Morning Playbook: Is oil bouncing back
 

Is oil bouncing back?

Your financial and economic news for December 2


 

MORNING-PLAYBOOK-STORY

This morning we’re watching where the loonie and the TSX will head, after optimism over a bump in oil prices yesterday battled it out with more news of a manufacturing slowdown in China.

The day ahead

Was the oil bounce short-lived? Oil had a rebound yesterday, gaining five percent – it’s biggest jump in a day since 2012 – on concern that shale production could start to slow. But while the rise in oil prices was a welcome boost for commodity currencies from the Canadian dollar to the ruble, it looks like oil is already falling slightly this morning, alongside other key commodities like gold and copper.

The TSX fell yesterday Despite the small jump in oil and other commodities – the TSX/S&P composite index finished the day down 119. 38 points. The drop likely came from fears of a slowing China, after numbers were released from HSBC that suggested Chinese manufacturing is barely growing. But markets in Asia have had a good day, and European markets, including the FTSE, are up this morning.

The dollar rose one cent to 88 cents, as the jump in oil prices outweighed news about China.

It’s bank season, starting with BMO: the Bank of Montreal will be the first of the big banks to release its earnings this week. Analysts say expect good profits, but many banks are already looking ahead to a rocky 2015.

Update: BMO’s fourth quarter earnings came in largely unchanged from last year, with a net profit of $1.07 billion, lower than many analysts were expecting. But the bank also announced they will raise dividends by $0.02 to 80 cents.

Quebec’s economic and fiscal update will also be released today.

What you missed

China and US slows, Canada stays steady Yesterday marked the release of manufacturing PMIs – where a rate above 50 separates growth from contraction – for November. The numbers confirmed the slowdown in China, while Canada’s numbers were more or less unchanged. While American growth is still strong compared to China, November saw a very small decline, though some analysts say this was better than expected.

Ruble jumps back after a very bad day yesterday – the currency’s worst single-day drop since the Russian financial crisis in 1998 – though the ruble was already starting to gain later in the day as oil prices strengthened. Sanctions on the country have hurt, but the real impact has come from oil prices.

Good morning in Germany: The European markets are doing better this morning after yesterday’s case of the “commywobbles”, and none more so Germany. The Dax exchange in Franfurt hit it’s highest point since June, and concern that Europe’s biggest economy could dip into recession seems to have abated, at least for now.

Cyber Monday hype flops, rounding out disappointing sales in the US after a second-year dip for Black Friday shopping. Sales for the e-shopping bonanza rose 8% in the US above normal shopping days – but that was almost 10% lower than they were before. Hopeful retailers blame the funk on the convenience of internet shopping. Why choose one day to shop when you can browse holiday sales in your pyjamas any day of the week?


 
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