It would seem that the Chinese are starting to come to terms with the fact that growth at 8 to 10% a year is just not sustainable over time and a senior official in the finance department has suggested that 6 to 7% is more realistic for the balance of the fiscal year. That comment caused the markets over there to fall by about a point and a half overnight. Japan was relatively flat.
In Europe, we are seeing modest gains at midday with markets higher by about a quarter point. Factory output in May fell for the first time in four months showing that the economy is still fragile in the region. On the positive side, S&P has upgraded its outlook on Irelands credit rating suggesting the debt may fall faster than anticipated. While other countries in the union seem to be fighting continuously politically as to how to get things done, Ireland’s political parties have put the politics aside and got things done. Pretty rare in the world today but a great example to other countries in financial crisis.
The US markets are set to open slightly higher as JP Morgan and Wells Fargo both beat consensus estimates. JP Morgan’s loan loss provisions were lower by 78% and both the top and bottom lines were stronger regardless of higher mortgage interest rates for the quarter.
Markets have had a nice rebound this week based on the clarification by the FOMC on the tapering program in regard to asset purchases. The gains have been across the board as cash and fixed income assets continue to flow into the capital markets.
In Canada we are going to see about a quarter point advance on the open following the US lead.
Commodities are mixed with gold off 7 to 1273, oil up 0.60 to 104.99 and the loonie down a fifth of a cent to 96.29.
Bond yields have retreated this week after the Fed minutes release with the ten year treasury yield falling back to 2.55% from 2.66% last week. In Canada we got a similar move with 10 year GOC bonds yielding 2.42% down from 2.51% last week.
For now we seem to be in a holding pattern going deeper into earnings season which will tell the story in regard to continued recovery.
|Kenneth A. Dick, BA, CIM, CFP, FCSI
Branch Manager & Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth Management