August 31, 2023
- The aggressive pace of interest-rate hikes is hitting mortgage books at Canada’s biggest banks, leading to slowing loan growth, longer amortization periods and a rise in impairments. Higher borrowing costs cut into mortgage growth, with would-be homebuyers sitting on the sidelines. At the country’s five largest lenders, including Royal Bank of Canada and Toronto-Dominion Bank, residential loan growth slowed to 4% in the fiscal third quarter, compared with annual growth of 9.8% a year earlier.
- Unionized employees at 27 Metro stores in the Toronto area ratify a new, five-year collective agreement. Metro looks forward to welcoming employees and customers back to those stores as of Sept. 5.
- US equity futures were pointing higher before Friday’s open, as investors await the national employment situation report for August. S&P 500 futures rose 0.3%, Dow Jones Industrial Average futures advanced 0.4%, and Nasdaq futures added 0.2% in the premarket. Asian exchanges and European bourses were mostly tracking in the green. The jobs report for the just concluded month posts at 8:30 am ET. Government data are expected to show nonfarm payroll growth of 170,000, which would be down from a 187,000 gain reported for July, according to a consensus compiled by Bloomberg.
- European stocks posted modest gains as investors awaited key US jobs data for clues on the Federal Reserve’s policy outlook. The Stoxx Europe 600 Index rose 0.2% as of 9:23 a.m. in London, on track for its best weekly gain since mid-July. Energy stocks outperformed after Morgan Stanley double-upgraded the sector, while autos were laggards after UBS Group AG analysts cut their ratings on Renault SA and Volkswagen AG. Among individual stocks, Aurubis AG plunged after being hit by a massive metal theft. Vestas Wind System A/S rose after it said it’s close to landing a large order to deliver turbines for a US onshore wind park.
- Asian stocks advanced, headed for their second weekly gain, as Chinese equities rose following more support measures from Beijing. Japan’s benchmark also climbed to a historic milestone. The MSCI Asia Pacific Index rose as much as 0.5%, led higher by Samsung, which jumped after reports on a supply deal with Nvidia. Japan’s Topix benchmark finished at the highest close since 1990, boosted by Sony. Markets in Hong Kong were shut due to a typhoon, while Singapore and Vietnam were closed for a holiday.
- Gold headed for a second weekly gain, buoyed by falling bond yields, ahead of the headline US labor market report that could impact the Federal Reserve’s tightening path. The metal edged higher on Friday after posting a small decline in the previous session as the Fed’s preferred inflation metric posted the smallest back-to-back increases since late 2020. Benchmark Treasury yields have declined every day this week, relieving the pressure on non-interest bearing bullion.
- Oil headed for the biggest weekly gain since April as Russia signaled it would extend export curbs and China fired another salvo of state support to bolster the economy in the world’s largest crude importer. West Texas Intermediate was up for a seventh day near $84 a barrel, which would be the longest such run since January. US futures have climbed about 5% this week. Russia said that further details on production cuts made in tandem with the country’s OPEC+ partners will be announced next week. Key market gauges are already pointing to market strength before any rollover, with the closely-watched spread between the nearest two December contracts for WTI at the firmest since April.
- The European Central Bank hasn’t yet decided what to do this month but the end of its interest-rate hiking cycle is near, according to Governing Council member Francois Villeroy de Galhau. “Our options are open at this meeting, as they will be at the following ones,” the Bank of France governor told journalists in Paris on Friday. “We are close — or very close — to the peak point of our interest rates,” he added. “We are still far though from the point where we could envisage cutting them.”
- Federal Reserve Bank of Atlanta President Raphael Bostic said the US economy faces a period of some disruption as debts are refinanced at significantly higher interest rates, putting some pressure on both financial institutions and the government. “We have a lot of existing debt out there that is at very low prices,” Bostic said at the South African Reserve Bank’s Biennial Research Conference in Cape Town. “When that comes due, they’re not going to be able to refinance into comparable prices. There’s going to be an adjustment that needs to happen on that. So I actually think there’s a shaking out that’s about to happen at all levels.”
