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
October 29, 2024
Canada
Oil recovered after tumbling the most in more than two years on Monday, as the wipeout of a geopolitical premium in prices shifted traders’ gaze back to supplies and key upcoming events including the US election. Brent rose above $72 a barrel after plummeting 6.1% in the previous session, while West Texas Intermediate traded around $68.
United States
Corporate America is sending an important signal this earnings season that the rally in US stocks can continue to broaden out beyond technology shares. Cyclical companies, whose prospects are closely tied to the trajectory of the economy, are still citing sluggish demand, according to Bank of America Corp.’s analysis of results through last week. The announcements over that period cover 36% of the S&P 500 Index’s earnings, according to the bank. Yet in an important forward-looking signal, the mention of a “bottom” in the results through last week, which had a heavy weighting toward cyclical companies, is up 56% from a year earlier, Bank of America says. That’s significant because history shows that an increase in such references tends to point to an improvement in earnings, the bank said.
Europe
HSBC Holdings Plc announced a fresh multibillion-dollar stock buyback as it reported better-than- estimated earnings, days after unveiling a major overhaul of its businesses. Europe’s largest bank said Tuesday that it would repurchase up to $3 billion of shares on the back of a 9.9% gain in pretax profit from a year earlier to $8.48 billion. The results were driven by gains in divisions including its wealth arm, which benefited from higher private banking volumes in Asia, according to its statement.
Volkswagen AG is embarking on an unheard-of German restructuring in what amounts to comeuppance for having allowed issues at its namesake brand to fester for years. The manufacturer plans to close at least three German factories, shrink all other remaining sites in the country and slash wages by 10% for around 140,000 workers. It’s also looking to freeze pay next year and in 2026, and abolish one-off payments to long-tenured employees.
Asia
The nuclear power plant closest to the epicenter of the massive earthquake that rocked Japan in 2011 resumed operation, a major milestone in the country’s bid to revive its use of atomic energy. Unit 2 at the Onagawa Nuclear Power Plant in northeast Japan was in the process of being brought back online following maintenance when the Tohoku earthquake and tsunami wreaked havoc more than 13 years ago.
China is weighing approving over 10 trillion yuan ($1.4 trillion) in additional borrowing in the coming years to shore up the economy and address local governments’ debt risks, Reuters reported, citing unnamed sources. The fiscal stimulus may be approved at a meeting by
China’s top legislative body to be held Nov. 4-8, according to the Tuesday report. The package includes 6 trillion yuan in debt to be raised over three years including 2024 to help local authorities resolve off-balance-sheet debt, as well as 4 trillion yuan worth of bonds to fund regional governments’ purchases of idle land and properties over the next five years, it said.