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
May 1, 2024
Canada
The Canadian economy appeared to be running out of steam at the end of the first quarter, bolstering a case for the Bank of Canada to pivot to easier policy as early as June. Preliminary data suggest gross domestic product was unchanged in March as gains in utilities and real estate were offset by declines in manufacturing and retail trade, Statistics Canada reported Tuesday in Ottawa. That followed 0.2% growth in February, missing expectations for a 0.3% increase in a Bloomberg survey of economists. Taken together with a downwardly revised 0.5% expansion in January, the industry-based GDP numbers point to an increase of 2.5% annualized in the first quarter, slightly below the central bank’s forecast of 2.8%. Overall, the report shows an economy that has no material risks of a sharp downturn but at the same time shows little signs of strength in domestic demand. The continued buildup of disinflationary pressures will set the stage for interest-rate cuts by Bank of Canada policymakers, who are waiting to be convinced the downward path to the 2% inflation target can be sustained.
The expansion of the Trans Mountain pipeline received the final regulatory clearance to ship crude from the oil sands to Canada’s Pacific Coast, concluding a decade-long wait for the project.
United States
A broad gauge of US labor costs closely watched by the Federal Reserve accelerated in the first quarter by more than forecast, illustrating persistent wage pressures that are keeping inflation elevated. The employment cost index, which measures wages and benefits, increased 1.2%, the most in a year, after rising 0.9% at the end of 2023. The advance exceeded all projections in a Bloomberg survey of economists.
Jerome Powell may adopt a notably more hawkish tone when he speaks after today’s Fed decision. Officials are poised to signal no plans for cuts in the near future and keep rates steady. Options traders are braced for the biggest Fed-day move in the S&P 500 in almost a year, Citi said.
Amazon.com Inc.’s cloud unit posted the strongest sales growth in a year, a sign that the retailer’s most profitable unit is recovering from a slump as businesses resume spending on technology projects, including artificial intelligence services. Despite the strong cloud performance, the company’s sales forecast for the current quarter fell short of estimates, reflecting concern about the main e-commerce business as consumers continue to spend cautiously.
Europe
UK house prices fell at the sharpest pace in eight months after the cost of mortgages crept higher, Nationwide said. Prices unexpectedly dropped 0.4% in April, making the average cost £261,962 — about 4% below the peak in the summer of 2022.
Wegovy and Ozempic have made Novo Nordisk Europe’s most valuable company, with a market cap larger than that of the entire economy of its home, Denmark. Now the worry is that if it stumbles or falls, the country’s economy and society will feel the pain.
Asia
Foreign funds boosted holdings of Chinese shares for the third straight month, with positive policy tone from the Politburo meeting expected to bolster sentiment after the Labor Day holiday. Overseas investors added 6 billion yuan ($829 million) of onshore equities in April, notching the longest run of monthly net purchases since March 2023. The CSI 300 Index ended April with a 1.9% gain, its third monthly advance.
China’s largest and most advanced warship began its first sea trial, paving the way for enhanced naval capacity.