Connect with us

Economy

Economy seen strong in first quarter, but impact of third wave looms

Published

 on

By Julie Gordon

OTTAWA (Reuters) –Canada‘s economy likely grew by 6.5% on an annualized basis in the first quarter, Statistics Canada said on Friday, though economists warned that the current third wave of COVID-19 infections will weigh in the second quarter.

In a preliminary estimate, Statscan said the economy likely grew by 0.9% in March from February. In February, the economy expanded 0.4%, a 10th consecutive monthly gain, on a rebound in retail trade and on the strength of residential construction.

That was slightly below analyst estimates that gross domestic product would grow by 0.5% in February from January.

The gains, as some controls were eased between the second and third waves of COVID-19 virus spread, put Canada‘s first-quarter GDP growth in line with the U.S., said economists. This despite more restrictions and a slower vaccine rollout.

By March, economic activity was likely only about 1% below pre-pandemic levels, Statscan said. But lockdowns imposed in April to curb a another surge in COVID-19 infections will weigh in the coming months.

“Much if not all of the recent progress in non-essential high-contact services industries will likely be reversed during this third wave,” said Royce Mendes, senior economist at CIBC Economics, in a note.

“We’ll have to wait and see how much pain will be inflicted by this latest rise,” he added.

Still, the strength of February and March, where activity rebounded from restrictions imposed in December to deal with the second wave, show how quickly the economy can bounce back.

“The solid performance of many sectors through the winter suggest that any setback in April will likely be quickly recouped in future months,” said Doug Porter, chief economist at BMO Economics, in a note.

The Bank of Canada said last week that it now expects the Canadian economy to grow by 6.5% in 2021 and signaled it could start hiking interest rates as soon as late 2022.

The Canadian dollar held near an earlier 3-year high of 1.2266 per U.S. dollar, or 81.53 U.S. cents, up 0.1% on the day.

(Reporting by Julie Gordon in Ottawa, Additional reporting by David Ljunggren and Fergal Smith; editing by Jason Neely, Steve Orlofsky and Louise Heavens)

Economy

Toronto Stock Exchange futures point to lower open as crude weakens

Published

 on

Toronto Stock Exchange

Futures for Canada‘s main stock index fell on Monday, tracking weakness in crude prices, while sentiment across global markets was subdued on inflation pressures.

Brent crude and U.S. West Texas Intermediate (WTI) crude were both down 0.17%. [O/R]

June-quarter futures on the S&P/TSX index were down 0.48% at 7:00 a.m. ET.

Securities Foreign data for March is due at 8:30 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX composite index ended 1.21% higher at 19,366.69 on Friday.

Dow Jones Industrial Average e-mini futures were down 0.39% at 7:00 a.m. ET, while S&P 500 e-mini futures had lost 0.34% and Nasdaq 100 e-mini futures were down 0.38%.

TOP STORIES [TOP/CAN]

Canada‘s Centerra Gold said on Sunday it had initiated binding arbitration against Kyrgyzstan government, after the parliament passed a law allowing the state to temporarily take over the country’s biggest industrial enterprise, the Kumtor gold mine operated by Centerra.

ANALYST RESEARCH HIGHLIGHTS [RCH/CA]

Bombardier: ATB Capital Markets raises to “speculative buy” from “sector perform”

Pan American Silver: National Bank of Canada raises to “outperform” from “sector perform”

SNC-Lavalin Group Inc: RBC raises target price to C$40 from C$33

COMMODITIES AT 7:00 a.m. ET

Gold futures: $1,850.4; +0.67% [GOL/]

US crude: $65.27; -0.17% [O/R]

Brent crude: $68.59; -0.16% [O/R]

U.S. ECONOMIC DATA DUE ON MONDAY

0830 NY Fed Manufacturing for May: Expected 23.90; prior 26.30

1000 NAHB Housing Market Index for May: Expected 83; prior 83

FOR CANADIAN MARKETS NEWS, CLICK ON CODES:

TSX market report [.TO]

Canadian dollar and bonds report [CAD/] [CA/]

Reuters global stocks poll for Canada

Canadian markets directory

($1= C$1.21)

 

(Reporting by Amal S in Bengaluru; Editing by Vinay Dwivedi)

Continue Reading

Economy

Britain’s pension fund USS invests 225 million euros in Spanish renewables

Published

 on

British private pension fund Universities Superannuation Scheme (USS) said on Monday it has invested 225 million euros ($273 million) to take a 50% stake in Bruc Energy, which develops renewable energy projects in Spain and Portugal.

The inflow of cash into renewables in the Iberian peninsula is an encouraging sign for the industry after recent setbacks.

Renewable power group Opdenergy shelved an initial public offering two weeks ago citing “unstable conditions in markets” and shares of rival Econener plummeted 15% on their first day of trading a few days earlier.

Bruc Energy, which was created in Spain by Canadian pension fund OPTrust and Spanish businessman Juan Bejar, is planning to develop solar projects in Spain and Portugal for a total potential capacity of 4,000 megawatts.

“The long-term nature of solar and the steady returns make renewables attractive to a pension scheme needing to pay pensions for years to come”, Gavin Merchant, USS’s co-head of direct equity, said in a statement.

The transaction was advised by Royal Bank of Canada (RBC), Greenhill and Nomura.

($1 = 0.8229 euros)

 

(Reporting by Cristina Galán, editing by Inti Landauro and Emelia Sithole-Matarise)

Continue Reading

Economy

Canadian dollar moves to extend weekly win streak as oil rebounds

Published

 on

Canadian dollar

The Canadian dollar strengthened against its U.S. counterpart on Friday and was on track for its seventh straight weekly gain as oil prices rose and domestic data added to evidence of robust economic growth in the first quarter.

Canadian factory sales rose 3.5% in March from February, led by the motor vehicle, petroleum and coal, and food product industries, while wholesale trade was up 2.8%, Statistics Canada said.

The price of oil, one of Canada‘s major exports, reversed some of the previous day’s sharp losses as stock markets strengthened, though gains were capped by the coronavirus situation in major oil consumer India and the restart of a fuel pipeline in the United States.

U.S. crude prices rose 1.2% to $64.61 a barrel, while the Canadian dollar was trading 0.6% higher at 1.2093 to the greenback, or 82.69 U.S. cents, moving back in reach of Wednesday’s 6-year peak at 1.2042.

For the week, the loonie was on track to gain 0.3%. It has climbed more than 5% since the start of the year, the biggest gain among G10 currencies, supported by surging commodity prices and a shift last month to a more hawkish stance by the Bank of Canada.

Still, BoC Governor Tiff Macklem said on Thursday if the currency continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy.

The U.S. dollar fell against a basket of major currencies, pressured by a recovery in risk appetite across markets after Federal Reserve officials helped calm concerns about a quick policy tightening in response to accelerating U.S. inflation.

Canadian government bond yields were lower across much of a flatter curve, with the 10-year down 2 basis points at 1.549%. On Thursday, it touched its highest intraday in eight weeks at 1.624%.

 

(Reporting by Fergal Smith; Editing by Nick Zieminski)

Continue Reading

Trending