The Dow jones Industrial Index is up 790 points yesterday and today, erasing Monday’s 725 point drop. Better than expected earnings, helped markets recover, in particular Coca Cola, it gave a boost to market sentiment after reporting quarterly revenue that topped pre-pandemic 2019 levels and raising its full year forecast. Those companies that suffered during the pandemic, airlines, hotels and restaurants are reporting better earnings, while those that benefitted through the pandemic such as Netflix, are now reporting disappointing numbers. Also, the expected demise of the U.S. economy due to a rise in Covid numbers seems to have subsided, however, health agencies are still saying be vigilant.
The Canadian dollar has rebounded in tandem with this change in market sentiment, oil prices have risen 1.7% this morning adding to the CAD strength.
Canada’s growth in new home prices slowed for a second month in a row, rising by 0.6% in June, the smallest increase in six months. Although the Canadian housing market remains near record-high sales levels, signs of moderation have begun to appear over the past few months. The current market slowdown, partly due to buyer fatigue, has started to manifest in the housing market, with fewer buyers ready to engage in bidding wars. As well, the desire to buy a home could start subsiding as pandemic measures are lifted and many workers return to offices.
Also, just for edification, Statscan has updated basket weights for the goods and services in the Consumer Price Index (CPI), representing consumer spending patterns in 2020, are now available. The updated weights are based on data from the 2020 national Household Final Consumption Expenditure (HFCE), the Survey of Household Spending and the provincial HFCE series. Alternative data sources for the 2020 reference year were also used to account for pandemic-related shifts in consumer spending at more detailed geographic and CPI product group levels.
Expect the CAD to trade on the stronger side today.
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