Author: train2invest Admins

• Gold prices hit a new all-time high recently, and there’s still room for it to surge as some countries continue on a gold buying spree.
• Strong physical demand for gold is also fueled by its appeal as a safe haven asset and investors looking to diversify amid lackluster performances in other asset classes.

Gold prices still have room to rise after hitting all-time highs early this month, as several central banks continue to purchase bullion in record amounts. 

These purchases have strengthened gold prices despite high interest rates and a strong dollar, market watchers told CNBC.

Higher rates tend to reduce the appeal of gold compared with bonds as it does not pay any interest, while a stronger dollar erodes the sheen of greenback-priced bullion for holders of other currencies.

“Central banks, who have bought historic levels of gold over the past two years, continue to be strong buyers in 2024 as well,” World Gold Council Global Head of Central Banks Shaokai Fan said. 

Strong physical demand for gold is also fueled by its appeal as a safe-haven asset amid geopolitical uncertainties.

“In the past decade, Russia and China have been the two largest buyers. However, central bank purchases in recent years have diversified,” Aakash Doshi, Citi’s North America head of commodities research, told CNBC.

China is the leading driver for both consumer demand and central bank gold purchases, and the country’s not likely to slow down.

Among central banks, the People’s Bank of China was the largest buyer of gold in 2023. China’s weak economy and embattled real estate sector also drove more investors toward the safe-haven asset, with individual gold investment remaining robust, WGC said.

Poland’s central bank was the second-largest net consumer of gold, snapping up 130 tons of bullion in 2023.

Challenges of the Russia-Ukraine war “just right next door” drives Poland’s desire for stability, said Wheaton Precious Metals CEO Randy Smallwood.

Poland’s central bank governor Adam Glapiński in 2021 had announced plans to buy 100 tons of gold in a bid to boost the country’s financial security, according to local media reports.

Singapore recorded the third highest net gold purchases in 2023, driven by purchases by the Monetary Authority of Singapore (MAS), which bought 76.51 tons.

While MAS did not disclose the reason for the investment decision, Fan surmised that central banks across the board have been wary of the geopolitical risks from the ongoing Russia-Ukraine conflict.

“They have probably been adjusting reserve allocations in accordance to their views on risk,” he said. 

Retail purchases

Stronger gold prices were also driven by retail purchases of jewelry, bars and coins.

On top of the People’s Bank of China buying the most gold amongst the world’s central banks, the country also recorded the highest amount of retail gold purchases.

“At the retail consumer level, China was a major factor in strong demand for gold last year as individuals moved into gold to diversify from other asset classes,” Fan said. 

According to data from the World Gold Council, China overtook India to become the world’s largest gold jewelry buyer in 2023. Chinese consumers bought 603 tons of gold jewelry last year, a 10% increase from 2022.

Alongside China, consumer demand for gold in India is also one of the world’s biggest, said Smallwood, especially during India’s wedding season, which runs typically from October to December, and between January and March.

“Gold is always the highest form of value gift that you can actually give someone within India. It’s a real big part of the wedding season,” he said.

Woman buying jewelry at a showroom in New Delhi, India.

Sonu Mehta | Hindustan Times | Getty Images

While India’s jewelry demand should continue to be significant, more expensive gold could put some dent in that spending, WGC said. India’s gold jewelry consumption demand dipped 6% to 562.3 tons in 2023 from a year earlier.

That said, India’s investment in gold bars and coins grew 7% year on year. The country’s central bank demand for gold also continues to be strong, with the Reserve Bank of India purchasing 8.7 tons of gold in January, marking the highest monthly purchase since July 2022.

Aside from China and India, Turkey’s gold demand last year almost doubled that of 2022, according to WGC records. 

Unrelenting consumer inflation, limited available alternative investment and domestic political uncertainty during the presidential elections last year drove Turkey’s demand for the yellow metal.

https://www.cnbc.com/2024/03/21/gold-prices-have-hit-record-highs-heres-why-they-could-rally-further.html

Canada’s inflation rate unexpectedly fell last month, and underlying price pressures appear to be fading fast, opening the door for the Bank of Canada to discuss lowering interest rates.

The Consumer Price Index rose 2.8 per cent in February on an annual basis, down from 2.9 per cent in January, Statistics Canada said Tuesday in a report. Analysts were expecting an upturn to 3.1 per cent. This was the second consecutive month that CPI growth has undershot estimates by a wide margin.

