to 20,630 sales for the month.

 

This report by The Canadian Press was first published June 23, 2020.

 

The Canadian Press

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Global stocks mixed after Wall St slips on economy worries – CTV News

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BEIJING —
European stock markets opened higher Friday while Asian prices followed Wall Street lower on worries economic recoveries might fade as coronavirus cases increase in the United States and some other countries.

London and Frankfurt gained in early trading and U.S. stock futures were lower. Shanghai, Tokyo, Hong Kong and Southeast Asia retreated a day after strong gains driven by the rise of U.S. tech stocks.

Global stock prices have recovered most of this year’s losses on optimism about a recovery from the coronavirus pandemic. But forecasters warn the rise might be too big and too fast to be supported by uncertain economic conditions.

“Stock markets just appear to be going through a consolidation phase in the run up to earnings season,” said Craig Erlam of OANDA in a report.

In early trading, the FTSE 100 in London gained 0.4% to 6,074.43 and Frankfurt’s DAX gained 0.4% to 12,544.91. The CAC 40 in France added 0.3% to 4,936.88.

On Wall Street, the future for the benchmark S&P 500 index rose 0.3%. That for the Dow Jones Industrial Average was 0.4% higher.

On Thursday, the S&P 500 index lost 0.6%. The Dow dropped 1.4%.

In Asia, the Shanghai Composite Index lost 1.9% to 3,383.32 and the Nikkei 225 in Tokyo shed 1.1% to 22,290.81. The Hang Seng in Hong Kong retreated 1.8% to 25,727.41.

The Kospi in Seoul lost 0.8% to 2,140.25 and Sydney’s S&P-ASX 200 declined 0.6% at 5,919.20. India’s Sensex lost 0.3% to 36,625.60. New Zealand, Jakarta and Bangkok retreated, while Singapore markets were closed.

On Thursday, three out of four stocks in the S&P declined. The biggest losers were oil companies, airlines and other stocks that are most heavily affected by a reopening and strengthening economy.

The Nasdaq composite, dominated by tech stocks that are seen as relatively resilient to the pandemic, added 0.5% to a record high.

“The market is concerned about the uptick in cases globally,” said Stephen Innes of AxiCorp. in a report. “Money is funneling into perceived safe areas of the market like tech, which should hold up broader indexes to a degree.”

U.S. government data showed 1.3 million workers filed for unemployment claims last week. That is down from 1.4 million the prior week and a peak of nearly 6.9 million in late March.

The improvements have helped validate investors’ optimism that the economy can recover as anti-virus controls are relaxed. That helped the S&P 500 rebound to within 7% of its record, after being down nearly 34%.

But economists point to a troubling slowdown in the pace of such changes, including moderating declines in the four-week average of jobless claims.

Investors are worried that worsening infection levels in the populous U.S. states of Florida, Texas and California could derail a recovery. Some states are rolling back their reopenings, while others are ordering people arriving from hotspots to quarantine.

Other countries including Brazil and South Africa also report rising case totals. Australia’s populous state of Victoria closed its border with neighbouring New South Wales this week to contain an outbreak.

In energy markets, benchmark U.S. crude lost 59 cents to $39.03 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, declined 50 cents to $41.85 per barrel in London.

The dollar declined to 106.81 yen from Thursday’s 107.95. The euro was little-changed at $1.1287.

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Asian stocks sink after Wall St losses on economy worries – CTV News

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BEIJING —
Asian stock markets followed Wall Street lower Friday on worries economic recoveries might fade as coronavirus cases increase in the United States and some other countries.

Benchmarks in Shanghai, Tokyo, Hong Kong and Southeast Asia retreated a day after strong gains driven by the rise of U.S. tech stocks.

Global stock prices have recovered most of this year’s losses on optimism about a recovery from the coronavirus pandemic. But forecasters warn the rise might be too big and too fast to be supported by uncertain economic conditions.

On Wall Street, the benchmark S&P 500 index lost 0.6% overnight.

“The market is concerned about the uptick in cases globally,” said Stephen Innes of AxiCorp. in a report. “Money is funneling into perceived safe areas of the market like tech, which should hold up broader indexes to a degree.”

The Shanghai Composite Index lost 1.2% to 3,408.93 and the Nikkei 225 in Tokyo shed 0.7% to 22,368.44. The Hang Seng in Hong Kong retreated 1.9% to 25,702.64.

