First Look With Surveillance: China Pivot, Oil Climbs
Oil prices are gaining ground – at last check, up almost three per cent for benchmark West Texas Intermediate crude – amid some optimistic signs coming out of China and the OPEC+ cartel. Let’s start with China – key urban centres including industrial and cultural hub Shanghai announces further easing of COVID restrictions over the weekend, taking some steam out of concerns the world’s second-largest economy would revert to strict lockdowns to curb the spread of the virus and thus stymie economic output. Over to the cartel side of things, the OPEC+ alliance is holding the line, maintaining production at current levels rather than taking a hatchet to production quotas as some market participants had feared.
STOCKS SLIP IN EARLY TRADING
U.S. equity market futures are sliding in the premarket as concerns over the Federal Reserve’s rate hiking path offset some of that optimism coming out of China. Now, not to ascribe broad-market moves to one thing or another, but it’s worth noting investors are still digesting that hotter-than-expected jobs report south of the border – not to mention a jump in average hourly earnings – and the implications for the Fed before it makes its final rate decision of the year next Wednesday. And a wee bit of context, given the weakness so far today – the S&P 500 is on track for its biggest fourth quarter gain since 1999 thus far, up some 13 per cent quarter-to-date.
AND NOW, MORE PAIN IN THE PRODUCE AISLE
Canadians hoping for some relief at the grocery store are likely out of luck heading into 2023, according to a new report from friend of the channel Sylvain Charlebois. Dalhousie’s Charlebois – along with peers over at the University of Guelph, the University of Saskatchewan, and the University of British Columbia – says we’re staring down 5-7 per cent increases in grocery costs next year, led higher by vegetables, meat and dairy products. According to their math, that equates to a $1,065.60 increase in the grocery bill for a family of four in the new year. Worth noting a few things – first, Charlebois will be appearing before a house committee on food price inflation today. Second, food costs and the role the big grocers have in them have become a political lightning rod, to a degree – NDP Leader Jagmeet Singh has accused the grocery giants of gouging customers. Third – and this brings us back to our investing wheelhouse – Loblaw and Metro have outperformed the overall S&P/TSX Composite Index by some margin this year (up 17 and 15 per cent, respectively, against the 3.5 per cent decline in the benchmark,) though Sobeys’ parent company Empire Co. has underperformed, down some seven per cent. We’re looking forward to Amber’s conversation with Sylvain today at 10:30 a.m. EST.
OTHER NOTABLE STORIES
- AltaGas is forecasting a four per cent increase in normalized earnings per share next year, and is boosting its annualized dividend by six per cent to $1.12 per share.
- Shares of Credit Suisse are getting a boost in the premarket on speculation Saudi Arabian Crown Prince Mohammed bin Salman may take a stake in the company’s planned investment bank spinout.
- Shares of Tesla are under some pressure in the premarket – down about four per cent – after Bloomberg News reported the EV-maker is planning to lower production at its Shanghai facility.
- Notable data: Building Permits, U.S. Factory Orders, ISM Services PMI, Quebec November home sales data
- Notable earnings: DLH Holdings, Gitlab
- Notable events: Prime Minister Justin Trudeau and Ontario Premier Doug Ford to make electric vehicle announcement and hold media avail (12:15), House of Commons to hear testimony of food price inflation (15:30)