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Oil prices fell on Friday, extending losses to a third straight day, amid concerns about the outlook for demand. Expectations of interest rate cuts by central banks, and hopes that the OPEC+ will extend production cuts into the third quarter helped limit oil’s losses.

Data showing a contraction in China’s manufacturing sector has added to concerns about the outlook for oil demand.

The latest survey from the National Bureau of Statistics showed China slipped into contraction territory in May, with a manufacturing PMI score of 49.5.

That missed forecasts for a score of 50.5 and was down from 50.4 in April, and it moves beneath the boom-or-bust line of 50 that separates expansion from contraction.

The non-manufacturing PMI came in at 51.1, shy of expectations for 51.5 and down from 51.2 in the previous month. The composite PMI was 51.0 versus forecasts for 51.4 and down from 51.7 a month earlier.

West Texas Intermediate crude oil futures for July ended down by $0.92 at $76.99 a barrel.

Brent crude futures were down $0.71 or 0.85% at $81.17 a barrel a little while ago.

A report from Baker Hughes said the oil rig count in the U.S. dropped by one this week to 496, which is less than 59 rigs a year ago.

Data from the Commerce Department said the personal consumption expenditures (PCE) price index rose by 0.3% for the third straight month in April, matching economist estimates.

Meanwhile, the report said the core PCE price index, which excludes food and energy prices, crept up by 0.2% in April after rising by 0.3% in March. Economists had expected another 0.3% increase.

The annual rates of growth by the PCE price index and the core PCE price index were both unchanged from the previous month at 2.7% and 2.8%, respectively. The readings matched expectations.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department’s report on personal income and spending.

The Commerce Department said real personal spending, which excludes price changes, edged down by 0.1% in April after climbing by 0.4% in March.

CWB Financial Group CWB-T +1.38%increase raised its quarterly dividend to 35 cents per common share, up one cent from its previous quarter, as it reported its second-quarter profit rose compared with a year ago.

The Edmonton-based bank says it earned common shareholders’ net income of $76.4-million or 79 cents per diluted share for the quarter ended April 30, up from $70-million or 73 cents per diluted share a year earlier.

Revenue totalled $285.9-million, up from $264.4-million in the same quarter last year.

Provisions for credit losses totalled $23.1-million compared with $10.3-million a year earlier.

On an adjusted basis, CWB says it earned 81 cents per share in its latest quarter compared with an adjusted profit of 74 cents per share in the same quarter last year.

The average analyst estimate had been for a profit of 86 cents per share, according to estimates compiled by financial markets data firm LSEG Data & Analytics.

The U.S. economy grew more slowly in the first quarter than previously estimated after downward revisions to consumer spending, the Commerce Department reported on Thursday.

Gross domestic product – the broadest measure of economic activity – grew at an 1.3 per cent annualized rate from January through March, down from the advance estimate of 1.6 per cent and notably slower than the 3.4 per cent pace in the final three months of 2023.

The downgrade of first-quarter growth followed recent softness in readings of retail sales and equipment spending.

A measure of inflation during the first quarter was revised down to 3.3 per cent from 3.4 per cent, the stiffest quarterly price-pressure growth in a year. After easing through much of last year, measures of inflation came in higher than expected to start 2024, driving Federal Reserve policymakers to push back expectations for when they’ll be able to pivot to interest rate cuts.

U.S. Treasury yields ticked lower after the modest downward revision to inflation in the first quarter, and equity index futures pared losses ahead of the opening bell on Wall Street.

The downward revision to GDP brings the first-quarter’s growth rate to the lowest since the second quarter of 2022, when the economy contracted, and leaves output below the 1.8 per cent rate that officials at the Fed see as its longer-run, noninflationary potential.

The soft start to the year is not expected to have persisted into the current second quarter, however, thanks in part to continued strength in the job market.

The number of Americans filing new claims for unemployment benefits ticked higher last week, the Labor Department said also on Thursday, but underlying strength in the labor market still shows signs of persisting and should continue to support the economy.

Initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 219,000 for the week ended May 25. Economists polled by Reuters had forecast 218,000 claims.

The so-called continuing claims tracking those who collect benefits beyond the first week rose 4,000 to a seasonally adjusted 1.791 million during the week ending May 18, the claims report showed.

The labor market is steadily rebalancing in the wake of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to slow demand in the overall economy.

Royal Bank of CanadaRY-T +3.01%increase reported higher second-quarter profit that beat analysts’ estimates on a boost from its capital markets business as the lender set aside lower-than-expected provisions for potentially sour loans.

RBC earned $4-billion, or $2.74 per share, in the three months that ended April 30. That compared with $3.68-billion, or $2.60 per share, in the same quarter last year.

Adjusted to exclude certain items, including transaction and integration costs from the HSBC Bank Canada acquisition, the bank said it earned $2.92 per share. That edged out the $2.75 per share analysts expected, according to S&P Capital IQ.

