U.S. stocks, oil and other financial markets around the world clawed back some of their historic plunge from a day before on hopes that the U.S. and other governments around the world will pump in more aid for the virus-weakened global economy.
Investors welcomed Tuesday’s reprieve, but weren’t pretending this is the end to the market’s plunges, which took the S&P 500 on Monday to its worst day since the 2008 financial crisis. Stocks have had jumps even bigger than this in the past couple weeks, only for the bottom to give out again.
Nonetheless, hope was rising that the big, co-ordinated effort from authorities around the world that markets have been waiting for may be on the way. President Donald Trump says his administration will ask Congress for payroll tax relief and other quick measures to help protect from the spread of COVID-19, which has pushed airlines to cancel flights and prodded Italy to lock down the entire country.
Canada’s main stock index was up 400 points in early trading Tuesday, a day after the Toronto Stock Exchange posted its biggest one-day loss since 1987, triggered by a collapse in oil prices.
The S&P/TSX composite index was up 439.85 points at 14,954.09 at one point, off the day’s high.
In Japan, a task force set up by the prime minister on Tuesday approved a 430 billion yen ($4.1 billion) package with support for small to medium-sized businesses.
Perhaps the most notable market move Tuesday was that Treasury yields also pushed higher in a sign that fear has receded a bit, though they remain far below where they were even a week ago.
The 10-year Treasury yield rose to 0.65% from 0.49% late Monday. A week ago, it had never been below 1%.
The S&P 500 was up 2.5%, as of 9:52 a.m. Eastern time. It recovered about a third of its loss from the day before.
The Dow Jones Industrial Average rose 658 points, or 2.8%, to 24,513, and the Nasdaq composite was up 2.6%.
Brent crude, the international standard, rose $2.96, or 8.6%, to $37.32 per barrel, while benchmark U.S. crude rose $2.53 to $33.66. Oil prices plunged 25% on Monday amid a price war between producers, who are pulling more oil out of the ground even though demand is falling due to the virus.
Bank of Canada set to make rate announcement, release economic outlook – CP24 Toronto's Breaking News
Jordan Press, The Canadian Press
Published Wednesday, July 15, 2020 8:48AM EDT
Last Updated Wednesday, July 15, 2020 11:08AM EDT
OTTAWA – The Bank of Canada is holding its key interest rate at 0.25 per cent in response to what it calls the “extremely uncertain” economic outlook from the COVID-19 pandemic, and plans to keep it there until the picture improves.
In its updated outlook, the bank said Wednesday it expects the economy to contract by 7.8 per cent this year, driven downward by a year-over-year contraction of 14.6 per cent in the second quarter.
The report pegs the annual inflation rate at 0.6 per cent this year, rising to 1.2 per cent in 2021 and 1.7 per cent in 2022.
Its inflation target is 2 per cent, and the bank said in its policy statement it will maintain the current rate until that target is achieved.
The rate will have to stay low to provide “extraordinary monetary policy support” to help recuperate from the economic impact of COVID-19, it said.
The forecasts included in the Bank of Canada’s monetary policy report also come with a caution that the numbers could be thrown off.
The bank’s outlook is based on the assumption that there won’t be a broad-based second wave of the pandemic, that lockdowns will be gradually lifted, and the pandemic will have run its course by mid-2022 thanks to a vaccine or effective treatment.
The monetary policy report said there isn’t enough information to forecast how deep the economic scarring will be from business closures or widespread job losses.
It’s also unclear how quickly consumer demand will recover through changes in spending habits, work patterns and social behaviour, the report said.
Still, the central bank said it appears the country has avoided a worst-case scenario envisioned by the bank in its last report in April.
The central bank’s key interest rate has been at 0.25 per cent since March when it was rapidly dropped in response to the economic fallout from COVID-19.
Governor Tiff Macklem has seemingly ruled out any further drops and has said that the central bank doesn’t plan to raise the rate until well into an economic recovery.
