Author: Consultant

  • China’s consumer and factory data miss expectations in July

    China’s consumer and factory data miss expectations in July

    • Retail sales grew by 2.7% in July from a year ago, the National Bureau of Statistics said Monday. That’s well below the 5% growth forecast by a Reuters poll, and down from growth of 3.1% in  June.
    • Industrial production rose by 3.8%, also missing expectations for 4.6% growth and a drop from the prior month’s 3.9% increase.
    • Investment into real estate fell at a faster pace in July than June, while investment into manufacturing slowed its pace of growth.

    https://www.cnbc.com/2022/08/15/chinas-consumer-and-factory-data-miss-expectations-in-july.html

  • China unexpectedly cuts key rates as economic data disappoints

    China unexpectedly cuts key rates as economic data disappoints

    China’s central bank cut key lending rates in a surprise move on Monday to revive demand as data showed the economy unexpectedly slowing in July, with factory and retail activity squeezed by Beijing’s zero-COVID policy and a property crisis.

    The grim set of figures indicate the world’s second largest economy is struggling to shake off the June quarter’s hit to growth from strict COVID-19 restrictions, prompting some economists to downgrade their projections.

    Industrial output grew 3.8% in July from a year earlier, according to the National Bureau of Statistics (NBS), below the 3.9% expansion in June and a 4.6% increase expected by analysts in a Reuters poll.

    Retail sales, which only just returned to growth in June, rose 2.7% from a year ago, missing forecasts for 5.0% growth and the 3.1% growth seen in June.

    “The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

    “The People’s Bank of China is already responding to these headwinds by stepping up support…But with credit growth proving less responsive to policy loosening than in the past, this probably won’t be sufficient to prevent further economic weakness.”

    Local shares gave up earlier gains after the data while the yuan weakened to a one-week low against the dollar and the Australian and New Zealand currencies pulled back from their recent two-month highs.

    China’s economy narrowly escaped a contraction in the June quarter, hobbled by the lockdown of the commercial hub of Shanghai, a deepening downturn in the property market and persistently soft consumer spending.

    Risks still abound as many Chinese cities, including manufacturing hubs and popular tourist spots, imposed lockdown measures in July after fresh outbreaks of the more transmissible Omicron variant of the coronavirus were found.

    The property sector, which has been further rocked by a mortgage boycott that weighed on buyer sentiment, deteriorated in July. Property investment tumbled 12.3% last month, the fastest rate this year, while the drop in new sales deepened to 28.9%.

    Nie Wen, Shanghai-based economist at Hwabao Trust, lowered his forecast for the third-quarter gross domestic product growth by 1 percentage point to 4-4.5%, after the weaker-than-expected data.

    ING also cut their forecast for China’s 2022 GDP growth to 4% from 4.4% previously, and warned a further downgrade is possible, depending on the strength in exports.

    Balancing Act

    To prop up growth, the central bank on Monday unexpectedly lowered interest rates on key lending facilities for the second time this year. Analysts expect the cut is likely to lead to a corresponding reduction in benchmark lending rates next week.

    Many believe the room for the People’s Bank of China to ease policy further could be limited by worries about capital outflows, as the U.S. Federal Reserve, and other economies, aggressively raise interest rates to fight soaring inflation.

    “Very sluggish credit demand in July on the back of weak activity growth, further deterioration in property indicators and lower-than-expected CPI inflation might have contributed to the PBOC’s move,” said analysts at Goldman Sachs.

    “Going forward, whether PBOC would cut interest rates again could be data-dependent in our view.”

    Official figures on Friday showed new yuan loans tumbled by more than expected in July, as companies and consumers stayed wary of taking on debt.

    Chinese policy-makers are trying balance the need to shore up a fragile recovery and eradicate new COVID-19 clusters. As a result, the economy is expected to miss its official growth target this year – set at around 5.5% – for the first time since 2015.

    In eastern Zhejiang province, the city of Yiwu, a key global supplier of small and cheap products, has been wrestling with COVID-related disruptions on and off since July. Many parts of Yiwu have been thrown into an extended lockdown since Aug. 11.

