LONDON (Reuters) – Stocks started September on a positive note, with global indexes close to all-time highs and Europe edging higher, pushed up by Chinese factory data that showed a rebound in demand.
Factory activity in China expanded at the fastest rate in nearly a decade in August, a private PMI survey showed on Tuesday, contrasting with an official survey on Monday that showed output in the country’s factories grew slightly more slowly last month as floods hit the southwest.
Both surveys pointed to improving export orders.
The MSCI world equity index, which tracks shares in 49 countries, was close to its highest ever, while the pan-European Stoxx 600 was up 0.2% at 0809 GMT.
France’s Cac 40 was up 0.4% and Germany’s Dax was up 0.6%. Britain’s FTSE 100 lagged, down 0.9%.
European stocks had opened even higher but pared gains after the German government revised down its GDP forecast for 2021.
PMI data from across Europe showed manufacturing activity generally on the path to recovery though factory managers are wary about investing and hiring more workers.
In Germany, Europe’s largest economy, output grew at its fastest pace since February 2018, while in France it contracted.
The euro zone economy has experienced a strong recovery in the third quarter even though the most recent incoming data have been less robust, European Central Bank Vice President Luis de Guindos said.
The euro rose to a two-year highs of $1.19975 at 0324 GMT. At 0800 GMT it was at $1.199, up 0.4% since New York’s close, as a dollar sell-off continued.
Versus a basket of currencies the dollar was down 0.4% at 91.8811 at 0810 GMT, dropping below 92 for the first time since May 2018.
Investors are betting on U.S. rates staying lower for longer after Federal Reserve Chair Jerome Powell on Thursday outlined an accommodative shift in the central bank’s approach to inflation.
Euro zone inflation data for August is due at 0900 GMT and is expected to show a decline to 0.2%, according to a Reuters poll.
Commerzbank analyst Esther Reichelt said inflation data highlights the difference between the Fed and the ECB.
“Whereas the market considers the Fed capable of rekindling inflation rates by leaving interest rates lower for longer than previously assumed, this does no longer seem to be the case as far as the ECB is concerned,” she wrote in a note to clients.
“Inflation data for August published today will once again underline by how much the ECB will miss its inflation target.
“Just as higher inflation is damaging for the dollar, the euro is benefiting from lower inflation – if monetary policy is unwilling (or unable) to do anything against it.”
Paul Donovan, chief economist at UBS Global Wealth Management said Tuesday’s data was likely to have limited impact because “markets are convinced interest rates will remain low for longer, and price data is unlikely to change that.”
Core euro zone bond yields were up around 1 to 2 basis points, with the benchmark German 10-year yield at -0.386%.
Oil prices gained, reversing overnight losses.
Brent crude futures climbed 57 cents to $45.85 a barrel at 0805 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 56 cents to $43.17 a barrel.
Gold prices also rose, to their highest in two weeks.
(Reporting by Elizabeth Howcroft; editing by John Stonestreet)
Quebec tables revamped bill to fast-track infrastructure projects and reboot economy – Global News
Quebec treasury board president Sonia Lebel tabled a new bill on Wednesday to speed up certain infrastructure projects and reboot the economy.
As the province faces a second wave of the novel coronavirus, Lebel said fighting the virus and strengthening the economy are top priorities for the Quebec government.
“Last spring we were forced to put Quebec on pause,” Lebel said, adding the acceleration of infrastructure projects is a key part of government’s plan to get the economy back on track.
Lebel explained that the gradual and careful resumption of activities wasn’t enough by itself to offset the negative impacts the health crisis.
Bill 66 replaces Bill 61, known as an “Act to restart Quebec’s economy and to mitigate the consequences of the public health emergency”, which was heavily criticized after in was tabled in early June by then-treasury board president Christian Dubé.
Opposition parties at the National Assembly raised several concerns at the time, saying Bill 61 could leave the province vulnerable to corruption and collusion since it would allow some projects to be sped up without all the checks and balances in place.
