Author: Consultant

Premarket (June 28): Stocks, oil edge up as China relaxes quarantine rules

Global shares moved into positive territory on Tuesday while oil prices firmed following China’s decision to ease some quarantine requirements for international arrivals that raised hopes for stronger growth and a revival in demand for commodities.

China slashed the quarantine time for inbound travellers by half in a major easing of one of the world’s strictest COVID-19 curbs, which have deterred travel in and out of the country since 2020.

Asian shares rose after the announcement and European stocks opened firmly in the green which sent the MSCI’s benchmark for global stocks into positive territory and on track for its fourth consecutive daily gain.

China’s strict zero-COVID regulations have been a drag on activity in the world’s number two economy, but an easing of travel restrictions and reopening of major cities from lockdowns boost optimism that growth can get back on track.

“This is a good step forward,” said Hani Redha, multi asset portfolio manager at PineBridge Investments.

“It’s not enough to lead to a very robust recovery, but it’s definitely going to be positive incrementally.”

MSCI’s broadest index of Asia-Pacific shares rose 0.3%, while Hong Kong’s Hang Seng reversed earlier losses to rise 0.7% and China’s CSI 300 Index gained over 1%. China’s tourism stocks gained over 5.5%.

The pan-European STOXX 600 was up 0.6%, boosted by oil & gas and mining stocks, but the outlook for developed market stocks remains challenging as central banks attempt to balance stubbornly high inflation with slowing growth.

“Equity markets will not be out of the woods until central banks shift their rhetoric to a less hawkish stance,” said Salman Baig, portfolio manager, cross asset solutions, at Unigestion.

“Unfortunately for many investors, such a pivot will likely not happen until after the economy has slowed down sufficiently to bring inflation on a sustainably downward path.”

The European Central Bank’s Forum on Central Banking in Sintra continued on Tuesday with a focus on a speech from ECB President Christine Lagarde.

Lagarde said the ECB will move gradually when it begins raising rates but with the option to act decisively on any deterioration in medium-term inflation, especially if there are signs of a de-anchoring of inflation expectations.

Euro zone government bond yields held near their highs after Lagarde’s comments, with Germany’s 10-year yield, the benchmark for the bloc, up 8 basis points at 1.63%.

The euro was little changed against the U.S. dollar following Lagarde’s initial comments, while China’s offshore yuan rose 0.1% after Beijing’s measures to ease travel restrictions.

The U.S. dollar index, which measures the greenback against a basket of six currencies, was little changed at 103.97.

Oil prices swung higher after China eased quarantine rules, with focus already on tight supply as G7 leaders agreed to study placing price caps on imports of Russian oil and gas.

U.S. crude rose 1.41% to $111.08 a barrel. Brent crude jumped 1.3% to $116.59 per barrel.

“A seam of tight supply news bolstered the (oil) market,” said analysts at Commonwealth Bank of Australia. “Political unrest might curtail supply from a couple of second-tier producers, Ecuador and Libya. And then there’s the G7′s proposed price cap on Russian oil.”

Gold was 0.2% higher with the spot price trading at $1,827 per ounce.

Bitcoin rose 0.8%, trading at $20,870 after falling as low as $17,588.88 earlier this month.

Reuters

One more blockbuster Supreme Court decision could still be coming even after Friday’s abortion ruling

Believe it or not, overturning Roe v Wade may not be the Supreme Court’s most dramatic decision this year. Instead, its ruling on West Virginia vs. the Environmental Protection Agency could prove far more consequential. It could literally upend how our government works.

West Virginia vs. the EPA asks whether important policies that impact the lives of all Americans should be made by unelected D.C. bureaucrats or by Congress. This SCOTUS could well decide that ruling by executive agency fiat is no longer acceptable.

The case involves the Clean Power Plan, which was adopted under President Barack Obama to fight climate change; the program was estimated to cost as much as $33 billion per year and would have completely reordered our nation’s power grid. The state of West Virginia, joined by two coal companies and others, sued the EPA, arguing the plan was an abuse of power. 

By deciding in favor of West Virginia, the court could begin to rein in the vast powers of the alphabet agencies in D.C. that run our lives and return it to legislators whom we elect to create…legislation. Just as the Supreme Court ruled in Roe v. Wade that abortion laws are more appropriately left up to the people’s elected representatives, it may decide in West Virginia vs. EPA that Congress, and not federal agencies, should write our laws.

A decision that puts Congress in charge would stall environmental rules intended to replace fossil fuels with renewable energy. Legislators, back in the driver’s seat, would have to debate and go public with the consequences – and costs — of regulations that are now adopted with little buy-in from the public. 

https://www.foxnews.com/opinion/one-more-blockbuster-supreme-court-decision-could-still-be-coming-after-fridays-abortion-ruling

Trudeau calls U.S. court decision overturning Roe v. Wade ‘horrific’

Prime Minister Justin Trudeau weighed in Friday on the U.S. Supreme Court’s decision to overturn decades-old jurisprudence on abortion, calling what’s unfolding south of the border a “horrific” development that threatens the right of women to choose what to do with their own bodies.

