Author: Consultant

Oil prices were steady on Monday as concern over rising interest rates, the global economy and the outlook for fuel demand were balanced by the prospect of tightening supplies.

Brent crude slipped 22 cents, or 0.3 per cent, to $81.44 a barrel by 1135 GMT. U.S. West Texas Intermediate crude was down 13 cents, or 0.2 per cent, at $77.74.

Both contracts fell more than 5 per cent last week for their first weekly declines in five as U.S. implied gasoline demand fell from a year earlier.

Weak U.S. economic data and worse than expected corporate earnings from the technology sector sparked growth concerns among investors, CMC Markets analyst Tina Teng said. The stabilising U.S. dollar and climbing bond yields are also adding pressure on commodity markets, she added.

Central banks from the United States to Britain and Europe are all expected to raise interest rates when they meet in the first week of May, seeking to tackle stubbornly high inflation.

China’s bumpy economic recovery after the COVID-19 pandemic is also clouding the oil demand outlook, though Chinese customs data showed on Friday that the world’s top crude importer brought in record volumes in March. China’s imports from leading suppliers Russia and Saudi Arabia topped 2 million barrels per day (bpd) each.

Refining margins in Asia, meanwhile, have weakened on record production from top refiners China and India, curbing the region’s appetite for Middle East supplies loading in June.

Yet analysts and traders remained bullish about China’s fuel demand recovery towards the second half of 2023 and potential supply tightness owing to additional supply cuts planned by the OPEC+ producer group from May.

“Planned output cuts by the OPEC+ alliance and a strong demand outlook from China could provide a fillip to prices in the coming days”, said independent oil analyst Sugandha Sachdeva.

“Brent is likely to find key support around $79 a barrel, while for WTI crude support is aligned at $75,” she said.

Equities

Wall Street futures were weaker early Monday with earnings from big tech names set to dominate this week. Major European markets turned mixed after a weaker start. TSX futures were little changed.

In the early premarket period, futures linked to the Dow, S&P and Nasdaq were all lower. All three saw gains on Friday but declines for the week. The S&P/TSX Composite Index closed Friday up and managed a 0.55-per-cent advance for the week.

“This week is all about the U.S. tech giants, which will be reporting and setting the tone for trading,” Naeem Aslam, chief investment officer with Zaye Capital Markets, said.

“There is no doubt that the earnings from the U.S. banks have been somewhat better than expected (if you look at the overall picture). This kept the trading sentiment positive among traders, but what matters now is how well the US tech giants will perform.”

Alphabet and Microsoft are set to report Tuesday. Amazon, Intel and Meta are among the companies reporting later in the week.

In this country, Canadian National Railway reports results after Monday’s close. Canadian Pacific Kansas City Ltd. reports after Wednesday’s close.

On the economic side, Canadians will get a snapshot of the country’s broad economic health with the release of GDP figures for February on Friday from Statistics Canada. Statscan’s early estimate suggested growth of 0.3 per cent for the month. The report will also include an early look at expected growth in March.

“RBC Economics expects the increase in February monthly GDP to be weaker than Statscan’s initial flash estimate of 0.3 per cent (RBC 0.1 per cent) given a large 2.4-per-cent drop in manufacturing sale volumes and declines in wholesale (-1.8%) and retail sales (-0.7%) volumes,” Alvin Tan, Asia FX strategist with RBC, said.

“March GDP growth is expected to remain on the slow side as hours worked rose less than in January and February, and the monthly manufacturing PMI slipped back into contractionary territory.”

He also said the current strike by federal workers could be enough to push GDP growth into negative territory in April.

Overseas, the pan-European STOXX 600 was up 0.06 per cent in late morning trading. Britain’s FTSE 100 slid 0.0.06 per cent. Germany’s DAX and France’s CAC 40 advanced 0.05 per cent and 0.07 per cent, respectively.