    “We’ve halted factory production since the city imposed a ‘quiet mode’,” said a sales manager at a Yiwu factory that makes consumer goods.

    Fixed asset investment, which Beijing hopes will compensate for slower exports in the second half, grew 5.7% in the first seven months of 2022 from the same period a year earlier, versus a forecast 6.2% rise and down from a 6.1% jump in January-June.

    The employment situation remained fragile. The nationwide survey-based jobless rate eased slightly to 5.4% in July from 5.5% in June, although youth unemployment stayed stubbornly high, reaching a record 19.9% in July.

    “In our view, China’s growth in H2 will be significantly hindered by its zero-COVID strategy, the deteriorating property sector, and a likely slowdown of export growth,” analysts at Nomura said.

    “Beijing’s policy support could be too little, too late and too inefficient.”

  • At the open: TSX starts lower as oil slumps on disappointing China data

    At the open: TSX starts lower as oil slumps on disappointing China data – Aug 15, 2022

    Canada’s main stock index opened lower on Wednesday as oil prices tumbled after weaker-than-expected Chinese economic data clouded the outlook for the global economy.

    At 9:32 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 142.59 points, or 0.71%, at 20,037.22.

    Miner Turquoise Hill Resources Ltd plunged 16% on rejecting an offer by majority shareholder Rio Tinto Ltd to buy the 49% stake it doesn’t already own for $2.7-billion

    Wall Street’s main indexes opened lower on Monday, mirroring global markets, after weak economic data from China rekindled fears of an economic slowdown in the world’s second-largest economy.

    The Dow Jones Industrial Average fell 50.35 points, or 0.15%, at the open to 33,710.70.

    The S&P 500 opened lower by 10.78 points, or 0.25%, at 4,269.37, while the Nasdaq Composite dropped 50.56 points, or 0.39%, to 12,996.63 at the opening bell.

    China’s central bank slashed key lending rates to revive demand as data showed the economy unexpectedly slowing in July, with factory and retail activity squeezed by Beijing’s zero-COVID policy and a property crisis.

    U.S.-listed shares of China’s e-commerce giant Alibaba Group Holding Ltd and internet firm Baidu Inc declined more than 1% each in early trading.

    Megacap growth and technology stocks such as Apple and Amazon began lower while banks also edged down after posting six straight weeks of gains.

    “With the recent rally that we’ve had from the June lows, it just gives investors a reason to pause today,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

    “I think the primary reason futures are down is because China surprisingly cut one of their key lending rates as economic news was a little bit weaker than expected.”

    Oil stocks Exxon Mobil Corp, Chevron Corp, Halliburton Co and Marathon Oil Corp fell as crude prices tumbled on concerns over demand in China, the world’s largest crude importer.

    U.S. benchmark crude oil shed $4.46 to $87.63 per barrel in electronic trading on the New York Mercantile Exchange. It lost $2.25 per barrel on Friday.

    Brent crude oil, the basis for pricing for international trading, gave up $4.62 to $93.53 per barrel.

    Wall Street has rallied over the last few weeks, with the benchmark S&P 500 index recovering half of its losses this year as optimism seeped back into markets following data that raised hopes the U.S. Federal Reserve can achieve a soft landing for the economy.

    The S&P 500 and the Nasdaq posted their fourth straight week of gains on Friday even as Fed officials pushed back on expectations that the central bank will end its rate hikes sooner than anticipated, and economists warned that inflation could return in the coming months.

    Meanwhile, analysts and advisers were optimistic that the move to delist five Chinese state-owned enterprises from the New York Stock Exchange could pave the way for Beijing to strike an audit deal with the United States, ending a more than decade-old dispute.

    U.S.-listed shares of the five Chinese firms China Life Insurance Co Ltd, Sinopec, Aluminum Corp of China Ltd, PetroChina Co Ltd and Sinopec Shanghai Petrochemical Co Ltd extended Friday’s decline.

    Reuters

  • U.S. Consumer Sentiment Improves Much More Than Expected In August

    U.S. Consumer Sentiment Improves Much More Than Expected In August

    By RTTNews Staff Writer   ✉  | Published: 8/12/2022 10:45 AM ET

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    Consumer sentiment in the U.S. has improved by much more than expected in the month of August, according to preliminary data released by the University of Michigan on Friday.