“My heart goes out to the millions of American women who are now set to lose their legal right to an abortion. I can’t imagine the fear and anger you are feeling right now,” Trudeau said in a social media post.

He said “no government, politician, or man” should force a woman to carry out a pregnancy, reiterating that, under his Liberal government, “women in Canada know that we will always stand up for your right to choose.”

Deputy Prime Minister Chrystia Freeland also condemned the ruling, saying she had a “visceral reaction” when she first heard of the court’s decision.

“I was just shocked and horrified and so worried, actually,” Freeland said in an interview with CBC’s Rosemary Barton Live airing Sunday.

https://www.cbc.ca/news/politics/trudeau-horrific-us-court-abortion-1.6500475

Four large US banks increase dividends following annual stress tests

Four U.S. banks — Wells Fargo, Bank of America, Goldman Sachs and Morgan Stanley — raised their dividends on Monday after clearing the Federal Reserve’s annual stress test exercise last week.

Wells Fargo said it expects to hike its dividend to 30 cents from 25 cents a share. Bank of America raised its dividend by 5% to 22 cents per share. Goldman Sachs said it would hike its dividend by 25%, to $2.50 per share, and Morgan Stanley said it plans an increase to 77.5 cents per share and a share buyback program of $20 billion.

A combination file photo shows Wells Fargo, Citigbank, Morgan Stanley, JPMorgan Chase, Bank of America, JPMorgan, and Goldman Sachs from Reuters archive. (REUTERS/File Photo / Reuters Photos)

The Federal Reserve said Thursday that the biggest lenders in the nation could easily weather a severe economic downturn, clearing the path for them to give extra capital to shareholders.

The results of the stress exercise gave banks the opportunity to hike dividends despite the Fed’s test being more difficult than last year, pushing up some lenders’ required capital buffers more than was anticipated.

ALL 33 MAJOR US BANKS PASS FED’S ANNUAL ‘STRESS TESTS’

But some other banks, like JPMorgan & Chase and Citigroup, said their dividends remained unchanged amid increasingly stringent capital requirements.

JP Morgan & Chase. (REUTERS/Mike Segar/File Photo)

The annual stress test exercise is different from the one created following the 2007-2009 financial crisis. For the current one, the Fed evaluates how banks’ balance sheets would perform against a hypothetical severe economic downturn. The results show banks how much capital they need to be healthy and how much they are able to give back to shareholders.

The test establishes each bank’s “stress capital buffer,” an extra capital cushion in addition to the regulatory minimum, with the size determined by each bank’s hypothetical losses under the exercise.

A Bank of America ATM is seen, Wednesday, Feb. 3, 2021, in Winchester, Mass. (AP Photo/Elise Amendola / AP Newsroom)

Citigroup, JPMorgan and Bank of America said their stress capital buffer would rise, which analysts had predicted. 

The increase for Bank of America and JPMorgan would be caused by higher credit provisions, while Citi would face higher trading losses, lower fee income and higher expenses, analysts said based on the tests’ results.

Reuters contributed to this report.

Oil prices edge higher ahead of G7 talks on new Russian sanctions

Oil prices edged higher on Monday in a volatile session as investors waited for any moves against Russian oil and gas exports that might come out of a meeting of leaders of the Group of Seven (G7) nations in Germany.

The prospect of even tighter supplies loomed over the market as western governments sought ways to cut Russia’s ability to fund its war in Ukraine, even though G7 leaders were also expected to discuss a revival of the Iran nuclear deal, which might lead to more Iranian oil exports.

Members of the Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, will likely stick to a plan for accelerated oil output increases in August when they meet on Thursday, sources said.

But for now, pressing supply worries outweighed growing concerns over the potential for a global recession following a string of downbeat economic data from the United States, the world’s biggest oil consumer.

OPEC member Libya’s national oil company said on Monday it might have to halt exports in the Gulf of Sirte area within 72 hours amid unrest that has restricted production.

Brent crude futures rose 46 cents to $113.58 a barrel after rebounding 2.8% on Friday. U.S. West Texas Intermediate crude was at $107.82 a barrel, up 20 cents, or 0.19%, following a 3.2% gain in the previous session.

Both contracts fell last week for the second week in a row as interest rate hikes in key economies strengthened the dollar and fanned recession fears.

G7 leaders, who began their meeting on Sunday, are expected to discuss options for tackling rising energy prices and replacing Russian oil and gas imports, as well as further sanctions that do not exacerbate inflation.

