Author: Consultant

Oil wobbles as global economic worries offset tightening supply

• Brent crude futures slipped 8 cents, or 0.1%, to $113.04 a barrel by 0242 GMT, after rising as much as 1% earlier. Front-month prices tumbled 7.3% last week, its first weekly fall in five.
• U.S. West Texas Intermediate crude was at $109.49 a barrel, down 7 cents, after rising more than $1 earlier. Front-month prices dropped 9.2% last week, the first decline in eight weeks.

https://www.cnbc.com/2022/06/20/oil-markets-global-economy-supply-concerns.html

South Korea drops 2%; China keeps benchmark lending rate unchanged

• Shares in Asia-Pacific were mixed on Monday.
• China’s one-year and five-year loan prime rates were both left unchanged on Monday.
• Netease shares in the city skidded 6.22% in Monday afternoon trade after the firm announced a delay to the release of its eagerly anticipated video game Diablo Immortal in China, just days before it was expected to launch officially.

https://www.cnbc.com/2022/06/20/asia-markets-china-loan-prime-rate-alibaba-currencies-oil.html

Workers at Canadian National Railway go on strike after failing to reach contract, union negotiator says

Workers in signals and communications have gone on strike at Canadian National Railway Co. CNR-T +0.61%increase in a development that threatens to exacerbate transport bottlenecks across the country in the midst of the COVID-19 pandemic.

Some 750 members of the International Brotherhood of Electrical Workers in Canada walked off the job Saturday after failing to agree to a new labour contract with the railway, union negotiator Steve Martin said in an interview. The two sides are not meeting in person but continue to talk and exchange contract proposals, he said.

A spokesman for Canadian National would not confirm that the walkout had occurred. “We’re not saying anything at this point on our end,” Jonathan Abecassis said by phone on Sunday.

A lasting strike could deliver yet another hit to supply chains in Canada and drive up prices for goods, which have already been affected by the pandemic. And last year in British Columbia, mudslides and flooding severed all major highways between the Lower Mainland and the Interior, as well as freight routes used by Canadian National and rival Canadian Pacific.

The railway has a contingency plan in place to ensure that the safe transport of goods continues, Mr. Abecassis said. There is no impact to operations currently and there is none expected, he said.

The union challenged that view, saying fallout is unavoidable if the work stoppage continues. “The impact to operations is highly likely,” Mr. Martin said. That’s because a large percentage of workers are on-call employees responding to troubleshooting situations like the aftermath of thunderstorms, he explained. Others do preventative maintenance.

The striking workers repair and maintain CN’s trackside electrical and signalling equipment, such as crossings, track signals and switches. This equipment dictates the potential speed of trains, much in the same way traffic lights dictate the speed of motor vehicles on the road, Mr. Martin said.

CN intends to use managers and contract workers to do the work if needed, Mr. Abecassis said. It was unclear how this would be possible in Quebec, which has stringent laws against using non-management replacement workers in a labour-conflict situation.

The union last week gave the company a 72-hour notice of its intention to strike. The company has offered to resolve the remaining differences with the union, chiefly on wages and benefits, through binding arbitration.

One major issue being contested concerns what’s called “out-of-region work.” The company wants to be able to move workers out of their home region for a specific number of days at time, Mr. Martin said. The same issue came up during the previous contract negotiations, which yielded a five-year collective agreement that expired at the end of 2021.

Canadian dollar hits 19-month low as oil tumbles

The Canadian dollar CADUSD -0.61%decrease weakened to its lowest in 19 months against its U.S. counterpart on Friday as oil prices tumbled and the greenback broadly rallied.

The loonie was trading 0.5% lower at 1.3020 to the greenback, or 76.80 U.S. cents, after touching its weakest since November 2020 at 1.3078.

For the week, the currency was down 1.8%, its biggest weekly decline since August last year, as investors worried that aggressive tightening by central banks, including Wednesday’s 0.75 percentage point rate hike by the U.S. Federal Reserve, could derail economic growth.

“On top of those interest rate concerns, we saw oil take a tumble,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc. “That added fuel to the loonie weakness today.”

The price of oil, one of Canada’s major exports, tumbled to a four-week low on worries that an economic slowdown could cut demand for energy.

U.S. crude oil futures settled 6.8% lower at $109.56 a barrel, while the U.S. dollar jumped against a basket of major currencies as the Bank of Japan’s decision to buck the recent wave of tightening weighed on the Japanese yen .

In domestic data, the pace of Canadian home price growth slowed in May, edging off April’s record high, but prices still rose both on the month and on the year, the National Bank Composite House Price Index showed.

Canadian government bond yields were higher across the curve, with the 10-year up 3.9 basis points at 3.414%. On Thursday, it touched its highest intraday level in 12 years at 3.664%.

Canadian Economic Calendar – June 2022

https://www.baystreet.ca/articles/econ_calendar.aspx

Ottawa launches first phase of Canada Greener Home Loan program

Ottawa has launched the first phase of its plan to offer interest-free loans to Canadians planning upgrades that will have a significant impact in reducing their home’s environmental footprint.