In Asia, Japan’s Nikkei finished up 0.10 per cent. Hong Kong’s Hang Seng lost 0.58 per cent, giving up gains seen earlier in the session.

Commodities

Crude prices were choppy in early trading with rate concerns ahead of next month’s Federal Reserve policy meeting and growth worries weighing on sentiment.

The day range on Brent is US$80.48 to US$81.87 in the predawn period. The range on West Texas Intermediate was US$76.72 to US$77.98.

“The recent stress in the U.S. banking sector has heightened concerns around the growth trajectory, triggering a shift from a market heavily focused on inflation last year to growth concerns,” Stephen Innes, managing partner with SPI Asset Management, said.

“Oil markets have particularly suffered from growth worries and slowing inflation, with areas of the economy showing signs of reset, such as housing and wages.”

From the policy perspective, he said, the main risk to growth and oil markets is if the Fed signals a rate hike beyond May.

Currently, the markets have priced in a quarter point rate hike by the Fed next month.

Elsewhere, gold prices were trading in a narrow range early Monday.

Spot gold was little changed at US$1,982.34 an ounce while U.S. gold futures were up 0.1 per cent at US$1,991.30.

Currencies

The Canadian dollar was fairly steady in early trading while its U.S. counterpart edged higher against a group of world currencies.

The day range on the loonie was 73.11 US cents to 73.94 US cents in the early premarket period. The Canadian dollar is up nearly 1 per cent against the greenback over the past month.

Canadian investors get February GDP figures on Friday. Ahead of that, the Bank of Canada releases deliberations from its most recent meeting on Wednesday.

Overseas, the U.S. dollar index, which weighs the currency against a group of world counterparts, was up 0.12 per cent at 101.8, according to figures from Reuters

The index hit a one-year low of 100.78 by mid-April as markets speculated on the future direction of interest rates.

The pound slid 0.2 per cent to US$1.2420 and the euro fell 0.1 per cent at US$1.09775, with neither currency having been able to hold respective multi-month highs above US$1.25 and US$1.10 reached in mid April, Reuters reported.

In bonds, the yield on the U.S. 10-year note was slightly lower at 3.541 per cent in the predawn period.

More company news

Coca-Cola Co beat Wall Street estimates for quarterly revenue on Monday, as demand for its sodas remained resilient in the face of multiple price increases. The company said net revenue rose to US$11-billion from US$10.49-billion in the first quarter, compared with analysts’ average estimate of US$10.80-billion, according to Refinitiv data. –Reuters

Bed Bath & Beyond — one of the original big box retailers known for its seemingly endless offerings of sheets, towels and kitchen gadgets — filed for bankruptcy protection, following years of dismal sales and losses and numerous failed turnaround plans. The beleaguered home goods chain made the filing Sunday in U.S. District Court in New Jersey and said it will start an orderly wind down of its operations, while seeking a buyer for all or some of its businesses. In the bankruptcy filing, the retailer said it anticipates closing all of its stores by June 30. Shares were down about 40 per cent in premarket trading. -The Associated Press

NBCUniversal Chief Executive Jeff Shell is leaving after acknowledging an inappropriate relationship with a woman in the company, following a complaint that prompted an investigation, parent company Comcast Corp said on Sunday. “I had an inappropriate relationship with a woman in the company, which I deeply regret,” Shell said in a statement. His departure is effective immediately. Shell, previously chairman of NBCUniversal Film and Entertainment, took over as CEO in 2020, replacing Steve Burke. –Reuters

Economic news

(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for March.

With Reuters and The Canadian Press

Near the Gulf Coast just east of Texas’ oil-rich Permian Basin, nearly 2,000 ExxonMobil contractors are making sure the company’s latest project – which includes 26 miles of piping, 35 miles of electrical wiring and 875 tons of steel – is pumping oil at full capacity.

After launching America’s largest oil refinery expansion in over a decade, ExxonMobil’s senior vice president of global operations detailed how the company’s Beaumont complex is not only fueling U.S. energy supply but also the economy.

