August 31, 2023
- Clearer signs of a cooling economy in the second quarter and a weaker July forecast will likely be enough to convince the Bank of Canada to hold rates steady at its meeting next week. The gross domestic product figures due Friday are the last key input before the central bank’s decision on Sept. 6. Economists in a Bloomberg survey expect June output to shrink 0.2%, this year’s first contraction, ending the quarter with 1.2% annualized growth. That would be slower than the bank’s 1.5% projection and a deceleration from the 3.1% pace in the first three months of 2023. If accompanied by a marked slowdown in consumption, that result could give Governor Tiff Macklem and his officials greater confidence that the cumulative weight of 475 basis points of hikes is helping to slow the economy and bring inflation to heel.
- Canadian Imperial Bank of Commerce fell far short of analyst estimates as the lender set aside more than expected for souring loans. Provisions for credit losses totaled C$736 million ($543 million) in the fiscal third quarter, according to a statement Thursday, more than the C$456 million analysts had predicted. The bank had put aside C$438 million in the previous three months. The Toronto-based bank’s C$1.52 of adjusted earnings per share missed an average analyst estimate of C$1.68. Chief Executive Officer Victor Dodig cited “a more challenging economic environment,” while saying the bank has a “disciplined approach to resource allocation.”
- AltaGas agreed to buy Pipestone natural gas processing plants and natural gas storage facility from Tidewater Midstream and Infrastructure for C$650m. Consideration comprised of C$325m in cash and the issuance of about 12.5m AltaGas common shares to Tidewater, which will be priced at C$26.07, based on AltaGas’ 10-day volume weighted average price as at Aug. 30.
- Amazon.com Inc. and Shopify Inc. have struck a deal to allow merchants who pay for Shopify’s e-commerce tools to use Amazon’s logistics network. The two companies, which both sell e-commerce software and services to brands and merchants, say Amazon’s “Buy with Prime” will soon be among the tools available to Shopify’s merchants in the US. The program started Wednesday for invited Shopify sellers, and will roll out to all Shopify merchants who want to use Amazon’s logistics network by the end of September, Amazon said in a statement. Shopify shares climbed more than 2% in extended trading, while Amazon stock rose less than 1% after the partnership was announced.
- US stock futures were little changed as investors remain hopeful that the Federal Reserve will stop raising interest rates, offsetting economic concerns over Europe and China. Contracts on the S&P 500 and the technology-heavy Nasdaq 100 traded flat by 5:16 a.m. in New York. Both indexes climbed on Wednesday on expectations that the Fed will pause its interest rate hikes after gross domestic product — the government’s main measure of economic activity — was revised lower.
- Asian stocks ended mixed on Thursday as investors digested key data from China and Japan and looked ahead to forthcoming inflation readings in Europe and the U.S. for additional clues on the outlook for interest rates.
- European equities gained on Thursday as a rally in UBS Group AG, driven by the biggest-ever quarterly profit, outweighed signs of sticky inflation and mixed economic data from China. The Stoxx Europe 600 was up 0.3% by 9:08 a.m. in London, with UBS surging as much as 7.2% and also lifting the broader European financial services sector. Among other individual movers, Pernod Ricard SA dropped as it expects sales in the US to decline in the first quarter. Sentiment had earlier been dented by data showing a drop in China’s manufacturing activity for a fifth consecutive month, though an improvement in the new orders gauge encouraged hopes that the worst of the slump is past. Meanwhile, French inflation accelerated in August, adding to evidence of persisting price pressures in the region, just as European Central Bank officials prepare to decide whether to keep raising interest rates.
- Gold held around the highest in three weeks ahead of US inflation and spending data that will add to the debate on the Federal Reserve’s next move. The metal edged higher Thursday for a fourth session, supported by weak US economic data that has diminished expectations of another hike by the country’s central bank. Swaps contracts are now pricing in less than a 50% chance of another quarter-point increase this year.
- Oil held gains after a five-day advance driven by a slump in US inventories and speculation that OPEC+ leaders will prolong supply cuts. West Texas Intermediate traded near $82 a barrel, after advancing 3.5% in the longest run of daily gains since March. Stockpiles in the US fell by 10.6 million barrels last week, cutting them to the lowest since December. Inventories at the key Cushing, Oklahoma, hub also declined to the least since January.
