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Weekly Economic Headlines
JULY 6-13, 2018
Bank of Canada hikes rates. The Bank of Canada (BoC) raised interest rates by 0.25% on Wednesday, and signalled more rate hikes to come. The BoC said that while mounting trade tensions with the United States were a concern, their impact on growth and inflation looked modest so far. The rate increase took the bank’s overnight interest rate to 1.50%. The bank’s relatively optimistic view of trade risk boosted the Canadian dollar to its strongest in nearly four weeks, and economists said they expected the central bank to hike again by year end.
U.S. earnings beat expectations. Stocks closed higher on Tuesday as the latest corporate earnings season got under way. Earnings reports for the first calendar quarter rose 24% on a year-over-year basis, and Wall Street is expecting similar second quarter results. By mid-day Friday, just over five percent of S&P 500 companies had reported results, posting earnings growth of 16.37%; however, analysts polled by FactSet expect second-quarter earnings to have grown by 20%. The S&P 500 Index gained 1.55% last week and at one point reached its highest level since February.
Oil plunges following output jump. The price of oil plummeted 5% on Wednesday afternoon, posting its largest daily drop since June 2017. Crude futures briefly pared losses in morning trade after the U.S. government reported a huge 12.6 million-barrel drop in crude stockpiles, but the market quickly shrugged off the weekly data. Instead, traders were focused on supply, as Libya resolved a major disruption to its crude exports and Saudi Arabia reported a big jump in output for June. West Texas Intermediate (WTI) Crude ended the week down 3.78% to close at $71.01 USD/barrel. †Source: Bloomberg, data as at July 13, 2018.
U.S. announces $200 billion China tariff list. U.S. Trade Representative Robert Lighthizer said the United States would impose tariffs of 10% on additional Chinese imports worth $200 billion, just days after its tariffs on $34 billion Chinese goods took effect. The move came after U.S. President Donald Trump said that the United States may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of U.S. imports from China last year. The U.S. dollar retreated slightly on the news, pulling back from a near two-month peak.
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