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Global bank crisis fears ease after billion-dollar lifelines

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Asian stock markets rise after moves to shore up confidence in troubled banks in Europe and the United States.

Fears of a global banking crisis have eased following the rollout of multi-billion-dollar lifelines for troubled lenders in Europe and the United States, with Asia’s stock markets rebounding from earlier lows.

Stocks rose in China, Japan, South Korea, Malaysia, Australia, the Philippines and Hong Kong on Friday, following gains on Wall Street after the largest US banks unveiled a $30bn lifeline for troubled regional lender First Republic Bank.

MSCI’s most representative index of Asia-Pacific shares excluding Japan climbed 0.9 percent, reversing earlier losses, while Japan’s Nikkei 225 rose by 0.5 percent.

China’s blue-chip index gained 0.8 percent, while Hong Kong’s Hang Seng jumped 1.2 percent.

Asian bank shares joined the gains, with the MSCI Asia Pacific Financials index climbing as much as 0.4 percent after earlier losses, Bloomberg reported.

Japanese banks including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group were among the big gainers, rising by as much as 2 percent, Bloomberg said.

“I would say all in all, central banks are ready. That’s why the markets are being calmer,” Alicia García-Herrero, chief economist for the Asia Pacific at Natixis in Hong Kong, told Al Jazeera.

“I don’t think we’ve averted a crisis, to be frank, I think it’s too early to say, but what I know is that especially the Fed, and I would say the Swiss National Bank, have reacted very quickly,” García-Herrero added.

Asian markets fell on Thursday amid concerns about the financial health of Credit Suisse and the fallout of Silicon Valley Bank’s (SVB) collapse stoked fears of a global banking crisis.

Financial authorities worldwide have been scrambling to prevent a financial crisis since last week’s sudden implosion of SVB, which failed after customers withdrew funds in response to steep losses the bank suffered from the sale of US government bonds.

Brian Levitt, a global strategist at Invesco, told the Reuters news agency that the market is focusing on smaller banks with specialty lending businesses. After SVB – which catered mainly to the tech industry – investors turned their attention to the next bank exposed to interest rate and specific credit risks.

“First Republic Bank, which has significant exposure to the coastal real estate markets, appears to be next on the list,” he said.

The California-based lender saw its stock price fall by more than 70 percent early in the week. But on Thursday, US stocks rose after 11 US banks – including Bank of America, Citigroup and JPMorgan Chase – announced they would deposit $30bn into First Republic.

“The actions of America’s largest banks reflect their confidence in the country’s banking system,” the banks said in a statement.

In Europe, markets were boosted by the European Central Bank’s decision to raise the benchmark interest rate by 0.5 percent amid concerns it could adopt a more hawkish stance.

Investors also welcomed the announcement that Credit Suisse, which has long been dogged by doubts over its financial health, would borrow up to 50 billion Swiss francs ($54bn) from Switzerland’s central bank to shore up confidence.

“Expectations that a financial crisis has been averted, at least for now, has exerted downside pressure on yields and depreciated the US dollar,” Carlos Casanova, senior economist for Asia at UBP in Hong Kong, told Al Jazeera.

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Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

The Canadian Press. All rights reserved.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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