Briefing highlights
- Strong first-quarter report expected
- Markets mixed, with European stocks down
- Scotiabank profit slips in second quarter
- Europe stuck with deflation, high unemployment
- A Mean Girls scene I'd love to see
- Video: Why rudeness at work is contagious
In like a lion
Canada’s economy likely came in like a lion at the beginning of the first quarter, and then out like a lamb.
And when you include what’s expected in the second quarter, it’s a lamb to the slaughter, to borrow yet another old phrase.
As The Globe and Mail’s David Parkinson writes, analysts expect Statistics Canada to report this morning that the economy expanded in the first quarter at an annual rate of between 2.7 and 2.9 per cent, a far better showing than the end of last year.
But that single number will mask what transpired over the three-month period.
January was strong but February was weak, and today’s report is expected to show a troubled March, as well – possibly a contraction of 0.1 per cent.
“And that was before the wildfires in northern Alberta took a toll on oil production, and hence GDP growth,” said Toronto-Dominion Bank senior economist Leslie Preston.
As Ms. Preston noted, the Bank of Canada said just last week it expects the wildfires, which ripped people from their homes and hobbled oil sands production, will cut 1.25 percentage points from second-quarter economic growth.
“At this point, we are estimating that the second quarter is likely to see a contraction, which will be offset by a rebound in [the third quarter] as activity in the oil sands gets back to normal,” she said in a recent report.
A Mean Girls scene I'd love to see ...
“Ewww. Gag, right?”
Markets mixed
Global markets are mixed so far, largely up in Asia and down in Europe.
Tokyo’s Nikkei climbed 1 per cent, Hong Kong’s Hang Seng 0.9 per cent, and the Shanghai composite 3.3 per cent.
In Europe, though, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were down by between 0.1 and 0.4 per cent by about 6:45 a.m. ET.
New York futures were little changed as U.S. markets prepared to open after a long weekend.
“U.S. markets look set to return from their long weekend break on a fairly flat note, in the process bringing to a close a month that started out badly but has seen stocks trade back close to their highest levels this year,” said chief analyst Michael Hewson of CMC Markets.
“This is despite speculation that the next U.S. rate hike could come as soon as the next couple of months, with most discounting a June move despite Fed chief Janet Yellen becoming the latest in a long line of U.S. policy makers suggesting that a move could come as soon as next month.”
Scotiabank profit dips
Bank of Nova Scotia posted a lower second-quarter profit today, citing a restructuring charge and a hit from the embattled oil sector.
The Canadian bank’s profit slipped to $1.6-billion, or $1.23 a share, from $1.8-billion or $1.42 a year earlier. The latest results included a pretax charge of $378-million, which meant profit was otherwise up.
“Partly offsetting our earnings growth were elevated loan loan losses in the energy sector, which are expected to decline beginning next quarter,” chief executive officer Brian Porter said in unveiling the results.
Europe's woes
Europe is stuck in deflation, with unemployment at elevated, though lower, levels.
Annual inflation in the euro zone is expected to be 0.1 per cent this month, up a tick from April’s 0.2 per cent, the Eurostat agency said today.
“Euro zone inflation remains within the doldrums, with today’s 0.1-per-cent reading representing the fourth consecutive negative reading despite continued gains in energy prices,” said IG market analyst Joshua Mahony.
“Despite the [European Central Bank] embarking on a substantial round of easing, the fact that the euro zone remains within deflation is a clear heads up that monetary policy alone cannot fix the problem of stagnant price growth.”
A separate Eurostat report today showed unemployment in the monetary union stuck at an elevated 10.2 per cent. While high, it’s the lowest level since August, 2011, the agency said.
On a stronger note, the jobless level across the wider European Union dipped to 8.7 per cent, the lowest since the harsh days of April, 2009.
More than 21 million people can’t find work in the EU, almost 16.5 million of them in the euro zone.