Quebec’s Bill 61 sent back to the drawing board
Lebel said she heard the critics and the the most controversial aspects of Bill 61 were abandoned in the revamped bill.
“It is possible to speed up the start of projects without compromising on integrity without compromising on the environment,” she said.
Among other things, the government is abandoning the idea of bypassing the law on public contracts.
“We are not touching in any way whatsoever the law on public contracts, this is not a process we are accelerating,” Lebel said.
The government is also dropping the idea of extending the state of health emergency indefinitely.
Under a state of emergency, the government has extraordinary powers. The law suspends many civil rights and normally a government is only able to enact it 10 days at a time.
Lebel also said the new bill addresses environmental concerns raised by environmental groups and that processes and safeguards are well defined.
Projects with moderate to low environmental risks will be allowed to go ahead with construction and provide environmental assessments once work is underway.
Lebel explained that environmental protocols are already known for many of the projects and environmental laws and standards will be respected.
“We can anticipate what the problems will be,” she said. “We know whether there is a wetland or not… we know how to protect it or rebuild it, if necessary, if we have to damage it.”
She also said the environment ministry would be supervising the projects and that the Bureau d’audiences publiques sur l’environnement (BAPE) would — except for two projects — maintain its role of informing and consulting with citizens, carrying out environmental investigations and providing recommendations to inform government decisions.
The two projects include the revamping of Highway 117 between Labelle and Rivière Rouge, and the widening of Highway 30 between Brossard and Boucherville.
“Highway 117 is one of the deadliest roads in Quebec,” Lebel said, “The work is is necessary, expected and requested,”
As for Highway 30, widening the road would allow for an express bus route and is part of wider plans to improve traffic congestion within the wider Montreal metropolitan area.
By bypassing the BAPE, it will allow to speed up the completion of the projects by 20 months, Lebel said, adding that they will be subject to all other environmental laws and requirements.
Initially, the province wanted to fast-track 202 infrastructure projects — including the construction of schools, seniors’ homes, roads and public transit systems.
Under Bill 66, however, that list has been whittled down to 181 projects.
“It’s a closed list,” Lebel said, meaning projects not included under the proposed legislation will have to follow regular procedures.
Bill 66 will be studied in committee this fall.
— With files from Global’s Raquel Fletcher and Kalina Laframboise
© 2020 Global News, a division of Corus Entertainment Inc.
Dollar shines as virus, economy woes hit risk assets – TheChronicleHerald.ca
By Stanley White
TOKYO (Reuters) – The dollar extended gains against most currencies on Thursday as signs of economic slowdown in Europe and the United States renewed concern about a second wave of coronavirus infections.
The euro, which has already taken a hit due to worries about a return to severe lockdown restrictions, faces an additional hurdle later on Thursday with the release of data on German business sentiment.
The dollar is likely to continue to rise as another spike in coronavirus cases and the Federal Reserve’s warnings that the U.S. economy needs more fiscal stimulus cause investors to repatriate funds from riskier assets.
“Risk is being sold across the board, and there is a big unwinding of dollar shorts,” said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities.
“Questions surrounding the coronavirus and the need for even more stimulus are turning flows back to the dollar.”
The dollar traded at $1.1658 per euro on Thursday in Asia, just shy of a two-month low high reached on Wednesday.
The pound bought $1.2714, near its weakest level since late July.
The dollar was quoted at 0.9240 Swiss franc , which is near a nine-week high.
The U.S. currency bought 105.40 yen , holding onto a 0.4% gain from the previous session.
The dollar has rallied this week as rising coronavirus infections in Europe and Britain undermined investor optimism about vaccine progress.
The Ifo survey due later on Thursday is forecast to show an improvement in business morale in Germany, Europe’s largest economy.
However, sentiment for the euro has already suffered a big blow after surveys released on Wednesday showed new restrictions to quell a resurgence in coronavirus infections slammed the euro zone’s services industry into reverse.
The mood for riskier assets has also soured after data on Wednesday showed U.S. business activity slowed in September and several Fed policymakers warned that further government aid is needed to bolster the economy.