In March, RBC completed its $13.5-billion takeover of British HSBC Holdings PLC’s Canadian subsidiary. This is the first quarter where Canada’s largest lender is reporting earnings that include the contribution from HSBC, and the deal initially reduced the bank’s profit by $51-million as RBC absorbs its provisions for credit losses.

Canada largest lender has seen some slight attrition from HSBC customers since the deal was announced in late 2022, which RBC said was within its expectations. Loan balances were down 4 per cent to $3.5-billion since September 2022.

RBC said that it is on track to meet its target cost savings of $740-million by combining HSBC’s platforms and services with its own.

“This quarter marked a pivotal milestone in RBC’s long-term growth story as we completed our acquisition of HSBC Bank Canada, welcoming thousands of colleagues and clients from across the country,” RBC chief executive officer Dave McKay said in a statement. “This historic acquisition, along with our solid results driven by our strong balance sheet, expense control and volume growth across our premium franchises, shows that RBC has the right strategy in place to continue building the bank of the future and our position as a global competitor.”

The bank raised its quarterly dividend by 4 cents to $1.42 per share.

RBC is the final major Canadian bank to report earnings for the second quarter. Canadian Imperial Bank of Commerce also released earnings on Thursday. Bank of Montreal posted a profit that fell below analysts’ expectations. Toronto-Dominion Bank, Bank of Nova Scotia and National Bank of Canada posted second-quarter results that beat analysts’ estimates.

In the quarter, RBC set aside $920-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was slightly lower than analysts anticipated, and included $672-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses.

In the same quarter last year, RBC had set aside $600-million in provisions.

Total revenue rose 14 per cent in the quarter to $14.15-billion. But expenses increased 12 per cent to $8.31-billion, which the bank said was driven by higher compensation costs and investments in its businesses.

Profit from personal and commercial banking was $2.05-billion, up 7 per cent from a year earlier, driven by higher net interest income, partially offset by an increase in provisions. Deposits grew 9 per cent and loan balances increased 6 per cent in the quarter.

The wealth management division generated $769-million in profit, up 7 per cent on higher fee-based client assets, which also drove higher variable compensation.

Profit from insurance was up 4 per cent at $177-million. And capital markets profit jumped 31 per cent to $1.26-billion, driven by higher revenue in corporate and investment banking on an increase in mergers and acquisitions and loan syndication activity, as well as equity and debt origination.

In March, RBC said that it terminated chief financial officer Nadine Ahn for violating its code of conduct with an undisclosed “close personal relationship” with a colleague, which resulted in preferential treatment. Senior vice president, finance and controller Katherine Gibson was tapped as interim CFO.

Canadian Imperial Bank of CommerceCM-T +3.28%increase reported second quarter earnings that beat analyst estimates, helping the lender build on the positive momentum it has established in recent months.

CIBC made $1.7-billion last quarter, or $1.79 per share, and earnings per share were up 2 per cent year-over-year. After adjusting for one-time items, the bank made $1.75 per share, beating analyst estimates of $1.65 per share.

Canadian banks have reported mixed results this quarter, with higher provisions for credit losses at some lenders concerning investors. Interest rates have remained higher for longer, making it more expensive for clients to borrow, which has pushing bankruptcies higher.

CIBC’s provisions for credit losses, however, dropped slightly quarter-over-over, particularly in Canadian personal and commercial banking, which is the lender’s largest division.

CIBC has also focused on expense control in recent quarters, and that continued. The bank reported operating leverage of 3 per cent in Canadian personal and commercial banking, meaning revenues in its largest unit are growing faster than expenses.

Canada Mortgage and Housing Corp. says the country’s total residential mortgage debt totalled $2.16-trillion as of February this year, up 3.4 per cent year-over-year and representing the slowest growth in 23 years.

The federal housing agency said in a new report that higher mortgage costs and uncertainty around the Bank of Canada lowering its key interest rate led to softer home sales and prices across many regions in the second half of 2023.

However, it said the slowdown in mortgage growth could be short-lived.

The agency expects the rate of growth for mortgage debt to increase amid forecasts of higher home sales and prices in the coming years.

It said an anticipated decline in mortgage rates, along with population growth and increases in real disposable incomes, will likely fuel the turnaround.

“In a context where debt levels have never been so elevated and households are showing increasing warning signs of financial struggle, household debt vulnerability is becoming a primary area of concern,” said CMHC deputy chief economist Tania Bourassa-Ochoa in a press release.

“As homeowners find it more difficult to manage their monthly budgets, policy-makers and the financial sector are on high alert when considering risks to the financial industry and the economy.”

The report also said borrowers are continuing to opt for shorter-term, fixed-rate mortgages over traditional five-year fixed terms as they remain uncertain of the short– and medium-term mortgage rate outlook.