The Bank of Canada’s June interest rate announcement came on Macklem’s first day on the job as the country’s top central banker. Though he was only observer during the June round of deliberations by the bank’s governing council, he endorsed the decision to keep the rate on hold.
The report Wednesday said growth will pick up beginning in this quarter, the third of the year, with the country recouping about 40 per cent of the drop in output from the first half of 2020.
Much of that will be driven by the reopening of businesses and partial rebound in spending, the bank says.
But after an initial, quick bounceback, Canada will enter what the bank calls a “recuperation phase” where the pace of recovery will slow.
“As reopening progresses, many people will probably continue to fear contracting the virus, and uncertainty about job security is likely to persist,” the report said.
“Both consumer and business confidence are therefore expected to remain subdued, restraining spending and employment, particularly in activities that involve in-person interaction.”
The bank said the pandemic will continue to affect consumer and business confidence during this phase amid widespread changes in the economy, including the energy sector where low prices and reduced demand have put production well below its pre-pandemic path.
As well, the shock facing the oil sector has “renewed questions about the likelihood of pipelines being developed,” the report said.
Some lower-income workers, disproportionately affected by job losses or cuts in earnings, “will face prolonged income losses” and push more households to the financial brink, the bank warns.
While higher income households may have excess savings to spend during this phase, some households will prioritize paying down debts, or padding rainy-day funds due to the uncertain economic environment, the report said.
Heavy discounts on unwanted inventory and smaller-than-planned price increases for firms will also act as a drag on inflation, which the bank expects to remain weak before gradually getting back to its two per cent target.
Housing activity is also expected to slow over the next few years with the ripple effects of the downturn, and lower immigration, the report said.
The central bank said it will provide a more detailed analysis of its long-run assumptions for the domestic economy when it updates it outlook in October.
This report by The Canadian Press was first published July 15, 2020.
Verging on a sellers' market – Business News – Castanet.net
A local real estate team says when it comes to single-family homes, Kelowna is on the verge of a sellers’ market.
The Krieg Family with RE/MAX said new numbers suggest buyers are back in force.
“I don’t think anyone saw this coming, but in one month, sales have gone from 50% under the 10-year average (139 sales in May 2020) to 261 sales in June, (over the 10-year average),” said Colin Krieg.
“Multiple offers and properties selling over asking price are no longer a thing of the past.”
Krieg said figures from the Okanagan Mainline Real Estate Board show single-family-home sales in June were up 20% over June 2019.
The average price is now $748,000—the third-highest it has ever been in the city. Almost 90% of the sales were under $1 million, with only two sales over $2 million.
However, supply is getting shorter. Listings are down 18% over last year, and 22% under the 10-year average.
Meanwhile, townhome sales, at a total of 77, are down slightly over this time last year, but up significantly over April and May and in line with the 10-year average of 75 sales for the month of June.
Apartment and condo sales were down 5% in June, at a total of 97 sales, compared to 102 in June 2019.
“This segment of the market is the slowest out of all three,” said Krieg.
Provincially, figures released Tuesday by the British Columbia Real Estate Association show the B.C. market as a whole is bouncing back.
The association reports that a total of 8,166 residential unit sales were recorded by the Multiple Listing Service.
“Sales around the province surged back to pre-COVID-19 levels in June,” said BCREA Chief Economist Brendon Ogmundson. “While there are some temporary factors that may have pushed demand forward, we are cautiously optimistic that market activity will remain firm.”
However, active listings are still down close to 20 per cent year-over-year and, as a result, many markets are seeing higher prices.
For more local business content, visit okanaganedge.net.
— Okanagan Edge staff
Interest rates will stay low as Canada faces 'long climb out' of COVID-19 hole, central bank says – CBC.ca
Canada’s central bank opted to keep its benchmark interest rate right where it was on Wednesday, at 0.25 per cent.