“When you put it all together and you look at this particular location, what I love about it, it allows us to buy what I consider to be very much needed, affordable energy, and in a very reliable supply to fuel the economy that we have here in Texas, the U.S. and, I say, across the globe,” Janet Matsushita told Fox News Digital.

After beginning construction in 2019, the Beaumont refinery startup broke ground just over one month ago and added 250,000 barrels per day to its oil output, increasing its total processing capacity to more than 630,000 barrels daily. To put things into perspective, this equates to a sizable 4 million gallons per day, providing enough fuel to power 61,000 long-haul trucks in a single day. 

CHEVRON, EXXON DEVELOPING CLEANER GAS AS ALTERNATIVE TO EVs

The project’s reported hefty $2 billion price tag was no match for Exxon, who completed the expansion on time and on budget, earning the facility two consecutive Gold Energy Star acknowledgments from the Environmental Protection Agency (EPA), according to Matsushita. 

ExxonMobil’s Beaumont refinery expansion adds 250,000 barrels per day to the oil company’s processing capacity. (Fox News)

“It is actually the equivalent of building a brand-new refinery. It is a big expansion, it is not a minor expansion,” she said contently. “When we built this project, we actually leveraged some of the best energy technology available so that when we operate this new project itself, it is one of the most energy-efficient versus industry standard.”

“And [what’s] really nice to see, we’re actually connected to the U.S. Permian crude,” she continued, “which is right here in our Texas backyard, and that is also a very energy-efficient operation in terms of how we perform. And it has an aspiration to actually be net-zero by 2030.”

https://www.foxbusiness.com/energy/exxonmobil-unleash-us-oil-capabilities-industrys-biggest-refinery-expansion-ten-years

Monday April 24

Germany business climate

(8:30 a.m. ET) Canada’s new housing price index for March. Estimate is a decline of 0.2 per cent from February and unchanged year-over-year.

(8:30 a.m. ET) Canadian wholesale trade for March.

(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for March.

Earnings include: Canadian National Railway Co.; Choice Properties REIT; Coca-Cola Co.

—

Tuesday April 25

Japan department store sales

(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index (20 city) for February. The Street is projecting a decline of 0.4 per cent from January and down 0.2 per cent year-over-year.

(9 a.m. ET) U.S. FHFA House Price Index for February. Consensus is a drop of 0.2 per cent from January and up 3.4 per cent year-over-year.

(10 a.m. ET) U.S. new home sales for March. The Street is forecasting an annualized rate decline of 1.3 per cent.

(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for April.

Earnings include: Aecon Group Inc.; Alphabet Inc.; Danaher Corp.; General Electric Co.; General Motors Co.; Halliburton Co.; McDonald’s Corp.; Microsoft Corp.; PepsiCo Inc.; Texas Instruments Inc.; United Parcel Service Inc.; Verizon Communications Inc.; Visa Inc.; West Fraser Timber Co. Ltd.; Winpak Ltd. 3M Co.

—

Wednesday April 26

Germany consumer confidence

(8:30 a.m. ET) Canadian manufacturing sales for March.

(8:30 a.m. ET) U.S. goods trade deficit for March.

(8:30 a.m. ET) U.S. wholesale and retail inventories for March.

(8:30 a.m. ET) U.S. durable and core orders for March. The Street expects month-over-month increases of 0.7 per cent and 0.2 per cent, respectively.

(1:30 p.m. ET) Bank of Canada summary of deliberations for April 12 decision.

Earnings include: Alamos Gold Inc.; Allied Properties REIT; AltaGas Ltd.; Boeing Co.; Canadian Pacific Kansas City; Celestica Inc.; Cenovus Energy Inc.; CGI Inc.; FirstService Corp.; Glencore ADR; Meta Platforms Inc.; Methanex Corp.; New Gold Inc.; Precision Drilling Corp.; Rogers Communications Inc.; Teck Resources Ltd.; Vale ADR; Waste Connections Inc.

