Global equity markets edged lower on Monday, though supported by U.S. shares hitting new highs, while Treasury bond yields eased and the dollar was little changed as investors awaited jobs data that could sway Federal Reserve monetary policy.
MSCI’s all country world index, which tracks shares across 50 countries, fell 0.1%, as markets in Europe fell. But fresh highs by the S&P 500 and the Nasdaq offset the declines in the major French, German and UK bourses because the global index is U.S.-centric.
Weaker-than-expected U.S. inflation and news of a possible bipartisan U.S. infrastructure agreement boosted risk appetite as the week opened. The infrastructure plan is valued at $1.2 trillion over eight years, of which $579 billion is new spending.
The plan is less than the White House’s initial proposal, but the total amount is likely to be greater than Republicans’ initial figure and may lead Congress to spread the initiative across two bills, said Solita Marcelli, UBS’ chief investment officer for the Americas for its global wealth management division.
While that could provide a tailwind for the reflation trade, Marcelli said “(the spending) will be spread out over a multi-year period, and tax increases could be part of the mix. So the stimulative impact on markets overall may not be very large.”
Stock markets across the world rebounded last week, but growing concern about the spread of the Delta variant of the COVID-19 virus, particularly in Asia, took some shine off on Monday.
Indonesia is battling record-high cases, Malaysia is set to extend a lockdown and Thailand has announced new restrictions.
European stocks, as measured by the pan-European STOXX 600 index, closed down an unofficial 0.53%, still near record highs. Germany’s DAX fell 0.34%, while France’s CAC 40 slid 0.89% and Britain’s FTSE 100 index dipped 0.88%.
Travel and leisure stocks took a particular hit, with the region’s sectoral index falling to a one-month low.
On Wall Street, the Dow Jones Industrial Average fell 167.9 points, or 0.49%, to 34,265.94, the S&P 500 gained 2.4 points, or 0.06%, to 4,283.1 and the Nasdaq Composite added 99.23 points, or 0.69%, to 14,459.62.
Canada’s Toronto Stock Exchange’s S&P/TSX composite index hit an all-time high of 20,273.6 early on Monday. It later erased those gains, as the energy sector fell 2.5% on the lower price of oil.
Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.16 points or 0.02 percent, to 703.61. Australian shares slipped 0.1%. Japan’s Nikkei and South Korea’s benchmark KOPS were barely changed.
Chinese shares were a touch higher, with the CSI300 index up 0.2%. Data over the weekend showed profit growth at China’s industrial firms slowed again in May, as surging raw material prices squeezed margins and pressured factory activity.
Investors will keep a close eye on official factory activity from China due on Wednesday. The manufacturing reading is expected to slow to 50.7 from 51. The private sector Caixin Manufacturing PMI will follow later in the week.
Oil prices slipped on Monday after hitting more than 2-1/2 year highs early in the session, hurt by the spike in COVID-19 cases in Asia ahead of this weeks OPEC+ meeting. [O/R]
Brent crude settled down $1.50, or 1.97%, at $74.68 a barrel. U.S. crude was last down $1.12, or down 1.51%, at $72.93 per barrel.
On Friday, a closely-watched U.S. jobs report, which could point to strong labor demand, will be released for June.
Yields for benchmark 10-year U.S. Treasuries fell, last down 5.6 basis points at 1.4765%. Last week, it notched its largest weekly gain since March.
The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.047 points or 0.05 percent, to 91.898.
The yen was last down 0.21 percent, at $110.5400.
Spot gold was steady at $1,779.70 per ounce by 13:31 p.m. EDT (1731 GMT). U.S. gold futures settled up 0.2% at $1,780.70.[GOL/]
(Reporting by Ritvik Carvalho; additional reporting by Swati Pandey in Singapore; editing by Jason Neely, Chizu Nomiyama and Nick Zieminski)
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