It’s the first rate decision under the stewardship of Tiff Macklem, who took over as governor of the Bank of Canada last month after Stephen Poloz’s seven-year term as governor ended.
The final months of Poloz’s tenure featured a sudden and dramatic series of rate cuts as central banks around the world moved in unison to slash lending rates to near zero to encourage borrowing and investment to stimulate the economy walloped by the COVID-19 pandemic.
The bank’s rate decision suggests there are no short term plans to deviate from that strategy any time soon.
“It’s going to be a long climb out,” Macklem said at a press conference following the announcement on Wednesday. “We are being unusually clear that interest rates are going to be unusually low for a long time.”
Move was expected
The decision was in line with expectations of economists who monitor the central bank polled by Bloomberg. The bank’s next decision is scheduled for Sept. 9 and no change is expected at that meeting either.
In addition to the interest rate decision, the bank also released its quarterly Monetary Policy Report, which outlines the bank’s outlook for the economy.
The bank calculates that lockdowns and other physical distancing efforts across Canada in the April-to-June period shaved off about 15 per cent of Canada’s GDP.
That makes for the worst quarter for Canada’s economy since the Great Depression, but it’s actually better than the worst-case scenario the bank was tracking when the pandemic began.
“There are early signs that the reopening of businesses and pent-up demand are leading to an initial bounce-back in employment and output,” the bank said.
Economy won’t get back to normal until 2022
For 2020 as a whole, the central bank is now expecting Canada’s economy to shrink by 7.8 per cent but then rebound by 5.1 per cent in 2021 and 3.7 per cent in 2022.
While that’s better than it could have been, it does mean the central bank doesn’t think the economy will get anywhere close to back to normal for another two years.
And that outlook hinges on one rather uncertain development: It assumes Canada’s economy will be spared a second wave of COVID-19.
“We have assumed there is no widespread second wave and hence there’s no widespread second lockdown,” Macklem said. “But we do anticipate there will be localized flare ups and localized restrictions.”
Sherry Cooper, chief economist of Dominion Lending Centres, says that view may prove to be overly optimistic.
“The last few weeks have shown that numbers can bounce back even faster than the numbers went down and a second wave is a very real possibility in the fall,” Cooper said.
In addition to signaling it has no plans to change rates any time soon, the bank also said it plans to continue its bond buying programs, to support credit markets.
Economist Brian DePratto of TD Bank said there were “no surprises” in the bank’s decision.
“With uncertainty still extremely elevated, the Bank of Canada is not taking any chances, maintaining stimulus, and reminding us again that they can and will do more to support the economy if needed.”
Bank of Canada set to make rate announcement, release economic outlook – CP24 Toronto's Breaking News
NHL Stanley Cup schedule: League adds times, exhibition games to 2020 qualifiers – NBCSports.com
Canadian-made mask proven to be first to deactivate coronavirus | News – Daily Hive
Silver investment demand jumped 12% in 2019 – report – MINING.com
Iran anticipates renewed protests amid social media shutdown
Richmond BBQ spot speaks out about coronavirus rumours Vancouver Is Awesome
- Real eState12 hours ago
Prince Edward County real-estate boom signals a fundamental change – The Globe and Mail
- Science22 hours ago
Comet NEOWISE offers rare nighttime sky show – Ottawa Citizen
- Science20 hours ago
Calgary photographers capture Comet NEOWISE with the aurora – Calgary Herald
- Politics6 hours ago
Gangster’s tale sheds light on India’s gritty grassroots politics
- Media6 hours ago
ARHT Media Signs 4 City Network Deal in the Asia-Pacific Region Capture and Display Locations Will Generate Upfront and Recurring Revenues
- News2 hours ago
Statistics Canada to start collecting race-based crime data – CBC.ca
- Health12 hours ago
India's Zydus begins human trials for potential COVID-19 vaccine – TheChronicleHerald.ca
- Tech5 hours ago
Ghost Of Tsushima And Paper Mario Will Be $10 Off On Release Day – GameSpot