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Global growth worries push Canada’s TSX lower for fourth day

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TSX extended losses for the fourth straight session on Tuesday, with the main TSX index hitting a one-week low as domestic and global economic data raised concerns about a slowing recovery.

The Toronto Stock Exchange’s S&P/TSX composite index fell 0.5% to 20,390 in morning trade.

Losses were broad-based, with healthcare, industrial, consumer discretionary and materials sectors all falling between 0.6% and 1.5%.

Wall Street’s main indexes tumbled almost 1% after data showed U.S. retail sales fell more than expected in July as shortages weighed on purchases of motor vehicles. [.N]

Meanwhile, commodity prices remained under pressure as investors feared a hit to demand due to a spike in COVID-19 cases in the United States and several Asian economies.

“With the resurgence of COVID around the world, especially in the United States and even to a lesser degree in Canada, we’re seeing the reopening stocks start to pull back,” said Allan Small, senior investment adviser at Allan Small Financial Group.

“This whole notion of reopening trade is being called into question.”

Data showed Canadian housing starts fell 3.2% in July, compared with the previous month, as a drop in multiple urban starts outweighed an increase in single-detached urban ones.

On investors’ radar will be the domestic inflation data due on Wednesday, which will be perused for clues on the Bank of Canada‘s policy outlook.

Hopes of a steady economic recovery and strength in corporate earnings pushed Toronto stocks to record highs just last week, with energy and financial stocks among the biggest drivers this year.

HIGHLIGHTS

* Westshore Terminals Investment Corp jumped 3.3% to the top of the TSX after the marine port service provider’s subsidiary entered into a conditional agreement to provide services to BHP Canada Inc.

* Lithium miner Lithium Americas Corp fell 4.3% to the bottom of the TSX.

* The TSX posted seven new 52-week highs and two new lows.

* Across all Canadian issues there were 31 new 52-week highs and 16 new lows, with total volume of 30.82 million shares.

* On the TSX, 46 issues were higher, while 174 issues declined for a 3.78-to-1 ratio to the downside, with 16.44 million shares traded.

 

(Reporting by Amal S and Sruthi Shankar in Bengaluru and Sriraj Kalluvila)

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A Key Indicator Shows Weakness In China’s Economy – Forbes

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You’d think from the official statistics that China’s economy was on fire. But a key metric indicates there could be trouble ahead for the second largest economy.

On the one hand the Chinese economy is said to have grown at almost 8% in the quarter through July, according to government data. That’s pretty impressive growth even for an emerging market economy like China.

Soft Steel in China

But on the other hand, more recent data shows a troubling weakness in the country’s steel production. It fell 13.2% in August versus the same month a year ago, according to data from the World Steel Association. That really matters because China produces more than half the world’s steel — or almost a billion metric tons in 2019 — much of which is used in the country’s manufacturing and construction industries. In other words, a weakness in steel production is tantamount to an indication of softness in China’s manufacturing and construction base.

Worse, still China is the only country int he top 10 steel producers to see a decline in steel output over the same period. Japan, the U.S. and Brazil all saw double digit increases, according to the World Steel Assn. data.

Deja Vu All Over Again?

I wrote about a more dramatic Chinese steel production slowdown in June 2015, arguing at the time that it likely augured bad economic news for the communist country. Sure enough in August 2015 poor economic news emerged from China sending global markets crashing.

For that reason, investors might want to be cautious about holding stocks with exposure to China such as those in the iShares MSCI China ETF

MCHI
. It’s already down 7% over the year through Friday, according to data from Yahoo.

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Quebec mulling additional support measures for economy: Pierre Fitzgibbon – Montreal Gazette

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The economy minister was in Montreal to introduce projects to brighten up downtown and lure office workers back.

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Quebec will consider unlocking fresh sums to support economic expansion and ensure businesses in downtown cores can survive the pandemic, Economy Minister Pierre Fitzgibbon said.

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Finance minister Eric Girard “is going to do an economic update in November, and we’re working now to see what other programs across all ministries we could tap to continue the relaunch of the economy,” Fitzgibbon said Friday in an interview in Montreal on the sidelines of a business event.

“Perhaps there are other sums out there that we can obtain. The government is quite open to this because all in all, public finances are in a good situation.”

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Quebec on Friday reported a $359-million deficit for the three-month period ended June 30. That’s a 92-per-cent improvement over the $4.74-billion shortfall reported in the same quarter a year ago — right at the start of the pandemic.

Real gross domestic product in Quebec expanded at an annualized rate of 3.4 per cent in the second quarter, topping its pre-pandemic level with the help of strong domestic demand, the provincial statistics institute said Thursday. Investment in machinery and equipment, household consumption and residential construction all posted gains.

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By contrast, GDP for Canada as a whole contracted 1.1 per cent on an annualized basis.

Despite the broad economic rebound, some sectors — such as commercial real estate — are struggling.

Office vacancies in downtown Montreal rose to 13.2 per cent in the third quarter, real-estate firm CBRE said Thursday. That’s the highest level since the fourth quarter of 2004.

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Fitzgibbon was in town Friday at a Chamber of Commerce of Metropolitan Montreal event to introduce eight creative projects selected to brighten up downtown Montreal and lure office workers back.

Provincial financing for the initiative totals $3.1 million, part of a $23.5-million aid package for Montreal’s central business district that was announced in March. All told, Quebec set aside $75 million to help rekindle economic activity in downtown cores across Quebec.

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“The Montreal economy accounts for 57 per cent of Quebec’s GDP, and we cannot let it down,” Fitzgibbon said. “If more money is required, we will do it. At this time, I don’t think we’ll have an issue with money. There are other programs for innovation or creativity that we can put to work. We can take money elsewhere to achieve the same thing.”

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COVID-19 has deprived downtown Montreal of much of its office worker population in the past 18 months. Plans to bring back employees this autumn have recently been put on hold as a fourth wave sweeps across Quebec.

In fact, teleworking’s enduring popularity probably means downtown cores will never be as busy as they were before the pandemic, according to Fitzgibbon.

“We have to admit that many companies are going to favour teleworking, even after health restrictions have been lifted, for reasons such as family-work balance,” the minister said. “That will be a reality.”

And with several downtown-based employers having opened satellite offices in suburbs such as Brossard or Laval during the pandemic, “perhaps we will never have the same density that we had before,” he said.

ftomesco@postmedia.com

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Bahrain to Double VAT as Economy Recovers from Pandemic – BNN

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(Bloomberg) — Bahrain will double value-added tax to 10% in an effort to boost revenues and curb one of the Gulf’s widest budget deficits as the economy begins to recover from the pandemic, according to an official close to the government. 

The Gulf country decided to raise VAT following a comprehensive spending and revenue review, the official told Bloomberg, as the government looks for ways to rebalance its finances without undermining an economy in recovery mode.

Bahrain is under fiscal strain despite a $10 billion bailout package pledged by its wealthier neighbors in 2018. Last year, it said it was putting some of its reform efforts on hold to focus on helping the economy cope with the double shock of Covid-19 and a fall in oil prices. 

Bahrain Puts Economic Recovery Ahead of Boosting Budget Revenue

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