—

Thursday April 27

Bank of Japan monetary policy meeting (through Friday)

Euro zone economic and consumer confidence

(8:30 a.m. ET) Canada’s Survey of Employment, Payrolls and Hours for February.

(8:30 a.m. ET) U.S. initial jobless claims for week of April 22. Estimate is 250,000, up 5,000 from the previous week.

(8:30 a.m. ET) U.S. real GDP for Q1. Consensus is an annualized rate rise of 2.0 per cent.

(10 a.m. ET) U.S. pending home sales for March. The Street predicts an increase of 1.0 per cent from February.

Earnings include: Agnico Eagle Mines Ltd.; Amazon.com Inc.; Atco Ltd.; Bombardier Inc.; Bristol-Myers Squibb Co.; Canadian Utilities Ltd.; Caterpillar Inc.; Eldorado Gold Corp.; Eli Lilly & Co.; GFL Environmental Holdings Inc.; Gilead Sciences Inc.; Intel Corp.; Mastercard Inc.; Merck & Company Inc.; Newcrest Mining Ltd.; Newmont Goldcorp Corp.; Secure Energy Services Inc.; Whitecap Resources Inc.

—

Friday April 28

Japan jobless rate, industrial production and retail sales

Euro zone and Germany GDP

(8:30 a.m. ET) Canada’s monthly real GDP. Consensus is an increase of 0.2 per cent from January.

(8:30 a.m. ET) U.S. personal spending for March. The Street expects a decline of 0.1 per cent with personal income rising 0.2 per cent.

(8:30 a.m. ET) U.S. Core PCE Price Index for March. Consensus is a rise of 0.3 per cent from February and up 4.5 per cent year-over-year.

(8:30 a.m. ET) U.S. Employment Cost Index for Q1. The Street is projecting an increase of 1.1 per cent from Q4 and up 4.8 per cent year-over-year.

(9:45 a.m. ET) U.S. Chicago PMI for April.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for April.

Earnings include: Advantage Oil & Gas Ltd.; Cameco Corp.; Chevron Corp.; Colgate-Palmolive Co.; Exxon Mobil Corp.; First National Financial Corp.; TC Energy Corp.

TORONTO — Shareholders looking for an update on TD Bank Group’s US$13.4 billion takeover of First Horizon Corp. were left with few answers at the bank’s annual meeting Thursday.

Facing numerous questions about the deal after U.S. banking turmoil has pushed down the value of Tennessee-based First Horizon, chief executive Bharat Masrani stuck to a statement that they are in negotiations about a potential extension of the deal past the May 27 deadline.

It’s the same message he gave in a March earnings call when the bank disclosed that they don’t expect to secure regulatory approval of the deal by the deadline, without providing details on what might be causing the delay.

Since then, the collapse of Silicon Valley Bank and Signature Bank have put pressure on the U.S. banking sector and led to calls from some for TD to walk away from the deal that it first announced in February, 2022.

Pressed by shareholders, Masrani said he sees the benefits of the merger, but notably absent in his comments was his March statement that the bank was “fully committed to the transaction.”

Outside of the deal, the meeting saw several shareholder proposals go to a vote related to climate change as well as on executive pay ratios and the financialization of housing.

This report by The Canadian Press was first published April 20, 2023.

Published: 4/21/2023 3:11 PM ET

Crude oil prices climbed higher on Friday, buoyed by fairly strong data on private sector activity in the U.K. and eurozone.

Concerns about the U.S. economic outlook and interest rate uncertainty limited the uptick in oil prices.

West Texas Intermediate Crude oil futures for June ended higher by $0.50 or about 0.7% at $77.87 a barrel.

Brent crude futures were up $0.45 or 0.55% at $81.55 a barrel a little while ago.

WTI crude futures and Brent crude futures both shed more than 5.5% in the week.