The inflation rate has also resided within the Bank of Canada’s target range of 1 per cent to 3 per cent for two consecutive months – the first time that’s happened since early 2021.

The results suggest higher interest rates are not only working to bring inflation under control, but also on a faster timeline than central bankers expected. In January, the Bank of Canada projected that annual inflation would average 3.2 per cent in the first quarter.

The economy has slowed to a crawl as it contends with restrictive interest rates, and many consumers have reduced their spending since the Bank of Canada’s rate-hike campaign began in early 2022. The bank has intentionally sought to curb demand in the economy as part of its efforts to tackle inflation.

After Tuesday’s report, investors ratcheted up their predictions of a summer rate cut. Interest-rate swaps, which capture market expectations about monetary policy, are pricing in a roughly 80-per-cent chance that the Bank of Canada cuts rates by a quarter of a point at its June meeting, up from about 50 per cent before the report, according to Bloomberg data.

“Monetary policy makers will be able to breathe a sigh of relief after seeing these numbers,” Royce Mendes, head of macro strategy at Desjardins Securities, said in a client note. “We expect central bankers will sound more dovish in April, thereby setting up a rate cutting cycle beginning in June.”

After many months of decline, gasoline prices rose an average of 4 per cent in February from January, a big reason why economists had pencilled in a higher rate of overall inflation.

However, this increase was offset by weakness in other categories. Consumers who subscribed to a cellphone plan in February paid 26.5 per cent less than a year earlier, while prices for internet service fell by 13.2 per cent. Clothing and footwear prices dropped by 4.4 per cent and 5.3 per cent, respectively.

Canadian dollar hits three-month low as CPI surprise lifts rate cut bets

The grocery sector is another area of progress. The price of food purchased from stores rose by 2.4 per cent in February on a 12-month basis, down from 3.4 per cent in January. Grocery inflation had peaked at more than 11 per cent in 2022 and 2023.

Even so, grocery prices have risen by nearly 22 per cent over the past three years, compared with an overall CPI increase of 14 per cent. “While price growth for groceries has been slowing, prices continue to increase and remain elevated,” Statscan said in its report.

An encouraging sign for the Bank of Canada is that core measures of inflation, which strip out volatile price movements, are subsiding quickly. On a three-month annualized basis, the central bank’s preferred measures of core inflation have slowed to an average of 2.2 per cent from 3.1 per cent in January.

The CPI report sets up a highly anticipated Bank of Canada interest-rate decision on April 10. Analysts don’t expect the central bank to change its benchmark rate from 5 per cent – the highest level since 2001 – but they’ll be looking for any hints about the timing of rate cuts.

Bank of Canada officials have been generally reticent to speak about lowering rates, highlighting their concerns around easing monetary policy too early and reigniting inflation. “It’s still too early to consider lowering the policy interest rate,” Governor Tiff Macklem said earlier this month at the bank’s most recent rate decision.

Still, Mr. Macklem said that interest rates likely wouldn’t be lowered as quickly as they were raised over 2022 and 2023, when the bank tightened monetary policy to get a handle on inflation. Central bankers have also said that headline inflation doesn’t need to return to 2 per cent before they start cutting the policy rate.

The Canadian inflation data differ from those of the United States, where price pressures are still running hot and the economy is posting solid growth. Investors have substantially altered their interest-rate expectations in recent weeks and now predict fewer rate cuts from the Federal Reserve this year.

In Canada, rate-sensitive consumers are facing some of the highest debt payments on record, as a percentage of disposable income, while others face a payment shock when their mortgages come up for renewal. On average, consumers have reduced their spending since mid-2022, which is bringing supply and demand in the economy into better balance.

The Bank of Canada expects inflation will return to its 2-per-cent target in 2025, although it will publish new projections next month. (The bank aims for the midpoint of its 1-per-cent to 3-per-cent target range.)

Economists are split over whether the bank will begin to lower interest rates in June or July.

“Overall, we continue to expect a persistently soft economic backdrop to further slow inflation readings in Canada in the months ahead,” Royal Bank of Canada economist Claire Fan wrote in a report. This should allow the central bank “to start lowering interest rates around midyear.”

It will cost at least $6.4-billion to tackle selenium contamination from Teck Resources Ltd.’s TECK-B-T -1.14%decrease Elk Valley coal mines, according to a new report – far exceeding a $1.9-billion security bond required by the B.C. government to cover cleanup costs.

