August 30, 2023

Daily Market Commentary


Canadian Headlines

  • National Bank of Canada reported its third-quarter profit edged higher compared with a year ago even as the money it set aside for bad loans in the quarter also rose. The Montreal-based bank says it earned $839 million or $2.36 per diluted share for the quarter ended July 31, up from $826 million or $2.35 in the third quarter of 2022.  Revenue for the quarter totalled $2.52 billion, up from $2.41 billion in the same quarter last year. National Bank’s provision for credit losses amounted to $111 million for the quarter, up from $57 million a year earlier.
  • A court ordered Canada’s competition body to pay millions to Rogers Communications Inc., saying the country’s antitrust czar engaged in “unreasonable behavior” in its legal challenge of the company’s takeover of a rival.  Competition Commissioner Matthew Boswell “adopted an unnecessarily contentious approach” in trying to block Rogers’ deal with Shaw Communications Inc., dragging out the legal case, the federal competition tribunal said in a ruling dated Aug. 28.  The tribunal, which is Canada’s merger court, ordered the commissioner to pay about C$13 million ($9.6 million) to Rogers and Shaw in legal fees and costs.


World Headlines

  • A rally in US stocks was set to pause on Wednesday as investors awaited key inflation and labor market data for clues on the Federal Reserve’s policy outlook. Contracts on the S&P 500 and the Nasdaq 100 were about 0.2% and 0.3% lower, respectively, by 5:32 a.m. in New York. Both underlying indexes jumped on Tuesday after data showed job openings fell in July to a more than two-year low, easing concerns over further interest rate hikes.
  • European stocks declined as some early prints suggested underlying inflation has remained stubbornly high in the region, hinting to a higher-for-longer regime from the European Central Bank.  The Stoxx 600 Index fell 0.3% at 10:18 a.m. London time. Banks and miners gained, while utilities lagged behind. Orsted slumped most ever after the Danish power generator forecast potential impairments of up to $2.3 billion relating to its US portfolio.  Investors await key inflation data from the region which could provide further clues on the direction central banks may take. All eyes will be on German inflation later today, a precursor for the European print on Thursday.
  • Asian stocks climbed for a third day as data from the US to Australia weakened the case for higher interest rates, helping boost risk appetite.  The MSCI Asia Pacific Index rose as much as 1%, led higher by tech stocks such as TSMC, before erasing more than half of its advance as China’s rally halted. Australia’s benchmark outperformed, climbing 1.2% as the country’s cooling inflation data bolstered the case for an interest-rate hold. Treasury yields retreated overnight after weaker-than-expected US jobs data.
  • Oil edged up to the highest in more than a week, ahead of data that could show another substantial draw in US inventories. West Texas Intermediate rose for a fifth day toward $82 a barrel, on course for the longest winning streak since March. US stockpiles tumbled by 11.5 million barrels, according to the industry-funded American Petroleum Institute. If confirmed by official data later Wednesday, that would be the sixth drop in seven weeks.
  • Gold held gains following weaker-than-expected US jobs openings data that caused Treasury yields to plunge. On Tuesday, bullion jumped to the highest in three weeks after US job openings fell to the lowest since early 2021. The figures, which potentially take pressure off the Federal Reserve to raise rates, prompted swaps traders to dial back bets on a September hike.  Higher borrowing costs are typically negative for bullion, which doesn’t yield interest. The metal rebounded above $1,900 an ounce in the second half of August, though it has yet to see renewed buying interest from investors in exchange-traded funds.
  • Hurricane Idalia weakened slightly to Category 3 as it heads toward landfall on Florida’s west coast, where it still threatens to unleash catastrophic storm surge and damaging winds. Idalia’s maximum sustained winds reached 125 miles (201 kilometers) per hour as it nears the state’s sparsely populated Big Bend region, the US National Hurricane Center said in an update at 7 a.m. Eastern time.  The eye of the hurricane was located about 65 miles south of state capital Tallahassee as the storm crawls north-northeast. It’s expected to make landfall Wednesday morning local time, then move along the coast of the Southeast US.
  • Spanish inflation quickened again in the first of a string of reports from around the region that will help European Central Bank officials judge whether to keep raising interest rates. Consumer prices rose 2.4% in August from a year earlier, up from 2.1% the prior month, driven by fuel costs, the country’s statistics agency said on Wednesday.
  • Inflation in the German state of North Rhine-Westphalia rose to 5.9% on the year in August, up from 5.8% in July, indicating German inflation may unexpectedly rise. Consumer Prices posted a monthly increase of 0.5%, according to the state statistics office in Dusseldorf, compared to a predicted national rise of 0.3%. A Bloomberg survey of 22 economists saw national inflation falling to 6% on the year from 6.2% in July.
  • HP Inc. reduced its full-year cash flow and profit outlook, saying a rebound in the market for personal computers will take longer than expected. The shares declined about 8.4% in early trading on Wednesday. Free cash flow for the fiscal year ending in October will be $3 billion, the Palo Alto, California-based company said Tuesday in a statement. It previously projected about $3.25 billion. HP also reduced its adjusted profit forecast to a range of $3.23 to $3.25 a share from $3.30 to $3.50 a share.
  • Citigroup Inc. will pay $2.9 million to settle Securities and Exchange Commission allegations that the bank’s broker had flawed processes in its accounting in underwriting of securities offerings. The SEC alleged Tuesday that the broker didn’t keep current records on the way it accounted for expenses charged in the underwriting of securities offerings.
  • China’s biggest oil company posted a record first-half profit as higher output offset lower crude prices and a slowdown in the nation’s economy.   PetroChina Co.’s net income rose 4.5% to 85.3 billion yuan ($11.7 billion) in the six months through June from a year earlier, it said in an exchange filing. The company reported a 82.39 billion yuan profit in the first half of 2022. The result was driven by a significant increase in sales of oil products, as well as gains in the natural gas segment, which offset declines in refining and chemicals, the company said in a statement.
  • The US government’s initial approach to negotiating drug prices could discourage cheaper copies of some of the more complex pharmaceuticals that eat up a high portion of total Medicare spending, drug policy analysts said.  The White House on Tuesday morning released the names of the first 10 drugs selected by the Medicare agency for price negotiations, marking a historic step to lower drug costs by dealing directly with drugmakers for the first time.
  • Standard Chartered Plc will offer at least 20 weeks of paid leave to new parents starting next month, joining a wave of companies expanding benefits for dads and adoptive parents as well as moms.  The bank, which had previously offered 20 paid weeks for maternity and two weeks of pay for paternity and adoption leave in its biggest market in Hong Kong, hopes the new policies will attract and retain talent, according to a statement Wednesday. The policy takes effect from September 1 globally, though some markets will implement it at a later date once local regulatory approvals have been obtained, according to the bank. The move puts the London-based lender ahead of most of the biggest US firms, just 9% of which offered at least 12 paid weeks off for all new parents in 2022, according to a report from JUST Capital, up from 6% the year previous.