The Kospi in Seoul lost 1.2% to 2,141.63 and Sydney’s S&P-ASX 200 declined 0.6% at 5,917.60. India’s Sensex opened 0.6% lower at 36,523.82. New Zealand, Jakarta and Bangkok retreated, while Singapore markets were closed.

On Wall Street, the S&P 500 declined to 3,152.05. The Dow Jones Industrial Average dropped 1.4% to 25,706.09.

Three out of four stocks in the S&P declined. The biggest losers were oil companies, airlines and other stocks that are most heavily affected by a reopening and strengthening economy.

The Nasdaq composite, dominated by tech stocks that are seen as relatively resilient to the pandemic, added 0.5% to a record 10,547.75.

U.S. government data showed 1.3 million workers filed for unemployment claims last week. That is down from 1.4 million the prior week and a peak of nearly 6.9 million in late March.

The improvements have helped validate investors’ optimism that the economy can recover as anti-virus controls are relaxed. That helped the S&P 500 rebound to within 7% of its record, after being down nearly 34%.

But economists point to a troubling slowdown in the pace of such changes, including moderating declines in the four-week average of jobless claims.

Investors are worried that worsening infection levels in the populous U.S. states of Florida, Texas and California could derail a recovery. Some states are rolling back their reopenings, while others are ordering people arriving from hotspots to quarantine.

Other countries including Brazil and South Africa also report rising case totals. Australia’s populous state of Victoria closed its border with neighbouring New South Wales this week to contain an outbreak.

In energy markets, benchmark U.S. crude lost 70 cents to $38.92 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, declined 63 cents to $41.72 per barrel in London.

The dollar declined to 106.94 yen from Thursday’s 107.95. The euro edged down to $1.1271 from $1.1286.

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Japan's economy to shrink at fastest pace in decades this fiscal year due to pandemic: Reuters poll – TheChronicleHerald.ca

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By Kaori Kaneko

TOKYO (Reuters) – Japan’s economy will shrink at the fastest pace in decades in the year through March 2021, forcing the government to compile another stimulus package to cushion the blow from the coronavirus pandemic, a Reuters poll showed on Friday.

Many respondents predicted the Bank of Japan’s (BOJ’s) next policy step would be to expand stimulus, but they do not see the pandemic triggering a banking sector crisis this year.

The world’s third-largest economy is forecast to contract 5.3% this fiscal year, a July 3-9 poll of over 30 economists shows, the most it has shrunk since comparable data became available in 1994.

It will rebound 3.3% next year, according to the poll.

The economy will grow at an annualised 10.0% pace in the current quarter of the calendar year 2020 after having shrunk 23.9% in the second quarter ended June, the poll shows.

“It would take two to three years for economic activity to return to normal levels in Japan as its overseas markets are likely to continue suffering from the spread of the virus,” said Atsushi Takeda, chief economist at Itochu Research Institute.

Two-thirds of economists polled expect Japan to compile its next stimulus package this year to ease the pain on companies and households. Japan has so far rolled out two packages totalling $2.2 trillion.

Arata Oto, market economist at Societe Generale Securities Japan, expects the next stimulus package to be worth about 1-2% of the country’s gross domestic product.

The package “would aim at accelerating Japan’s recovery … once there are more signs the pandemic is beginning to subside, or to help further cushion the blow from COVID-19 if the likelihood of a second wave heightens”, he said.

Globally, more than 12 million have been infected by the virus and over half a million people have died. In Japan, more than 21,000 people have been infected and over 900 killed.

Policy support for hard-hit firms should help counter worries about Japan’s financial system, over 90% of economists surveyed said.

Asked about BOJ’s next move, 26 of 40 economists said they expect it to expand its stimulus, with 18 saying it would happen this year and five predicting it would be next year.

At next week’s rate review, the BOJ is expected to roughly maintain its view the economy will gradually recover this year from the virus-led downturn, sources have said, even as fears of a second wave of infections cloud the outlook.

Japan’s core consumer prices, which exclude volatile fresh food but includes energy costs, will drop 0.4% this fiscal year and rise 0.3% next fiscal year, the latest poll showed.

(For other stories from the Reuters global long-term economic outlook polls package)

(Reporting by Kaori Kaneko; Polling by Daniel Leussink in Tokyo and Shaloo Shrivastava, Tushar Goenka and Manzer Hussain in Bengaluru; Editing by Leika Kihara and Himani Sarkar)

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