The report, commissioned by environmental group Wildsight, bases its price tag on calculations of what it would cost to implement Vancouver-based Teck’s current plan of building water treatment plants through to 2027 and then running them for 60 years.

The resulting estimates raise concerns that B.C. taxpayers could be stuck with a hefty cleanup bill, said Simon Wiebe, mining policy and impacts researcher at Wildsight, which released the report on Tuesday.

“We’ve been concerned for quite a while that the amount of money that Teck has put aside for selenium remediation with the B.C. government would not be enough to cover the actual cost,” he said.

The Wildsight report adds to heightened scrutiny on the issue of selenium leaching from Teck’s Elk Valley coal mines in southeastern B.C. to river systems in Canada and the United States. Earlier this month, the governments of Canada and the United States, along with the Ktunaxa Nation, agreed to put the issue before the International Joint Commission (IJC), a body that tackles transboundary water issues between the two countries.

Asked to comment on the Wildsight report, Teck said the report’s estimates are inaccurate and that the company is in full compliance with provincial bonding requirements.

The Wildsight report uses simplified assumptions for ongoing water treatment costs that “result in significant overestimations,” said Dale Steeves, a Teck spokesperson, in an e-mail.

Eric Reguly: Coal is dead, or at least was, according to the ESG crowd. Long live coal

At the top of the CN Tower, a rare study of winter air pollution is under way

This past November, Teck announced a US$8.9-billion deal to sell its steelmaking coal operations, with a minority stake going to Japan’s Nippon Steel Corp. and South Korean steelmaker POSCO, and a majority stake to Swiss mining giant Glencore. The sale of the minority interest closed in January and the sale of the majority stake is expected to close this year, pending regulatory approvals.

Wildsight is “concerned that the new owners may be even less receptive to actually fixing the pollution issue than Teck has been,” Mr. Wiebe said of the sale.

In Canada, mining companies are typically required to provide some sort of financial guarantee to provincial governments to cover mine remediation if an owner doesn’t clean up a site. A joint Globe/Narwhal investigation found a shortfall in such funds in B.C., although its government says it has been closing that gap.

Both Teck and the B.C. government have in the past resisted a reference to the IJC, citing steps Teck was taking to reduce water pollution in the region, including building new water treatment plants under a 2014 provincially-approved water quality plan.

Under that plan, Teck says it has spent $1.4-billion to improve water quality and that it plans to invest up to $250-million more by the end of this year.

Glencore declined to comment on the Wildsight report, but the company is committed to implementing the Elk Valley Water Water Quality Plan, spokesperson Charles Watenphul said in an e-mail.

The Elk River rises in the Canadian Rockies and flows into the U.S. at Lake Koocanusa, a reservoir on the Kootenay River, known as the Kootenai in the U.S., and from there through Montana and Idaho, and then back into B.C.

In an e-mailed statement, B.C.’s Minister of Energy, Mines and Low Carbon Innovation, Josie Osborne, said her staff are conducting a “thorough review” of the Wildsight report.

“Ministry staff regularly review securities and liabilities for all mines in the province, including those in the Elk Valley, ensuring they are consistent with our policy and updated in accordance with the latest information, “ she said.

90 per cent of mining liabilities are currently covered by securities, compared with 40 per cent before the NDP took office, Ms. Osborne added.

B.C. government officials this month also voiced support for the joint reference to the IJC.

Nuvei Corp.’s NVEI-T +31.82%increase stock soared Monday after confirming news reports that the Montreal digital payments processing company, which counts celebrity actor Ryan Reynolds as a shareholder and spokesman, is in talks that could lead to a takeover.

Its stock gained 32 per cent on the Toronto Stock Exchange and Nasdaq, after Nuvei said in a release late Sunday it “is engaged with discussions with certain third parties in connection with a potential transaction involving continued significant ownership by certain of the holders of multiple voting shares” including chair and chief executive Phil Fayer. He owns 27.9 million multiple voting shares, representing 20 per cent of outstanding shares and 33.8-per-cent voting control of the company. Nuvei further said its board had formed a special committee of independent directors to evaluate strategic alternatives after receiving “expressions of interest.”

The announcement follows a weekend report in The Wall Street Journal that Boston-based private-equity firm Advent International Corp. was in advanced talks concerning a potential transaction with Nuvei, which had a market capitalization of US$3-billion at Friday’s close.