The U.K. private sector expanded for the third successive month in April to the strongest level in a year, driven by a sharp upturn in the services economy, while manufacturing remained in the contraction zone, flash survey results from S&P Global showed.

The flash Chartered Institute of Procurement & Supply composite output index climbed to 53.9 in April from 52.2 in March. The expected score was 52.5.

Eurozone private sector activity expanded at the fastest pace in nearly a year in April, driven by reviving demand in the service sector, and was accompanied by a sharp increase in employment amid a moderation in inflationary pressures and resilient business confidence, the results of the latest purchasing managers’ survey by S&P Global showed Friday.

The seasonally adjusted HCOB flash composite output index rose to 54.4 in April from 53.7 in the previous month. The score was expected to remain steady at 53.7.

The reading rose for the sixth month in a row and remained above the critical 50.0 threshold for the fourth successive month. This suggested the biggest growth in the private sector since May 2022.

According to a report released by Baker Hughes, the total number of active drilling rigs in the U.S. rose by 5 this week.

The total rig count rose to 753 this week, 58 rigs higher than the count this time last year.

While oil rigs increased by 3 this week, gas rigs rose by 2.

Magna International Inc. says it will engineer and build electric off-road vehicles for U.K.-based industrial conglomerate Ineos Group Ltd.

Aurora, Ont.-based Magna says the contract will see it produce the vehicles at its facility in Graz, Austria with a 2026 expected start.

Magna began working with Ineos in 2018 to engineer its first vehicle, a 4×4 fossil-fuel powered vehicle called the Grenadier.

The automotive company already produces several models at the Graz plant, including Jaguar and Fisker electric vehicles, and has drawn speculation as being a potential producer for an Apple Inc. car thought to be in development.

Magna is also working to increase its EV-related production in Canada, announcing in February a $471 million investment across six Ontario locations to expand its EV parts capacity.

Ineos is a chemical company with some $65 billion in annual revenues operating in 29 countries that has branched into consumer goods through its auto division as well as a hygiene and clothing brand.

This report by The Canadian Press was first published April 17, 2023.

The Canadian market ended modestly higher on Friday, aided by gains in technology and consumer staples sections.

Several stocks from industrials, utilities and consumer discretionary sectors too posted notable gains.

Concerns about interest rates and economic slowdown weighed on sentiment.

The benchmark S&P/TSX Composite Index ended with a modest gain of 62.46 points or 0.3% at 20,693.15. The index gained about 0.55% in the week.

Technology stock Shopify Inc (SHOP.TO) rallied about 2.7%. Sylogist (SYZ.TO), Kinaxis Inc (KXS.TO), CGI Group Inc (GIB.A.TO), Constellation Software (CSU.TO) and Descartes Systems (DSG.TO) gained 1 to 1.7%.

Consumer staples shares Maple Leaf Foods (MFI.TO) and The North West Company (NWC.TO) both ended nearly 2% up. Loblaw (L.TO), Metro Inc (MRU.TO), Alimentation Couche-Tard (ATD.TO), Weston George (WN.TO), Empire Company (EMP.A.TO) and Saputo (SAP.TO) gained 1 to 1.7%.

Fairfax Financial Holdings (FFH.TO), BRP Inc (DOO.TO) and Thomson Reuters Corporation (TRI.TO) gained 2.5%, 1.5% and 1.4%, respectively. Waste Connections (WCN.TO), Restaurant Brands International (QSR.TO) and Canadian Pacific Kansas City (CP.TO) also ended notably higher.

First Quantum Minerals (FM.TO) ended 6% down. Rogers Communications (RCI.A.TO), Nutrien (NTR.TO), Precision Drilling Corporation (PD.TO) and Teck Resources (TECK.A.TO) lost 1.4 to 1.7%.

On the economic front, data from Statistics Canada showed retail sales in Canada increased 4.3% in February over the same month in the previous year.

Retail sales in Canada are expected to have dropped by 1.4% month-over-month in March, according to preliminary estimates.