The dollar index =USD>, which pits the dollar against a basket of six major currencies, stood at 94.336 on Thursday, close to a nine-week high.
There are no major economic data releases scheduled during the Asian session, so trading could be subdued, analysts said.
Some investors are watching the Australian and New Zealand dollars, which have come under pressure due to growing expectations for additional monetary easing.
A recent decline in commodity prices is expected to increase downside risks for the Antipodean currencies, some traders say.
The Aussie traded at $0.7069, near its weakest since July 21.
Across the Tasman Sea, the kiwi bought $0.6549 after tumbling by 1.3% in the previous session.
(Reporting by Stanley White; Editing by Sam Holmes)
UPDATE: Trudeau throne speech emphasizes economic support for Canadian workers, economy – The Guardian
A speech from the throne delivered in Ottawa on Wednesday emphasized a number of enhancements to existing programs put in place in response to the pandemic but did not offer large-scale social policy reforms, such as a basic income guarantee, that were hinted at by government weeks ago.
The speech, read before parliamentarians by Governor General Julie Payette, outlined the Justin Trudeau government’s immediate plans to respond to the continuing COVID-19 pandemic in the coming months. While the severity of cases of the virus has diminished since a high point seen last spring, a recent spike in cases in Canada’s most populous provinces has provoked fears of the social and economic effects of a second wave across Canada.
In the speech, Payette said the immediate public health response to the continuing pandemic is the first priority of government. The speech pledged to improve rapid testing capacity in Canada and pledged additional short-term assistance for businesses forced to close due to future public health orders. Payette also briefly addressed plans to deploy a vaccine for the virus, although it remains unclear when a vaccine will be approved by health officials.
“The government has already secured access to vaccine candidates and therapeutics while investing in manufacturing here at home. And to get the vaccines out to Canadians once they’re ready, the government has made further investments in our capacity for vaccine distribution,” Payette said.
The bulk of the 53-minute speech focused on immediate economic and social support for Canadians in the coming months, as well as plans for a longer-term economic recovery.
Notably, the speech did not include a pledge to create any new economic supports on the scale of the Canada Emergency Response Benefit (CERB), which will begin to transition to a program under the Employment Insurance system at the end of September.
In terms of commitments in the coming months of the pandemic, the government pledged to:
- Create one million jobs as part of a green economic recovery;
- Extend the Canada Emergency Wage Subsidy until next summer;
- Create a transitional Canada Recovery Benefit for individuals who would not qualify for EI;
- Provide more supports for self-employed individuals and gig workers through the EI system.
The speech also included a pledge to “make a significant, long-term, sustained investment” in childcare, but stopped short of committing to a universal childcare program.
In a moment that harkened back to the Trudeau government’s successful 2015 election campaign, the throne speech also pledged to better tax “extreme wealth inequality,” address tax avoidance by tech giants and limit stock option deductions for the wealthy.
The speech also pledged to improve protections for seniors in long-term care homes by penalizing those who neglect seniors. The speech also pledged to “accelerate steps to achieve” a universal pharmacare program.
The more ambitious components of the speech focused on climate change and green economic recovery. The commitments included:
- Legislated commitments for achieving net zero emissions by 2050;
- Improving upon Canada’s emissions reduction goals by 2030;
- Making zero-emissions vehicles more affordable;
- Creating a new national water agency; and
- Planting 2 billion trees.
The Trudeau government’s speech from the throne followed the prorogation of parliament in August, after sustained pressure on the government for its handling of the WE Charity scandal.
At that time, Trudeau said the move would allow the government to focus on a plan for a recovery of the Canadian economy after the COVID-19 pandemic.
Trudeau’s decision to prorogue parliament effectively brought an end to scrutiny of the government’s handling of the WE Charity controversy by several standing committees.
In the weeks that followed, sources in government had communicated to media that the throne speech would set out bold, social initiatives, including a proposal for a Basic Income Guarantee, as well as plans for a “green recovery” of the economy.
But in recent weeks, government staff had downplayed the possibility of large-scale, costly social programs.
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