    The report showed the consumer sentiment index jumped to 55.1 in August from 51.5 in July. Economists had expected the index to inch up to 52.5.

    With the bigger than expected increase, the consumer sentiment index continued to recover after hitting a record low 50.0 in June.

    The extended rebound by the headline index reflected a significant improvement in consumer expectations, with the index of consumer expectations surging to 54.9 in August from 47.3 in July.

    “All components of the expectations index improved this month, particularly among low and middle income consumers for whom inflation is particularly salient,” said Surveys of Consumers Director Joanne Hsu.

    She added, “The year-ahead economic outlook rose substantially to just above its average reading from the second quarter 2022, while the two other expectations index components remain at or below their second quarter averages.”

    Meanwhile, the report showed a pullback by the current economic conditions index, which fell to 55.5 in August after climbing to 58.1 in July.

    The University of Michigan also said one-year inflation expectations dipped to 5.0 percent in August from 5.2 percent in July, while five-year inflation expectations crept up 3.0 percent from 2.9 percent.

    Hsu noted one-year inflation expectations fell to the lowest level since February but were still well above the 4.6 percent reading from a year ago.

    “Uncertainty over long run inflation receded a bit, with the interquartile range in expectations falling from 4.7 last month to 3.8 this month, remaining above the 3.3 range seen last August,” Hsu added. “Still, the share of consumers blaming inflation for eroding their living standards remained near 48%.”

  • House passes massive climate, tax and health bill, sending Biden a core piece of his agenda to sign

    House passes massive climate, tax and health bill, sending Biden a core piece of his agenda to sign

    • The House passed a sweeping tax, health and climate bill, dubbed the Inflation Reduction Act.
    • Its passage marked a win for Democrats and President Joe Biden less than three months before the pivotal midterm elections.
    • Biden is expected to sign the legislation, a core piece of his agenda, in the coming days.

    https://www.cnbc.com/2022/08/12/house-to-vote-on-inflation-reduction-act-tax-and-climate-bill.html

  • Economic Calendar : Aug 15 – Aug 19

    Economic Calendar : Aug 15 – Aug 19

    Monday August 15

    China retail sales, industrial production and fixed asset investment

    Japan real GDP and industrial production

    (8:30 a.m. ET) Canadian manufacturing sales and new orders. The Street expects month-over-month declines of 1.0 per cent for both.

    (8:30 a.m. ET) Canada’s wholesale trade for June. Estimate is a rise of 0.5 per cent from May.

    (8:30 a.m. ET) Canada’s new motor vehicle sales for June. Estimate is a year-over-year decline of 10.0 per cent.

    (8:30 a.m. ET) U.S. Empire State Manufacturing Survey for August.

    (9 a.m. ET) Canada’s existing home sales and average prices for July. Estimates are declines of 26.0 per cent and 4.0 per cent year-over-year, respectively.

    (9 a.m. ET) Canada’s MLS home price index for July. Estimate is a rise of 12.5 per cent year-over-year.

    (10 a.m. ET) U.S. NAHB Housing Market Index for August.

    Earnings include: Galaxy Digital Holdings Inc.; Ivanhoe Mines Ltd.; K92 Mining Inc.; MAG Silver Corp.

    Tuesday August 16

    Japan tertiary index

    Euro zone trade balance

    (8:15 a.m. ET) Canadian housing starts for July. The Street is expecting an annualized rate decline of 3.2 per cent.

    (8:30 a.m. ET) Canada’s CPI for July. The consensus forecast is for a rise of 0.1 per cent from June and up 7.6 per cent year-over-year.

    (8:30 a.m. ET) Canadian international securities transactions for June.

    (8:30 a.m. ET) U.S. housing starts for July. The Street is projecting an annualized decline of 1.4 per cent.

    (8:30 a.m. ET) U.S. building permits for July. The Street expects an annualized rate drop of 3 per cent.