These measures include a possible price cap on Russian oil exports to reduce Moscow’s revenues while limiting the damage to other economies.

“It’s unclear whether a price cap will achieve this outcome,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

“There’s still nothing stopping Russia from banning oil and refined product exports to G7 economies in response to a price cap, exacerbating shortage conditions in global oil and refined product markets.”

The G7 will also discuss the prospect of reviving the Iran nuclear talks after the European Union’s foreign policy chief met senior officials in Tehran to try to unblock the stalled negotiations, a French presidency official said on Sunday.

US pledges $200B to G7 infrastructure project to counter China’s Belt and Road Initiative (Hunter Biden….collects a % ???)

https://www.foxbusiness.com/politics/us-biden-billions-g7-infrastructure-project-counter-china-belt-road-initiative

CORRUPTION? Prince Charles accepted suitcase with 1 million euros from Qatari sheikh, Sunday Times reports

larence House said Prince Charles received charitable donations and the correct processes were followed regarding those donations after a British newspaper reported the Prince of Wales once accepted a suitcase containing €1 million ($1.05 million) in cash from a Qatari politician.

According to the Sunday Times, the suitcase containing €1 million in cash was one of three lots of cash he personally received, totaling €3 million, from former Qatari Prime Minister Sheikh Hamad bin Jassim bin Jaber Al Thani between 2011 and 2015. CNN has not independently verified The Sunday Times report.

“Charitable donations received from Sheikh Hamad bin Jassim were passed immediately to one of the Prince’s charities who carried out the appropriate governance and have assured us that all the correct processes were followed,” Clarence House told CNN in a statement.

The Sunday Times reported on one occasion, Sheikh Hamad gave Prince Charles €1 million reportedly stuffed into carrier bags from the upmarket London department store, Fortnum and Mason.

On another occasion, Prince Charles accepted a duffel bag containing €1 million during a private one-on-one meeting at Clarence House in 2015, the Sunday Times reports.

The Sunday Times reports the payments were deposited into the accounts of the Prince of Wales’s Charitable Fund (PWCF), an entity that bankrolls the prince’s private projects and his country estate in Scotland.

A royal source tells CNN they dispute many of the details in the Sunday Times report. The royal source said they do not dispute the fact of the charitable donations and asserted that all the correct processes were followed from what they have looked at, from over a decade ago. They add the report contained several mistakes, and their lawyers are involved.

There is no suggestion the payments were illegal.

West Fraser Timber VP buys the dip

Forest product stocks have been cut down this year over fears rising bond yields will destroy housing demand. West Fraser Timber Co. Ltd. WFG-T +4.19%increase is no exception, off more than 15 per cent year-to-date. When it reported first-quarter results, West Fraser noted it has experienced transportation and logistics constraints in North America. On the positive side, West Fraser expects aging housing stock to support repair and renovation demand for lumber, plywood and oriented strand board. Meanwhile, during the recent sell-off an officer bought 2,568 shares in the public market on June 17.

TSX Ends On Buoyant Note On Positive Global Cues (june 24)

Published: 6/24/2022 5:52 PM ET

The Canadian stock market ended on a buoyant note on Friday, rebounding strongly after suffering its worst setbacks in three months a day earlier.

Positive global markets and higher crude oil prices helped offset concerns about inflation and rate hikes and prompted investors to indulge in hectic buying right through the day’s session.

The benchmark S&P/TSX Composite Index ended with a gain of 345.79 points or 1.85% at 19,062.91. The index touched a low of 18,828.93 and a high of 19,100.72 in the session.

All the sectoral indexes closed in positive territory. The Health Care Capped Index climbed almost 6%. The Information Technology and Energy Indexes moved up 3.73% and 3.29%, respectively. The consumer staples, industrials and materials indexes gained 2.2% to 2.3%. Communications, consumer discretionary and real estate stocks too ended with strong gains.

Tecsys Inc (TCS.TO) soared 10.5%. Docebo Inc (DCBO.TO) surged up 8.9% and MTY Food Group (MTY.TO) climbed nearly 7%. Kinaxis Inc (KXS.TO), Shopify Inc (SHOP.TO), Boyd Group Services (BYD.TO), goeasy (GSY.TO), Precision Drilling Corp (PD.TO), Cargojet (CJT.TO) and West Fraser Timber (WFG.TO) gained 4 to 8%.

BlackBerry (BB.TO) gained nearly 6% after reporting stronger than expected first quarter revenue thanks to growth in its auto products and cybersecurity services segments. The company said that revenue from its internet-of-things segment that includes its auto products grew the fastest in the first quarter at 19%, with a gross margin of 84%.

On the economic front, data from Statistics Canada showed average weekly earnings of non-farm payroll employees in Canada rose for the eleventh consecutive month in April, increasing by 4% year-on-year to C$ 1,170.1.