Author: Consultant

Oil prices rose on Friday to their highest in over half a year and snapped a two-week losing streak, buoyed by expectations of tightening supplies.

Saudi Arabia is widely expected to extend a voluntary 1 million barrel per day oil production cut into October, prolonging supply curbs engineered by the Organization of the Petroleum Exporting Countries (OPEC) and allies, known collectively as OPEC+, to support prices.

Russia, the world’s second-largest oil exporter, has already agreed with OPEC+ partners to cut oil exports next month, Deputy Prime Minister Alexander Novak said on Thursday.

Brent crude settled up $1.66, or 1.9 per cent, at $88.49 a barrel. Earlier it gained to a session high of $88.75 a barrel, the highest since Jan. 27.

U.S. West Texas Intermediate crude (WTI) had risen $1.39, roughly 1.7 per cent, to $85.02. It rose earlier to $85.81, the highest since Nov. 16.

Brent rose about 4.8 per cent this week, the most it has increased in a week since late July. WTI advanced by 7.2 per cent in the week, its biggest weekly gain since March.

“There is a realization the economy is not falling off the map, and signs that demand is near record highs,” said Price Futures Group analyst Phil Flynn. “People have to face the cold, hard reality that supplies are below average.”

The appetite for oil in the United States has been robust, with commercial crude inventories declining in five of the most recent six weeks, according to surveys conducted by the U.S. Energy Information Administration.

A keenly watched U.S. report on Friday also showed a rise in the unemployment rate and moderation in wage growth, bolstering expectations of a pause in interest rate hikes.

Meanwhile, expectations for demand recovery elsewhere are growing.

A downturn in euro zone manufacturing eased last month, suggesting the worst may be over for the bloc’s beleaguered factories, while an unexpected rebound in China offered some hope for export-reliant economies, private surveys showed.

Both OPEC and the International Energy Agency are depending on the world’s biggest oil importer, China, to shore up oil demand over the rest of 2023, but the sluggish recovery of the country’s economy has investors concerned.

The remainder of this year promises to bring supply shortage, partly owing to reasonably healthy global consumption and partly because of the Saudi determination to provide a high price floor, said Tamas Varga of oil broker PVM.

“Unless the Chinese economy stages a confident revival next year, the mood will sour markedly,” he said.

In an indication of future supply, U.S. oil rigs were unchanged at 512 this week, the measure holding at its lowest level since February 2022, energy services firm Baker Hughes said on Friday.

Published: 9/1/2023 5:39 AM ET

Gold inched higher on Friday and was on track for a weekly gain, as the dollar weakened and bond yields dipped on growing expectations that the Federal Reserve is done with raising rates.

Spot gold edged up 0.2 percent to $1,944.30 per ounce, while U.S. gold futures were up 0.3 percent at $1,970.75.

Recent data from the U.S. has been on the soft side, prompting traders to dial back rate-hike bets for the Fed’s September, November and December meetings.

The monthly jobs report along with a report on manufacturing activity may attract some attention in the New York session.

Economists expect U.S. employment to increase by 170,000 jobs in August after an increase of 187,000 jobs in July. The unemployment rate is expected to remain at 3.5 percent.

On Thursday, Fed Bank of Atlanta President Raphael Bostic said that U.S. monetary policy is already tight enough to bring inflation back down to 2 percent over a “reasonable” period.

OPINION

Weaker-than-expected second-quarter gross domestic product data this morning has money markets pricing in stronger odds that the Bank of Canada is done hiking rates for this economic cycle.

Canada’s economy unexpectedly contracted in the second quarter at an annualized rate of 0.2%, while real GDP was most likely unchanged in July after a 0.2% fall in June, Statistics Canada said Friday.

The second-quarter reading was far lower than the Bank of Canada’s forecast for a 1.5% annualized GDP growth as well as the 1.2% gain expected by analysts.

The quarterly slowdown was largely due to declines in housing investment, smaller inventory accumulation, as well as slower international exports and household spending, Statistics Canada said.

The month-over-month decline in June was in line with forecasts. Statscan also downwardly revised May GDP growth to a 0.2% increase from an initial report of 0.3% growth. First-quarter annualized growth rate was also downwardly revised to 2.6% from 3.1%.

Friday’s GDP report is the last major piece of domestic data before the Bank of Canada makes its next policy decision next week.

Credit markets have quickly reassessed the odds that the bank will further hike interest rates at next week’s meeting and they are now signalling very strong odds – about 91% – that the BoC will hold rates steady, according to Refinitiv Eikon data that’s based on implied probabilities in the swaps market. That’s up from about 79% odds of no change prior to the 0830 am ET GDP release.