    (9:15 a.m. ET) U.S. industrial production for July. The consensus estimate is a rise of 0.4 per cent from June.

    Earnings include: Dream Unlimited Corp.; Home Depot Inc.; Osisko Mining Corp.; Sea Ltd.; TJX Companies Inc.; Walmart Inc.

    Wednesday August 17

    Japan trade balance and core machine orders

    Euro zone real GDP

    (8:30 a.m. ET) U.S. retail sales for July. The Street is estimating a rise of 0.1 per cent from June.

    (10 a.m. ET) U.S. business inventories for June. Consensus is a rise of 1.4 per cent from May.

    (2 p.m. ET) U.S. Fed minutes from July 26-27 meeting are released.

    Earnings include: Analog Devices Inc.; Birchcliff Energy Ltd.; Cisco Systems Inc.; Cresco Labs Inc.; Lowe’s Companies Inc.; Target Corp.

    Thursday August 18

    Euro zone CPI

    (8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for July. Estimates are month-over-month declines of 1.0 per cent and 4.5 per cent, respectively.

    (8:30 a.m. ET) U.S. initial jobless claims for week of Aug. 13. Estimate is 265,000, up 3,000 from the previous week.

    (8:30 a.m. ET) U.S. Philadelphia Fed Index for August.

    (10 a.m. ET) U.S. existing home sales for July. Consensus is a decline of 4.6 per cent on an annualized rate basis.

    (10 a.m. ET) U.S. leading indicator for July.

    Earnings include: Applied Materials Inc.; Canadian Solar Inc.; Estee Lauder Companies Inc.

    Friday August 19

    Japan CPI

    Germany PPI

    (8:30 a.m. ET) Canadian retail sales for June. The Street is forecasting a rise of 0.4 per cent from May.

    (8:30 a.m. ET) Canada’s new housing price index for July. Estimate is flat from June and up 7.4 per cent year-over-year.

    (8:30 a.m. ET) Canada’s household credit and mortgage credit for June.

    Earnings include: Deere & Co.; Newcrest Mining Ltd.

  • Oil falls 2% on expectations that U.S. Gulf supply disruption will ease

    Oil falls 2% on expectations that U.S. Gulf supply disruption will ease

    Oil prices plunged around 2% on Friday, on expectations that supply disruptions in the U.S. Gulf of Mexico would be short-term, while recession fears clouded the demand outlook.

    Futures, however, were still on track for a weekly gain.

    Brent crude futures fell $1.47, or 1.5%, to $98.13 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.08, or 2.2%, to $92.26 a barrel. Both contracts gained more than 2% on Thursday.

    “We are pulling back a little bit after the big run up yesterday,” said Phil Flynn, an analyst at Price Futures group.

    Brent was on track for a 3.5% gain this week after last week’s 14% tumble on fears that rising inflation and interest rates will hit economic growth and demand for fuel. WTI was on course for a 3.7% gain.

    Crews were expected to replace a damaged oil pipeline piece nL1N2ZO154 by the end of the day on Friday, a Louisiana port official said, allowing for the resumption of production at seven offshore U.S. Gulf of Mexico oil platforms.

    On Thursday, top U.S. Gulf of Mexico oil producer Shell said it halted production at three deepwater platforms in the region. The three platforms are designed to produce up to 410,000 barrels of oil per day combined.

    The market also absorbed contrasting demand views from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).

    “We are seeing an economic slowdown, but its unclear if it’s as big a slowdown as some of the recent outlooks have been predicting,” said Ole Hansen, head of commodity strategy at Saxo Bank. “The demand will ebb and flow, but supply is still the main concern.”

    European sanctions on Russian oil are due to tighten later this year while a six-month coordinated energy release agreed by the United States and other developed economies is due to run its course by the end of the year.

    On Thursday OPEC cut its forecast for growth in world oil demand in 2022 by 260,000 barrels per day (bpd). It now expects demand to rise by 3.1 million bpd this year.

    The IEA, meanwhile, raised its demand growth forecast to 2.1 million bpd, citing gas-to-oil switching in power generation

    The IEA also raised its outlook for Russian oil supply by 500,000 bpd for the second half of 2022 but said OPEC would struggle to boost production.