The language in Nuvei’s release suggests a potential deal could see Mr. Fayer, and possibly the two other large multiple voting stockholders, Quebec private-equity firm Novacap and pension giant Caisse de dépôt et placement du Québec, roll over some of their stock in a takeover should one occur. That has happened in other buyouts, including last year’s takeover of Waterloo’s Magnet Forensics by private-equity giant Thoma Bravo.

National Bank of Canada Financial Markets analyst Richard Tse said he wasn’t surprised to see Nuvei in play, given continuing consolidation among digital payments processing companies and the fact it traded at a 30-per-cent discount to industry peers. “It sticks out as a potential candidate for value-focused acquirers.”

No deal has been signed and “there can be no assurance” one will materialize, the company said. If a transaction happens, Nuvei would become the eighth Canadian technology company out of the 20 that went public on the Toronto Stock Exchange during a flurry of COVID-19-era offerings in 2020 and 2021 to reprivatize.

Six others have gone private through buyouts – BBTV Holdings Inc., Dialogue Health Technologies Inc., Farmers Edge Inc., Magnet Forensics Inc., MindBeacon Holdings Inc. and Q4 Inc. A seventh, automotive marketplace provider E Inc., delisted from the TSX.

Two TSX-listed tech companies that went public during the dot-com boom, Absolute Software Corp. and mdf commerce inc., have also agreed to buyouts in the past year.

Like many other tech companies, Nuvei’s stock has sold off since late 2021, when fears of rising interest rates, later realized, slammed the sector. Its stock closed Friday at US$21.76 on Nasdaq, well below its 2020 initial public offering price of US$26 a share and down more than 80 per cent from peak levels three summers ago.

Nuvei sustained hits last year, including a critical report from short seller Spruce Point Capital Management, a reduced revenue forecast and the loss of one of its 10 largest customers. The company maintained its lower financial targets when it issued results this month, projecting annual revenue growth of 15 per cent to 20 per cent over the medium term.

Unlike many other tech companies, Nuvei, which manages payments across a range of sectors including retail, travel, online gambling and sports betting, is still growing and profitable. It has added several marquee clients in recent months, including Microsoft Corp., Adobe Inc. and Canadian pharmacy chain Familiprix.

Nuvei’s fourth-quarter revenue reached US$321.5-million, up 46 per cent from the same period a year earlier. Organic growth – revenue expansion from existing businesses excluding acquisitions – was just 7 per cent. Excluding digital assets and cryptocurrencies, organic growth was 17 per cent, in line with the company’s medium-term revenue goals. Net income in the quarter increased by 51 per cent, to $14.1-million.

Adjusted operating earnings, a key measure for analysts, reached US$120.1-million, up 40 per cent year-over-year, representing 37.3 per cent of revenues. Nuvei’s long-term goal is for that margin to reach 50 per cent. Results were roughly in line with expectations reflecting “continued execution” by Nuvei, Mr. Tse said in a report this month.

Wall Street’s main indexes advanced on Monday, with megacap growth stocks such as Alphabet and Tesla supporting a rebound in technology-heavy Nasdaq while investors also waited for the U.S. Federal Reserve’s meeting this week. The Canadian benchmark stock index – lacking in big tech names – was left behind, closing slightly in negative territory.

Google’s parent Alphabet provided a sizeable boost to the U.S. market after a media report that Apple is in talks to build Google’s Gemini AI engine into the iPhone.

This supported the communication services sector, which ended up almost 3%, leading gains among the 11 major S&P 500 sectors after hitting its highest level since Sept. 2021.

Tesla shares finished up 6.3%, leading S&P 500 percentage gains, after the electric carmaker said it would soon increase the price of its Model Y EVs in parts of Europe.

Nvidia shares added 0.7% but closed well below its session high. The artificial intelligence poster-child kicked off its annual developer conference as investors waited for new chip announcements from Chief Executive Jensen Huang.

Investors were torn between enthusiasm about the prospects for AI on the technology sector and worries ahead to the Federal Reserve’s policy update on Wednesday, according to Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina.

“This is a market that really wants to hold onto the momentum trade but what’s really weighing on investors’ minds is what happens with the Fed this week,” said Bell.

“The market is sitting comfortably with the first cut coming in June or July but not entirely confident it’ll be the case. The question is if it gets pushed out further.”