The program will provide interest-free loans of up to $40,000 per household to help finance eligible retrofits.

The first phase is open to eligible homeowners who are applying or have an open application to the Canada Greener Homes Grant.

The second phase will begin in early September.

It will expand the eligibility to homeowners who have already received a grant or requested a post-retrofit EnerGuide evaluation, but still have remaining eligible retrofits they are interested in doing, that have not yet started.

The Canada Greener Homes Loan program is an designed to help up to 175,000 eligible homeowners.

Oil Futures Fall Sharply, Settle 6.8% Down At 4-week Low

Crude oil prices fell sharply on Friday amid mounting fears about a possible global economic recession following severe tightening of policies by several central banks, including the Federal Reserve and the Bank of England.

The U.S. dollar’s sharp uptick – the dollar index climbed to 105.09, before paring some gains – weighed as well on oil prices. The dollar index surged to a fresh two-decade high of 105.79 earlier in the week.

Oil prices climbed higher earlier in the session, reacting to news about new U.S. sanctions on Iran and a pledge by China’s cabinet that it will accelerate the implementation of a raft of pro-growth policies to stabilize the world’s second-largest economy.

West Texas Intermediate Crude oil futures for July ended lower by as much as $8.03 or about 6.8% at $109.56 a barrel, a four-week low. The most active crude oil futures contract shed over 9% in the week, after gaining from seven successive weeks.

Brent crude futures were down $6.00 or 5.06% at $113.81 a barrel a little while ago.

A report from Baker Hughes said active oil and gas drilling rigs in the U.S. rose by 7 to 740 in the week, about 57% above year-ago levels.

Drilling rigs increased by 4 to 584, while gas rigs climbed by three to 154, the report said.

Canadian Shares Swinging Between Gains And Losses, Look Headed For Mixed Close

Canadian shares are swinging between gains and losses in cautious trade on Friday, with investors assessing the likely impact of the interest rate hikes by central banks on economic growth.

Technology, healthcare, communications and consumer discretionary stocks are up with strong gains. Several stocks from real estate and industrials sectors are also up with strong gains. Energy stocks are down sharply.

The benchmark S&P/TSX Composite Index is up 30.86 points or 0.16% at 19,034.87. The index touched a high of 19,193.97 and a low of 18,787.68.

Technology stocks Lightspeed Commerce (LSPD.TO) is climbing 8.7%. Magnet Forensics (MAGT.TO), Shopify Inc (SHOP.TO), Tecsys Inc (TCS.TO), Softchoice Corp (SFTC.TO), Kinaxis Inc (KXS.TO) and Hut 8 Mining Corp (HUT.TO) are up 5 to 6.5%.

In the healthcare section, Aurora Cannabis (ACB.TO) is up 8.75%. Tilray Inc (TLRY.TO), Canopy Growth Corp (WEED.TO), Cronos Group (CRON.TO), Bausch Health Companies (BHC.TO) and Well Health Technologies (WELL.TO) are gaining 2.5 to 4.7%.

Consumer discretionary stocks Mty Food Group (MTY.TO), Canada Goose Holdings (GOOS.TO), Restaurant Brands International (QSR.TO) and Magna International (MG.TO) are up 3 to 4.5%.

In the communications sector, Telus Corp (T.TO) is up 4.5%, Rogers Communications (RCI.B.TO) is gaining 2.7% and Shaw Communications (SJR.B.TO) is rising 2%. BCE Inc (BCE.TO) and Cogeco Communications (CCA.TO) are up 1.3% and 1%, respectively.

Energy stocks Vermilion Energy (VET.TO), Nuvista Energy (NVA.TO), Whitecap Resources (WCP.TO), Crescent Point Energy (CPG.TO), MEG Energy (MEG.TO), Enerplus Corp (ERF.TO), Arc Resources (ARX.TO) and Parex Resources (PXT.TO) are down 6 to 7%.

On the economic front, data from Statistics Canada showed the Raw Materials Price Index in Canada surged 37.4% year-on-year in May of 2022, following a 38.3% rise in April. On monthly basis, the raw materials price index increased 2.5% in May, rebounding from a 2.1% fall in April.

Producer prices in Canada jumped 1.7% month-over-month in May of 2022, picking up from a 0.8% increase in April. Producer prices in Canada increased 15% in May of 2022 over the same month in the previous year, the data showed.

Ukraine moves closer to joining the EU; Zelenskky says historic decision will help to defeat Russia

The European Commission, the executive arm of the EU, has proposed that Ukraine become a membership candidate to join the bloc — the first step on a long road to EU membership.

Commission President Ursula von der Leyen said Friday that Ukraine should be welcomed by Europe.

It comes shortly after some of the most powerful EU leaders traveled to Ukraine’s capital city of Kyiv in a show of solidarity with the war-ravaged country.

Serhiy Haidai, the head of Luhansk’s regional administration region, says the number of Russian bombings in Ukraine is “rising daily.”

Russian forces are continuing to launch ground assaults on the strategically important Donbas city of Severodonetsk in an attempt to establish control.