TodayEquities edged higher this morning, putting major benchmarks in a position for their first week of gains after a seven-week losing streak. Still, the averages are well off their highs, with the Nasdaq solidly in bear market territory and the S&P 500 having briefly dipped more than 20% below its record last week. Chinese tech shares jumped as two of the biggest Internet giants reported sales that topped estimates, lifting some of the gloom that had beset the sector following lockdowns and regulatory headwinds. The U.S. retail sector is being closely watched by investors now looking for more details on just how much pain inflation is inflicting on companies and consumers.
As inflation soars and interest rates rise, Canadians are growing increasingly concerned that the economy is sinking into a recession. A new survey found that 23% of respondents believe the country will experience a recession in the next three months, while 55% of respondents think Canada is currently in the midst of one. While the data lags, this sentiment hasn’t shown up in the retail sales data, as we pointed out in a recent Market Ethos. Recession concerns have been on the rise in recent weeks, as central banks tighten rapidly. With fears of a recession looming, Canadians say they have started to change their spending habits, with over half of those surveyed saying they have set stricter priorities and reduced spending in the last month. We’ll see if the data concurs.
Speaking of retail sales, Canada posted weaker-than-expected gains in March. Sales hit $60.1 billion in March, unchanged from the month before. While March receipts were up in 10 out of 11 subsectors led by higher sales at gasoline stations, lower sales at motor vehicle and parts dealers offset the gains in the remaining sectors. Despite posting weaker numbers in April, sales are expected to increase 0.8% in April, according to preliminary estimates.
Global equity funds saw their biggest inflows in 10 weeks of about $20 billion led by U.S. stocks, as cheaper valuations lured buyers. Inflows into the U.S. Cash led the inflows among asset classes with about $28 billion, signaling market participants continue to search for havens while bond fund outflows reached $5.8 billion.
Canadian employers reported a surge in job vacancies in March that brought the number of unfilled positions to a record. Stats Canada reported yesterday that openings increased 13.4% seasonally adjusted to just over 1 million, up about 60% from the same period last year with the job vacancy rate now 5.9%. The numbers, which are at odds with the survey data noted above, illustrate the extent to which Canada’s labour market has been tightening over the last number of months. This has provided a green light for the BoC to move ahead with rate hikes. Markets expect the policy rate to reach as high as 2.75% over the next twelve months, from the current 1%.
Is this really a shock to anyone? A class action lawsuit is being filed against Elon Musk, accusing him of pushing down Twitter's stock price in order to either give himself an escape hatch from his $44 billion buyout bid, or room to negotiate a discount. The lawsuit, filed by the shareholder William Heresniak on behalf of an unspecified number of investors, also claimed that Musk breached U.S. SEC rules when he failed to disclose that he had purchased a 9.2% stake in Twitter almost two months earlier, on March 14. I guess they weren’t watching the rest of the market.
Diversion: When you want the view but are afraid of heights.