Stronger-than-expected inflation figures have prompted traders to rethink when and by how much policymakers will lower rates this year, with traders pulling back the probability for a June rate cut to around 51% from about 71% just a week ago, according to the CME FedWatch Tool.

If the Fed were to take a hawkish tone when its policy meeting concludes on Wednesday, this could pressure stocks.

“The fact we’re up today provides investors with an opportunity to take profits ahead of the Fed which is more likely to disappoint than to support the recent rally in risk assets,” said Sameer Samana, Senior Global Market Strategist at Wells Fargo Investment Institute in Charlotte.

Goldman Sachs on Monday said they now expect three interest rate cuts in 2024, compared with four expected earlier, after inflation came in a bit firmer than expected.

“With the market near recent highs it’s very difficult to see what could provide an upside spark from here. It’s not hard to imagine the things that could cause disappointment,” said Samana, citing the Fed and high valuations for tech stocks.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 11.97 points, or 0.1%, at 21,837.18, but staying within reach of a near two-year high it posted last Wednesday at 21,970.11.

The Canadian 10-year bond yield touched a one-month high at 3.612% ahead of the Fed decision. The 5-year Canadian bond yield traded at its highest level since Feb 12.

Investors were also awaiting domestic inflation data on Tuesday that could offer clues on the Bank of Canada’s policy outlook. Economists expect inflation to rise to an annual rate of 3.1% in February from 2.9% in January.

High-dividend paying telecom and utilities companies could particularly benefit from lower borrowing costs.

The utilities sector fell 0.8% and communication services was down 0.7%. The materials group, which includes precious and base metals miners and fertilizer companies, was also a drag, falling 0.7%.

In contrast, energy in Toronto added 0.9% as the price of oil rose to a four-month high on lower crude exports from Iraq and Saudi Arabia and signs of stronger demand and economic growth in China and the United States. U.S. crude futures settled 2.1% higher at US$82.72 a barrel.

Nuvei Corp shares were also a standout in Toronto, jumping 32.3% after the payments processor said it was evaluating go-private proposals.

The Dow Jones Industrial Average rose 75.66 points, or 0.20% , to 38,790.43, the S&P 500 gained 32.33 points, or 0.63%, to 5,149.42 and the Nasdaq Composite gained 130.27 points, or 0.82%, to 16,103.45.

The Nasdaq snapped three straight days of losses.

The Philadelphia Semiconductor index gave up gains to end the day virtually unchanged while the S&P 500 technology index finished up 0.5%.

Of the S&P’s 11 major sectors the weakest were rate sensitive real estate and healthcare, with both off 0.02%.

Exchange operator Nasdaq said it resolved an issue related to connectivity and stock orders that had affected early trading for more than two hours on Monday.

U.S.-listed shares of Xpeng added 1.9% on its plans to launch a cheaper EV brand amid fierce price competition.

Boeing finished down 1.5% after a media report that a federal grand jury in Seattle issued a subpoena to the planemaker over the Jan. 5 midair blowout of a Boeing door plug on an Alaska Airlines flight.

Super Micro Computer, which joined the S&P 500 on Monday, gave up earlier gains to close down 6.4%, making it the biggest percentage decliner on the day in the benchmark index.

However, the stock, which has rallied furiously recently on bets it would benefit from AI, is still up more than 252% for the year-to-date.

Advancing issues outnumbered decliners by a 1.17-to-1 ratio on the NYSE where there were 224 new highs and 58 new lows. On the Nasdaq 1,905 stocks rose and 2,400 fell as declining issues outnumbered advancers by about a 1.26-to-1 ratio. The S&P 500 posted 41 new 52-week highs and one new low while the Nasdaq recorded 102 new highs and 131 new lows.

Reuters, Globe staff

Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters’ poll, while industrial production increased 7%, compared with estimates of 5% growth.Fixed asset investment rose by 4.2%, more than the forecast of 3.2%.Online retail sales of physical goods rose by 14.4% from a year ago during the first two months of the year.

China’s economic data for the first two months of the year beat analysts’ expectations across the board on Monday.

Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters poll, while industrial production climbed 7%, compared with estimates of 5% growth.

Fixed asset investment rose by 4.2%, more than the 3.2% estimated by analysts.

The unemployment rate in February for cities came in at 5.3%.

Online retail sales of physical goods rose 14.4% from a year earlier during the first two months of the year.

Investment into real estate fell 9% in the first two months of the year from a year ago. Investment in infrastructure rose by 6.3% while those in manufacturing increased by 9.4% during that time.