- Industrial metals were mixed, as traders weighed tentative signs that the worst of China’s factory slump may ending and Beijing’s efforts to support the economy. Worries about demand in the crucial buyer have weighed on base metal prices this year. Still, China’s manufacturing contraction eased slightly in August and a gauge of new orders improved, signaling efforts to boost the economy are having some effect. The central bank also met with lenders and private businesses to discuss improving their access to funding.
- Euro-area inflation stopped slowing in August, presenting European Central Bank officials with a quandary as they weigh whether pressures are too persistent to risk a pause in interest-rate hiking. Consumer prices rose 5.3% from a year earlier, stuck more than 2 1/2 times above the goal sought by policymakers, because of energy. Economists had anticipated weakening. An underlying measure stripping out volatile items slowed as expected to reach exactly the same level as the headline gauge.
- Traders continued to pare bets on further increases in ECB borrowing costs, focusing on the slowing of so-called core inflation, amid relief that faster-than-expected numbers from Germany and France — the region’s biggest economies — didn’t prevent an overall easing of underlying measures. French inflation accelerated in August, adding to evidence of persisting pressures in the region just as European Central Bank officials prepare to decide whether to keep raising interest rates. Consumer prices in the euro area’s second-biggest economy rose 5.7% from a year earlier, statistics agency Insee said on Thursday — much faster than the 5.4% median forecast in a Bloomberg survey of economists.
- US temporary-help employment, historically a harbinger of turns in the labor market and the economy, has fallen for six straight months and is signaling a recession ahead. Some industry veterans aren’t buying it. Rather than presaging a broad economic downturn, executives say the pullback in hiring may instead represent a gradual cooling of an overheated job market and see the chance of a soft landing for the economy.
- UBS Group AG has signalled it will shutter roughly two-thirds of Credit Suisse’s investment bank — including many trading operations — as it looks to exit businesses that don’t fit its existing strategy. The Swiss lender has put $17 billion of risk-weighted assets from Credit Suisse’s investment bank into its wind-down unit at the end of June, according to a presentation Thursday as part of the bank’s second-quarter earnings. About $9 billion will be retained in the core investment bank. The figures exclude assets tied to operational risk.
- India received the lowest August rains since at least 1901, prompting concerns about weaker crop output and the potential for more export restrictions following the South Asian nation’s curbs on rice. The country received 162.7 millimeters of rainfall this month, 36% lower than normal, according to data compiled by the India Meteorological Department. Total rainfall during June-August was 10% below average, the figures show. Monsoon rains irrigate about half of India’s farmland and are crucial for crops such as sugar and soybeans. Erratic weather has hurt some harvests since last year, forcing the nation to restrict exports of wheat and rice to cool domestic retail inflation that surged to a 15-month high in July. The government has also imposed stockpile limits on some crops.
- Dollar General Corp., already on track for its first annual share decline, fell again after cutting its profit forecast for the second straight quarter amid rising labor costs and “softer sales trends.” Earnings will tumble as much as 34% on a per-share basis during the current fiscal year, the discount retailer said in a statement Thursday as it reported financial results. Dollar General had previously said the measure wouldn’t fall more than 8%. Wall Street had been projecting about a 6% drop.
- House Republicans are probing Hawaiian Electric Industries Inc.’s role in the deadly Lahaina wildfire amid a contentious blame game over the blaze that killed at least 115 people and caused more than $5.5 billion in damages. House Energy and Commerce Committee Chair Cathy McMorris Rodgers and other committee leaders said in a letter they are seeking more information on the sequence of events that led to the blaze, which has also left hundreds of people missing. “We must come to a complete understanding of how this disaster started to ensure Hawaii and other states are prepared to prevent and stop other deadly wildfires,” the lawmakers wrote in their letter sent Wednesday to the utility, the Hawaii Public Utilities Commission and the Hawaii State Energy Office. “Certain evidence of a downed power line sparking dry grass in Lahaina indicates that Hawaiian Electric equipment may have been the cause.”