- A monthly report on US employment due Friday is set to show net hiring slowed again to a fresh post-2020 low of 182,000 in August, according to Bloomberg Economics. Two high-profile events in particular — the Hollywood writers’ strike and the bankruptcy of trucking company Yellow Corp. — probably weighed on the numbers, Bloomberg economists Anna Wong, Stuart Paul and Eliza Winger wrote Thursday in a preview of the report. Wage growth probably also slowed, they said.
- Tesla Inc. revamped the Model 3 sedan with sleeker looks and longer range while slashing prices of its premium vehicles in an all-out push to boost sales. The automaker slimmed down the front end of its entry sedan in the first major face-lift of the Model 3 since it went into production six years ago. The car is rated to go 606 kilometers (377 miles) on a charge in China, a 9% improvement. Other upgrades include a new 8-inch rear touch screen and added speakers to the sound system.
- More than three years from the onset of the coronavirus pandemic, Wall Street is still working on cajoling staffers back to the office. In recent mid-year evaluations, Citigroup Inc. managers were reminding staffers with persistent absences of the firm’s expectations for in-office work. Goldman Sachs Group Inc. has also started reiterating the message that it expects employees to be in the office five days a week. Later this month, BlackRock Inc. will tighten its in-office requirements from three days a week to four.
- Huawei Technologies Co.’s latest smartphone clearly demonstrates wireless speeds akin to Apple Inc.’s latest iPhones in numerous tests, as more details emerge about a gadget labeled a Chinese breakthrough despite US tech sanctions. Testing by Bloomberg News of Huawei’s new $900-plus flagship model shows bandwidth similar to other 5G phones. That aligned with blogposts and videos on Chinese social media that claimed the device came with 5G capabilities.
- Walgreens Boots Alliance Inc.’s Rosalind Brewer stepped down from her post as chief executive officer and board member, the drugstore chain said Friday. The move took effect Aug. 31 and board member Ginger Graham has been appointed as the company’s interim CEO, according to a statement. Brewer had been CEO since March 2021 and was one of only a handful of women of color leading Fortune 500 companies. She has agreed to advise Walgreens during its search for a permanent successor.
- Shell Plc agreed to sell its home energy retail business in the UK and Germany to Octopus Energy Group Ltd. for an undisclosed sum. The deal marks the end of an expensive foray into the direct supply of natural gas and power to households through the Shell Energy Brand. Under new Chief Executive Officer Wael Sawan, the London-based company is refocusing on its core business in an effort to boost returns to investors.
- Russian liquefied natural gas shipments to the European Union slumped last month due to plant maintenance and weaker demand, but exports could rebound if a cold snap this winter boosts consumption. Russian LNG arrivals in EU ports fell more than 25% in August from a year earlier to about 770,000 tons, the lowest level for any month since 2021, according to preliminary ship-tracking data compiled by Bloomberg. While the region’s overall imports also declined, Russia’s export capacity was also curbed by annual works.
- Arm Holdings Ltd., one of the most anticipated stock listings of the year, is preparing to set a price range for its initial public offering before embarking on an investor roadshow next week, according to people familiar with the matter. The chip designer is considering pricing its shares on Sept. 13 and the stock will start trading the next day, said the people, who asked not to be identified because the deliberations are private. The roadshow to promote the offering is expected to come after the Labor Day holiday on Monday. Still, the company’s plans are fluid and the timeline could move, the people cautioned.
- Automakers Volkswagen AG and Renault SA are going to feel growing pressure from Chinese rivals muscling in to snatch away sales, analysts at UBS Group AG cautioned. The two carmakers — and prominent players in the electric vehicle market — both got rare downgrades to sell from the Swiss bank on Friday, sending shares around 4% lower. “Legacy mass manufacturers are at greatest risk of structural market share losses due to intensifying competition from Chinese OEMs and Tesla,” analyst David Lesne wrote in a note, cutting Renault’s price target to a Street-low of €31 ($33.63).
- Europe’s top copper producer Aurubis AG warned it may face losses in the hundreds of millions of euros after being hit by a massive scam involving shipments of scrap metal that it uses in its recycling business. Shares in the company plunged as much as 18% after it announced it found a significant metal shortfall and said it no longer expects to meet its profit forecast for the year. Aurubis believes some of its suppliers have manipulated details about the scrap metal they provided and had been working with employees in the company’s sampling department to cover it up.