China retail sales, industrial data for first 2 months beats expectations (cnbc.com)

• The seven-stage election process will start from April 19 and last till June 1, 2024, according to the schedule announced by the Election Commission of India.
• The country has about 970 million registered voters.
• Polls project that Prime Minister Narendra Modi’s Bharatiya Janata Party will win a third straight term. 

India will hold the world’s largest general elections starting April this year with nearly a billion voters set to exercise their franchise.

The seven-stage election process will start from April 19 and last till June 1, 2024, according to the schedule announced by the Election Commission of India. The country has about 970 million registered voters.

India’s Prime Minister Narendra Modi’s Bharatiya Janata Party is projected to win more than the required 272 seats to form a government, according to several opinion polls.

Experts also forecast that the BJP is set to win a third straight term. 

“Given the economic growth momentum in the domestic economy created by a Modi-led government and an increased image of India on a global stage, many are confident that Modi will win again,” Kranthi Bathini, equity strategist at WealthMills Securities told CNBC. 

Opposition parties have often alleged that electronic voting machines can be “hacked,” benefiting the ruling BJP, a claim refuted by the country’s election body.

In December, Modi’s party was accused by opposition members of orchestrating a power grab after 141 lawmakers were suspended for disrupting parliamentary proceedings.

Chief Election Commissioner Rajiv Kumar appealed to voters in a press conference on Saturday to “maintain decorum when campaigning and refrain from abuses and personal attacks.” 

Since Modi won a second term in the 2019 general election, India has seen the economy strengthen, with Indian equity benchmarks hitting record highs. The Nifty 50 and BSE Sensex have both hit all-time highs this year after the country overtook Hong Kong in December to become the world’s seventh largest stock market.

International Monetary Fund executive director Krishnamurthy Subramanian said earlier in March that India is “easily” the fastest-growing economy and is poised for 8% growth this year.

Warming relations with the U.S. after Modi’s state visit to the White House in June has also boosted India’s appeal as investment destination, with several firms keen to expand their manufacturing presence in the South-Asian nation as they diversify away from China.

Monday March 18

China retail sales, industrial production, and fixed asset investment data

Euro area consumer price index

830 am ET: Canadian industrial product price and raw materials indexes for February.

830 am ET: Canadian construction investment

9 am ET: Canadian existing home sales for February. They are expected to be up 17 per cent from a year ago, with average prices up 3 per cent. MLS home price index also expected.

10 am ET: U.S. NAHB housing market index.

Tuesday March 19

Japan industrial production

Australia monetary policy announcement

830 am ET: Canadian consumer price index for February. Consensus is for a monthly rise of 0.6 per cent, or up 3.1 per cent from a year ago, accelerating from January’s 2.9 per cent annual rise. Core readings are also expected to be modestly higher.

830 am ET: U.S. housing starts and building permits

New Brunswick budget

Earnings include: True North Commercial REIT

Wednesday March 20

Euro area consumer confidence. Germany producer price index. Italy industrial production. U.K. CPI and PPI

130 pm ET: Bank of Canada summary of deliberations for the March 6 policy decision.

2 pm ET: FOMC policy announcement and summary of economic projections. Fed Chair Powell’s press briefing follows at 230 pm.

Saskatchewan budget

Earnings include: Chewy, Alimentation Couche-Tard, General Mills, KB Home, H.B. Fuller, Boyd Group Services, Power Corp., Glacier Media, Mogo

Thursday March 21

Euro area and U.K. purchasing managers indexes and ECB Economic Bulletin

France business confidence and retail sales

Bank of England monetary policy announcement

830 am ET: Canada new housing price index for February. It’s expected to be down 0.5 per cent from a year ago.

830 am ET: Canadian household credit for January

830 am ET: U.S. weekly jobless claims

830 am ET: U.S. current account deficit.

830 am ET: Philadelphia Fed Index

935 am ET: Bank of Canada Deputy Governor Gravelle speaks at the CFA Society in Toronto.

945 am ET: S&P Global PMIs

10 am ET: U.S. existing home sales

10 am ET: U.S. leading indicator

Earnings include: Accenture, Nike, FedEx, Lululemon Athletica, Darden Restaurants, Carnival Corp., Wynn Macau

Friday March 22

Japan CPI

Germany releases business confidence figures and the UK releases consumer confidence and retail sales data.

830 am ET: Canadian retail sales for January. Consensus is for a decline of 0.4 per cent.