Here’s a detailed look at how money markets are pricing in further moves in the Bank of Canada overnight rate, as of 0840 am ET. The current Bank of Canada overnight rate is 5%. While the bank moves in quarter point increments, credit market implied rates fluctuate more fluidly and are constantly changing. Columns to the right are percentage probabilities of future rate moves.

Beyond the September meeting, money markets are also now pricing in much stronger odds that the bank won’t hike rates any further through the course of this year and next. By next June, money markets are now pricing in nearly 50% odds that the bank would have implemented a rate cut.

US economy adds 187,000 jobs in August while unemployment rate unexpectedly jumps | Fox Business

 Canadian Imperial Bank of Commerce (CM) on Thursday reported fiscal third-quarter earnings of $1.06 billion.The bank, based in Toronto, said it had earnings of $1.10 per share. Earnings, adjusted for non-recurring costs, were $1.14 per share.The results did not meet Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of $1.25 per share.The bank and financial services company posted revenue of $10.66 billion in the period. Its revenue net of interest expense was $4.38 billion, exceeding Street forecasts.

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. On an adjusted basis, National Bank says it earned $2.21 per diluted share, down from $2.35 per diluted share in the same quarter last year. Analysts on average had expected an adjusted profit of $2.38 per share, according to estimates compiled by financial markets data firm Refinitiv. This report by The Canadian Press was first published Aug. 30, 2023.

Scotiabank reported that its third-quarter profit fell compared with a year ago as its provision for credit losses nearly doubled. The bank says its net income amounted to $2.21 billion, or $1.72 per diluted share, for the quarter ended July 31, down from $2.59 billion, or $2.09 per diluted share, a year earlier.

Revenue for the quarter totaled $8.09 billion, up from $7.80 billion.

Scotiabank’s provision for credit losses totaled $819 million in its latest quarter, up from $412 million in the same quarter last year.On an adjusted basis, the bank says it earned $1.73 per diluted share, down from an adjusted profit of $2.10 per diluted share a year ago.Analysts on average had expected an adjusted profit of $1.74 per share, according to estimates compiled by financial markets data firm Refinitiv.

This report by The Canadian Press was first published Aug. 29, 2023.

BMO Financial Group reported its third-quarter profit edged higher compared with a year ago even as the amount it set aside for bad loans grew. The bank says it earned $1.45 billion or $1.97 per diluted share for the quarter ended July 31, up from $1.37 billion or $1.95 per diluted share a year earlier.

Revenue totaled $7.93 billion, up from $6.10 billion in the same quarter last year.

BMO’s provision for credit losses totaled $492 million, up from $136 million in its third quarter last year.On an adjusted basis, BMO says it earned $2.78 per diluted share, down from an adjusted profit of $3.09 per diluted share a year earlier.

Analysts on average had expected an adjusted profit of $3.13 per share, based on estimates compiled by financial markets data firm Refinitiv.

This report by The Canadian Press was first published Aug. 29, 2023.

 Published: 8/28/2023 4:37 AM ET

Asian shares advanced on Monday as investors cheered China’s stimulus to ease market unrest and drive economic growth. Chinese authorities announced a slew of measures over the weekend to bolster the country’s equity markets and fuel an increase in spending.

The measures included a 50 percent reduction in stamp duty on stock trades and a slower pace of initial public offerings. China’s securities regulator also approved the launch of 37 retail funds. Meanwhile, investors shrugged off data showing that profits at China’s industrial firms extended a slump into a seventh month.

The dollar fell against a basket of currencies ahead of key U.S. jobs and inflation readings due this week.Gold was little changed, defying Fed Chair Jerome Powell’s hawkish tone on interest rates.

Oil prices edged higher as China’s latest stimulus measures helped to alleviate fuel demand concerns. Chinese shares climbed after authorities cut stamp duty and margin ratios for leveraged trades. The benchmark Shanghai Composite index settled 1.13 percent higher at 3,098.64.Hong Kong’s Hang Seng index rose 0.97 percent to 18,130.74. China Evergrande Group shares plummeted almost 79 percent as trading resumed following a 17-month suspension. According to its 2023 interim report, the property developer’s net loss for the six-month period stood at $5.4 billion. Japanese shares rallied, underpinned in part by the persistent weakness of the yen.
The yen hovered close to its lowest in over nine months after Bank of Japan Governor cited inflation concerns to support ultra-easy monetary policy.