The next few days could bring big announcements – or old news – for Canada, the UK and Europe, as central banks prepare to announce their interest rate targets. In the mean time, volatile oil prices are sending world exchanges on a bumpy ride.
The day ahead
It’s still bank season! The country’s big banks are releasing their earnings this week, with the Royal Bank of Canada reporting today. BMO released their earnings yesterday, with lower than predicted profits. The bank increased their dividend to 80 cents, but shares had slipped a couple dollars by the end of the day.
Update: RBC announced an 11% increase from last year in their fourth quarter earnings, to $2.3 million. Fiscal year earnings were up by 8% to $9 billion. The bank said the increase came from strong retail banking, outweighing lower trading revenue.
The Bank of Canada will announce its interest rate target this morning. But don’t expect anything radical – the interest rate will probably stay at 1 percent.
Oil prices continue to be volatile, after spending Tuesday losing some of Monday’s recovery, and commodity currencies, including the loonie, continue to bounce along with them.
The Loonie took another dip yesterday, down to 87.77 cents to the dollar. The greenback is starting today at a five and a half year high, while the yen and the euro have weakened.
The TSX closed slightly down yesterday on flagging commodities. In the US, Dow Jones industrials, Nasdaq and the S&P 500 all rose yesterday, which has offered a boost to markets in Asia this morning.
Today is the UK’s autumn statement, the second-annual check up on the British budget. Chancellor George Osborne will present the statement, and with election season just months away, expect lots of political theatre. Big announcements will likely include funds for the National Health Service, roads and flood protection, and efforts to get buyers into the highly uneven British housing market. But despite the UK’s position as one of Europe’s strongest economies, the UK is grappling with a high deficit, at 11 percent of national output.
The Bank of England and the European Central Bank will both announce their interest rate targets tomorrow. Will the ECB implement quantitative easing? Prepare to jump on the speculation train, as Mario Draghi urges national governments to fight flagging growth and the threat of deflation.
What you missed
The Canadian auto industry isn’t doing well – the Globe and Mail reports that one of two General Motors plants in Oshawa, Ontario are due to be shut down by 2016, and both will be closed by 2019 – ending a total of 3,600 unionized jobs. Cuts will also be made to a plant in Ingersoll, Ontario. On the other hand, cars are selling in Canada – last month was a record for November.
The future of an oil shipping terminal slated for Quebec is in question, over concern that the location would affect the habitat and breeding grounds of beluga whales. TransCanada Corp.’s Energy East project would transport crude oil from Alberta to refineries in Quebec and New Brunswick. In the mean time, energy regulators in Alberta, BC and Saskatchewan say they’ve banded together to speed up the approval process for pipelines, after delays on TransCanada’s Keystone XL.
Russia will enter a recession. If you’ve been following the impact of international sanctions, falling oil prices, the scrapped South Stream pipeline, and the wildly bouncing ruble, this will come as no surprise. But yesterday, the Kremlin officially acknowledged the country is facing a rocky year ahead.