That’s despite “noteworthy increases” in the discounts being offered by lenders on five-year, fixed-rate mortgages in the first two months of this year, which marked a reversal of the trend from the last half of 2023.

“Lenders are foreseeing potential rate cuts by the (Bank of Canada) occurring sooner than they anticipated last year and are seeking to lock in mortgages at relatively high rates,” the report said.

Terms ranging from three years to less than five years remained the most popular choice, representing nearly 40 per cent of all lending for newly extended mortgages in February, 2024. Variable-rate mortgages accounted for 15 per cent of all lending for newly extended mortgages.

The report showed the national mortgage delinquency rate hit 0.17 per cent in the fourth quarter of last year, still near historic lows, but trending up for the first time since the beginning of the pandemic.

It also highlighted the Big Six banks taking an increasing share of the market for extended mortgages.

In the fourth quarter of 2023, those banks’ share grew 11.8 percentage points from last year, driven by increases in refinances and renewals. Other chartered banks and credit unions recorded decreases of 6.9 and 3.1 percentage points, respectively.

Canadian stocks tumbled on Wednesday on concerns the Federal Reserve might keep interest rates higher for longer in the event of U.S. inflation readings coming in hotter than expected.

The Commerce Department is due to release its report on personal income and spending in the month of April, which includes readings on inflation said to be preferred by the Fed. The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed’s next monetary policy meeting.

Selling was widespread on Bay Street, with financials, utilities, materials and energy sectors suffering sharp losses. Several shares from consumer discretionary, real estate, communications and industrials sectors also ended sharply lower.

The benchmark S&P/TSX Composite Index, which opened with a negative gap of nearly 100 points at 22,170.16 (it remained the day’s high), ended with a loss of 367.07 points or 1.65% at 21,897.98, a point off the day’s low.

Bank of Montreal (BMO.TO) tanked nearly 9% as the bank’s results fell short of expectations. The lender reported adjusted net income of C$2.03 billion or C$2.59 per share for the second-quarter, compared to prior year’s C$2.19 billion or C$2.89 per share.

National Bank of Canada (NA.TO) climbed more than 2.5%. The bank reported net income of C$906 million or C$2.54 per share for the second quarter, higher than C$832 million or C$2.34 per share in the same quarter a year ago, primarily helped by growth in revenue in all segments.

Nutrien (NTR.TO), Bombardier Inc (BBD.B.TO), Cargojet (CJT.TO), Fairfax Financial Holdings (FFH.TO), Canadian Natural Resources (CNQ.TO), CGI Inc (GIB.A.TO), Boyd Group Services (BYD.TO) and Stantec (STN.TO) lost 2 to 3.4%.

Royal Bank of Canada (RY.TO), Colliers International (CIGI.TO), goeasy (GSY.TO), Thomson Reuters (TRI.TO), WSP Global (WSP.TO) and Franco-Nevada Corporation (FNV.TO) were among the several other prominent losers.

Ag Growth International (AFN.TO) soared 11.1%. Softchoice Corporation (SFTC.TO) rallied 3.2%. Tecsys (TCS.TO), Kinaxis Inc (KXS.TO), Nuvei Corporation (NVEI.TO) and Cameco Corporation (CCO.TO) also posted strong gains.

BMO Financial Group raised its dividend as it reported a profit of $1.87 billion in its latest quarter, up from $1.03 billion a year earlier.

The bank says it will now pay a quarterly dividend of $1.55 per share, up four cents from $1.51 per share.

The increased payment to shareholders came as BMO says its profit amounted to $2.36 per diluted share for the quarter ended April 30, up from $1.26 per diluted share a year earlier.

Revenue totalled $7.97 billion, up from $7.79 billion in the same quarter last year, while BMO’s provision for credit losses for the quarter amounted to $705 million, down from $1.02 billion a year ago.

On an adjusted basis, BMO says it earned $2.59 per diluted share, down from an adjusted profit of $2.89 per diluted share in the same quarter last year.

Analysts on average had expected a profit of $2.77 per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published May 29, 2024.

National Bank of Canada reported a second-quarter profit of $906 million, up from $832 million a year earlier, and raised its dividend.

The Montreal-based bank says it will now pay a quarterly dividend of $1.10 per share, an increase of four cents.

The increased payment to shareholders came as National Bank says its profit amounted to $2.54 per diluted share for the quarter ended April 30, up from $2.34 per diluted share in the same quarter last year.

Revenue totalled $2.75 billion, up from $2.45 billion a year earlier, while the bank’s provision for credit losses amounted to $138 million, up from $85 million in the same quarter last year.

On an adjusted basis, National Bank says it earned $2.54 per diluted share, up from an adjusted profit of $2.34 per diluted share a year ago.

Analysts on average had expected a profit of $2.45 per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published May 29, 2024.