    In the United States, import prices fell for the first time in seven months in July, helped by a strong dollar and lower fuel and nonfuel costs, while consumers’ one-year inflation outlook ebbed in August, the latest signs that price pressures may have peaked.

    U.S. oil rigs rose three to 601 this week, energy services firm Baker Hughes Co said. The rig count, an indicator of future output, has been slow to grow with oil production only seen recovering to pre-pandemic levels next year.

  • Linamar Reports Sales Up On Market Share, Pricing, While Income Dips To $105M

    Linamar Reports Sales Up On Market Share, Pricing, While Income Dips To $105M

    Linamar Corp. says sales climbed in its last quarter on increased market share and higher pricing while profits saw a modest dip in part on higher input costs.

    The manufacturer says net income for the quarter ending June 30 came in at $104.5 million, or $1.61 per share, down from $108 million or $1.65 per share.

    Adjusted net earnings were $109.3 million, or $1.68 per share, up from $106.9 million or $1.63 per share.

    Sales came in at $1.98 billion, up from $1.58 billion for the same quarter last year.

    Analysts had expected revenue of $1.8 billion and an adjusted net income of $1.09 per share, according to financial markets data firm Eikon.

    The company says sales were also boosted by fewer supply chain problems, as well as acquisitions in both its industrial and mobility segments.

    This report by The Canadian Press was first published August 10, 2022.

  • OPEC, in contrast to IEA, sees lower 2022 oil demand growth

    OPEC, in contrast to IEA, sees lower 2022 oil demand growth

    OPEC on Thursday cut its 2022 forecast for growth in world oil demand for a third time since April, citing the economic impact of Russia’s invasion of Ukraine, high inflation and efforts to contain the coronavirus pandemic.

    The view from the Organization of the Petroleum Exporting Countries contrasts with that of the International Energy Agency, the adviser to industrialized countries, which earlier on Thursday raised its 2022 demand growth outlook.

    OPEC in a monthly report said it expects 2022 oil demand to rise by 3.1 million barrels per day (bpd), or 3.2%, down 260,000 bpd from the previous forecast. The IEA raised its forecast by 380,000 bpd to 2.1 million bpd.

    Oil use has rebounded from the worst of the pandemic and is set to exceed 2019 levels this year even after prices hit record highs. However, high prices and Chinese coronavirus outbreaks have eaten into OPEC’s 2022 growth projections.

    “Global oil market fundamentals continued their strong recovery to pre-COVID-19 levels for most of the first half of 2022, albeit signs of slowing growth in the world economy and oil demand have emerged,” OPEC said in its report.

    OPEC cut its 2022 global economic growth forecast to 3.1% from 3.5% and trimmed next year to 3.1%, saying that the prospect of further weakness remained.

    “This is, however, still solid growth, when compared with pre-pandemic growth levels,” OPEC said. “Therefore, it is obvious that significant downside risk prevails.”

    Oil prices held on to an earlier gain after the OPEC report was released, finding support from the IEA’s view on demand and trading above $98 a barrel

    OPEC pumps more

    OPEC and allies, including Russia, known collectively as OPEC+, are ramping up oil output after record cuts put in place as the pandemic took hold in 2020.

    In recent months OPEC+ has failed to fully achieve its planned production increases owing to underinvestment in oilfields by some OPEC members and by losses in Russian output.

    The report showed OPEC output in July rose by 162,000 bpd to 28.84 million bpd, a smaller increase than pledged.

    OPEC’s take on the outlook for 2023 suggests that the market could remain tight.

    OPEC left its 2023 world demand growth projection unchanged at 2.7 million bpd and expects supply from non-member countries to rise by 1.71 million bpd, meaning OPEC will need to pump around 900,000 bpd more to balance the market.

    While the 2023 outlook for overall non-OPEC supply was left steady, OPEC sees a slight acceleration in U.S. shale growth.

    Supply of U.S. tight oil, another term for shale, is expected to rise by 800,000 bpd in 2023, up from 740,000 bpd in 2022, although this year’s forecast was revised down.