- Users of X, the social network formerly known as Twitter, will be able to make video and audio calls through the platform without having to share their phone number, owner Elon Musk said in a post Thursday, in the latest expansion of services as he seeks to create an “everything app.” Musk wants X to become more like Tencent Holdings Ltd.’s WeChat, a messaging service turned super-app that offers everything from social media and video games to fintech. X Chief Executive Officer Linda Yaccarino has said X will include features such as payments and banking.
- The one-third UBS does plan to keep is largely made up of the mergers and acquisitions and capital markets business, as well as some parts of the research function although it will also look to build out capabilities in the areas of trading it has retained, a person familiar with the matter said. The $9 billion figure is about 13% of UBS’s existing allocation to the overall investment banking business.
- Hong Kong is making preparations for a possible direct hit by Super Typhoon Saola, which is shaping up to be the strongest storm to affect the city in at least five years. The city will raise its No. 8 storm warning as early as 2 a.m. on Friday — effectively closing down the city including its $5 trillion stock market — and schools will be shut, Chief Secretary Chan Kwok-ki said at a press briefing Thursday afternoon. Chan Pak-wai, director of the local observatory, said the no. 8 signal will probably be kept on Saturday and may even be raised to the highest level — no. 10.
- Vinfast Auto is down 16% in Wednesday afternoon trading, adding to Tuesday’s record 44% plunge. The low-float EV startup, whose market value soared to $190 billion as of Monday’s close, is now worth about $92 billion.
- Microsoft Corp. tried to ward off further European Union antitrust scrutiny of its Teams video-conferencing app by offering to split the program from a broader business software package. Nanna-Louise Linde, Microsoft’s vice-president for European government affairs, said in a blog post on Thursday that from Oct. 1, Microsoft will unbundle Teams from Microsoft 365 and Office 365 across Europe. The Redmond, Washington-based firm is trying avoid formal antitrust charges from the EU and the risk of future fines, following the bloc’s decision to open a probe in July. Following a complaint from Salesforce Inc.’s messaging platform Slack made three years ago, EU investigators are investigating whether Microsoft breached competition rules by tying or bundling Teams to its Office 365 and Microsoft 365 packages.
- Britain’s energy regulator approved new rules designed to ban generators from charging sky-high prices for power using a tactic that’s piled millions onto consumer bills. Ofgem will prevent plants from “artificially inflating” prices by threatening to turn off before then demanding more money to keep operating — in a side market known as the balancing mechanism. Traders could be fined up to 10% of regulated turnover for breaching the new rule, which comes into force on Oct. 26, it said Thursday. The move comes after reviews by the regulator and an investigation published by Bloomberg News in March, which revealed that the tactic added more than £525 million ($667 million) to consumers’ bills in the five years through 2022. Plants controlled by VPI, a unit of Vitol Group, and by German state-owned Uniper SE together accounted for £321 million of the total.
- The deal to take Donald Trump’s social-media company public faces a make-or-break moment as the blank-check firm that’s acquiring it rushes to get investor buy-in. Digital World Acquisition Corp., the special-purpose acquisition company, is at risk of seeing the deal collapse if investors — made up largely of pro-Trump retail traders — don’t give it another year. The shareholder vote next week is crucial for Digital World, whose shares rallied sharply in July on speculation that a settlement with the Securities and Exchange Commission would pave the way for it to buy Trump Media & Technology Group, the owner of the Truth Social platform used by the former president.
- Public health officials in Germany are raising the alarm over an unexpected uptick in cigarette smoking — including among the young — that started in the wake of the Covid-19 lockdowns. The overall smoking rate in Germany was just over 34% in July, according to the most recent findings from Debra, a bimonthly survey funded by the German Health Ministry. In March 2020, the rate was 26.5%. The percentage of Germans between 14 and 17 years old who said they smoked cigarettes jumped to 15.9% in 2022, from 8.7% in 2021, according to Debra. This makes Germany an outlier among other developed nations. Other European countries, including Sweden, Ireland and the Netherlands, have seen steady decreases in smoking rates, said Rüdiger Krech, director of health promotion for the World Health Organization.