Ottawa’s budget balance

Earnings include: Lithium Americas; Dentalcorp Holdings

Major North American stock indexes slipped on Thursday as hotter-than-expected producer prices data likely muddied bets around the timing of the Federal Reserve’s first rate cut and high-flying chip stocks extended their losses.

A Labor Department report showed the Producer Price Index (PPI) rose 0.6% month-on-month in February, compared with a 0.3% increase expected by economists polled by Reuters. It rose 1.6% in the 12 months to February, versus an estimated growth of 1.1%.

Meanwhile, U.S. retail sales rebounded in February, rising 0.6% last month but below expectations of a 0.8% advance.

“In a way, today was the past month in microcosm – sticky inflation combined with signs of softness elsewhere in the economy,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.

“Retail sales may have come in below estimates, but the PPI was even more of an upside surprise than Tuesday’s CPI.”

Traders now see a 63.5% chance of the Fed cutting rates in June, according to the CME FedWatch tool, down from 67% prior to the data.

Meanwhile, the number of Americans filing for unemployment claims stood at 209,000 for the week ended March 9, compared to an estimated 218,000 claims, according to another Labor Department report.

The slew of economic data comes ahead of the Fed’s policy meeting next week, where the focus will be on possible cues about how soon the central bank could kick off the rate-easing cycle.

At 10:11 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 142.28 points, or 0.65%, at 21,827.83.

Yields on the 10-year U.S. and Canadian benchmark bond rose by 2-3 basis points after the U.S. producer prices data. The Canadian dollar also weakened.

“We still believe the Federal Reserve’s first rate cut is at least not until June and perhaps with some of the sticky inflation data could be pushed out further,” said Kevin Headland, co-chief investment strategist at Manulife Investment Management.

Communication services on the TSX fell 1.3% to notch a fresh four-month low and led the sectoral declines amid a broad selloff in equities. Technology shares that opened in the green also reversed course to fall 0.6%.

Shares of Lithium Americas jumped 12.9% after the U.S. Department of Energy granted the miner a conditional commitment loan of $2.26 billion to finance the construction of its Thacker Pass project in Nevada.

Restaurant Brands International was down 1.3%. Burger King parent named Sami Siddiqui as its chief financial officer and made a slew of other leadership changes, as the company pushes ahead with its long-term goals and navigates weakness in some international markets.

Meanwhile, Canadian factory sales grew by 0.2% in January from December on higher sales of motor vehicles, as well as chemical products, Statistics Canada said on Thursday.

At 10:01 a.m. ET, the Dow Jones Industrial Average was down 168.41 points, or 0.43%, at 38,874.91, the S&P 500 was down 26.56 points, or 0.51%, at 5,138.75, and the Nasdaq Composite was down 96.03 points, or 0.59%, at 16,081.74.

Ten of the 11 major S&P 500 sectors fell, with real estate leading losses, down 1.6%.

Most megacap growth and technology stocks inched higher, but artificial intelligence (AI) giant Nvidia fell 3.4%.

Other chipmakers including Intel and Advanced Micro Devices fell 1.5% and 2.0%, respectively, while the Philadelphia SE Semiconductor Index shed 1.4%.

Shares of Robinhood Markets jumped 6.0% after the trading app operator said its assets under custody rose 16% in February.

Aerospace and defense company RTX gained 1.9% after Wells Fargo upgraded its rating to “overweight” from “equal weight”.

Declining issues outnumbered advancers for a 3.86-to-1 ratio on the NYSE and a 2.86-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and no new lows, while the Nasdaq recorded 41 new highs and 77 new lows.

Reuters, Globe staff

Statistics Canada says manufacturing sales rose 0.2 per cent to $71.1-billion in January, led by strength in the motor vehicle and chemical subsectors.

The federal agency says sales were up in 11 of its 21 subsectors, as the transportation equipment group gained 4.3 per cent and chemical added 3.5 per cent.

After five consecutive monthly declines, sales in the motor vehicle subsector increased 19.6 per cent to $5.3-billion in January, as production resumed in auto plants that had downtime for retooling in 2023.

These gains were partially offset by a 16.7 per cent drop in sales of aerospace products and parts.

Total manufacturing sales in constant dollars rose 1.1 per cent in January.

Manufacturing sales increased in seven provinces in January, led by Ontario and New Brunswick, while Quebec recorded the largest decline.