Daily Pulse
One of our most accessible tools, this daily comment keeps you abreast of developments on the North American and international financial markets.
Michel Doucet
Vice-President and
Portfolio Manager
April 26, 2024
Canada
Copper hit $10,000 a ton for the first time in two years. Copper’s move higher came amid speculation that the world’s mines will struggle to meet demand from green industries. BlackRock and Trafigura say the price will have to jump even further to spur the creation of new mines.
Honda Motor Co. will spend C$15 billion ($11 billion) to build out its electric-vehicle supply chain in Canada, with billions of dollars of financial aid from government, as the Japanese automaker seeks to tap long-term demand in the region. The figure includes investment by joint venture partners, and the aim is to start producing EVs in 2028, Honda said. The company will manufacture 240,000 vehicles a year at a new facility in Alliston, Ontario — a town north of Toronto where it currently produces gasoline-powered Honda CR-V and Civic models. It will also build a standalone battery plant in the community with a capacity of 36 gigawatt hours.
United States
The surprisingly sharp downshift in US economic growth last quarter masked otherwise resilient household demand and business investment that helped generate faster inflation. Gross domestic product advanced at a 1.6% annualized rate, below all economists’ projections, with the biggest restraints stemming from less inventory accumulation and a wider trade gap. However, so-called final sales to private domestic purchasers, which strips out inventories, trade and government spending, rose at a 3.1% rate after adjusting for inflation. For three straight quarters, this key gauge of underlying demand has expanded at least 3%.
Microsoft and Alphabet jumped premarket after stellar earnings and expectations for a surge in cloud revenue fueled by AI demand. Execs at both companies said they plan to spend more on AI.
The Fed’s preferred inflation measure, the core PCE deflator, probably rose 0.3% in March. Bloomberg Economics sees it reinvigorating near-term “no-landing” bets after first-quarter PCE caused markets to further push back expectations of an initial Fed rate cut.
Europe
A net 6% of European companies have beat earnings estimates and 12% on sales, according to Morgan Stanley. Market reaction has leaned positive, although more neutral than in recent quarters, according to Barclays. A sentiment tracker of Barclays sector analysts’ take on European results shows an “overwhelmingly positive tilt,” and companies see better demand and a profit recovery later in the year. Earnings upgrades have been outnumbering downgrades for more than a month, according to a Citi index.
UK consumer confidence edged higher this month as easing inflation and the prospect of further tax cuts made people more willing to spend, GfK found. Its key gauge of household sentiment rose to minus 19.
Asia
The yen fell toward 157, hitting a fresh 34-year low after the BOJ left rates unchanged. Kazuo Ueda did little to limit the decline. He said currency movements may be a factor in deciding policy if they affect inflation trends, though the yen isn’t having a big impact so far. More from Japan: Tokyo CPI excluding fresh food slowed in April to 1.6%, though the number was largely distorted by the start of education subsidies.
US Secretary of State Antony Blinken has begun talks with Chinese President Xi Jinping in Beijing, addressing trade complaints to China’s continued support for Russia. The US raised issues such as Beijing’s support for the Kremlin’s military industrial base, peace in the Taiwan Strait and China’s military activity in the South China Sea, in what were described as “substantive and constructive” discussions.