Check out our recap of last week's top market news, as well as a glimpse of the week ahead.
This week’s episode - week of March 27, 2017
In this week’s video, we discuss the U.S. healthcare debate and what it means to the Canadian marketplace, particularly energy stocks.
Added: 03-27-2017Length: 2:31
Canada’s Fiscal budget Unveiled
Finance Minister Bill Morneau delivered Canada’s fiscal budget, seemingly taking a “wait and see” approach, with no major initiatives announced.
The budget deficit is set to rise to $28.5B for the 2017-2018 fiscal year, up from the outgoing year’s $23.0B. Over the next four years, spending is expected to come down to $18.8B.
Program spending will increase 5% in 2017-2018 and the skills, innovation and middle-class jobs agenda will receive $1.2B of funding.
Despite speculation, no change was made to the capital gains inclusion rate, which remains at 50%. Personal and corporate tax rates, sales tax rates and treatment of stock options were all left unchanged as well.
In what is normally the strongest month for inflation, February’s CPI grew only 0.2% to an annual rate of 2.0%. A 4.9% drop in gasoline prices and food prices continuing to trend lower created downward pressure on headline inflation. Core CPI measured 1.6%.
Food prices have fallen 4.1% from a year ago, which is the second largest decline in nearly 60 years.
Canadian retail sales rebounded strongly in January after a soft prior month, beating expectations and advancing 2.2%. Health/personal care, vehicles and electronics sales led the gain.
U.S. Home Sales slip, yet still trending higher
U.S. existing home sales suffered their worst retreat in a year, falling 3.7% in February. Condo sales fell 9.2% and single-family homes were down 3.0%. Still, existing home sales are up 5.4% year over year and both the six- and 12-month averages are on the rise.
New home sales fared better, up 6.1%, to the highest levels since 2008.
Inventory levels are down 6.4% annualized and approaching two-decade lows, an indication of insufficient housing stock relative to demand.
Other Economic News
The U.K. will officially trigger Article 50 on Wednesday March 29, as its formal intention to leave the E.U. after last June’s referendum. Despite strong economic data immediately following the vote and retail sales rising 1.4% in February, the three-month trend is falling at the fastest rate in seven years. Inflation measured 2.3% in February, a three-year high, which could add further pressure to consumer spending.
Activity across the eurozone neared a six-year high in March as the Markit Eurozone Composite PMI measured 56.7. Within Europe, Germany reported a composite PMI of 57.0, now the 47th straight month of expansion, and France was even stronger at 57.6. Meanwhile, the Markit U.S. Composite PMI slid to 53.2, a six-month low and Japan’s manufacturing PMI slipped to a three-month low of 52.6.
GDP reports and a busy week in Japan
Canada will report January’s GDP on Friday which should rise slightly thanks to strength in retail, wholesale and manufacturing sectors. The U.S. is also expected to make an upward revision to its second estimate of fourth quarter GDP and we’ll also get an update on the eurozone’s inflation on Friday. It will be a busy week in Japan with February’s national CPI, employment data, industrial production and retail trade all set to be released.
The first round of French elections is now less than a month away, set to take place April 23. OpinionWay’s latest polls as of March 21 indicate Marine Le Pen is in the lead with 26% of the vote and Emmanuel Macron is close behind with 24%.