Stocks and commodities rally as US and China close in on new trade deal
Oil prices got a lift across the board this week, rising in step with global equity markets. Both Brent and WTI have now returned to the levels of last November.
Canadian crude and condensate streams also got support from narrowing differentials. The discount on Western Canadian Select (WCS) contracted by US$1.70, ending Friday below US$13/bbl and lifting WCS by over 8%. The discounts on Canadian Light and Edmonton Condensate also narrowed, boosting each benchmark by about 4%.
In natural gas markets, Alberta's AECO gas gained 18% for the week, while Henry Hub rose 3.5%.
This week's notable Canadian economic news:
- According to Statistics Canada, 446,300 Canadians received regular Employment Insurance (EI) benefits in December, up 1.0% from the previous month.
- After a 1.1% drop in November, wholesale sales rose 0.3% to $63.1 billion in December.
- For the full-year 2018, wholesale trade rose 3.7% to $757 billion, marking the ninth consecutive annual increase.
- Retail sales dipped 0.1% in December, due mainly to a 3.6% drop in sales at gasoline stations.
- For the full year 2018, Canadians spent $605 billion, up 2.7% from the previous year. Sales receipts at gasoline stations rose almost 8% due to higher gas prices.
- Yields on the Canadian 10-year were roughly unchanged, ending the week at 1.89%.
- The Canadian dollar gained 0.8% this week, ending Friday above 76 cents.
This week's US economic news:
- After a 1.0% gain in November, durable goods orders rose 1.2% in December.
- Initial claims for unemployment benefits fell to 216,000 last week, down 23,000.
- In minutes released from the latest FOMC meeting, Fed officials promised to show "patience" in future rate hikes and the unwinding of US$4 trillion held in treasures, despite a robust economy and strong labour market.
- Shorter duration bond yields dipped lower on expectations of fewer rate hikes this year. Yields on the 30-year rose 2 basis points, ending Friday at 3.02%, and slightly steeping the yield curve.
- The US dollar lost 0.4%, wiping out all gains from the previous week.
Across the pond this week:
- Global bond yields mostly ended the week lower, including Germany, Japan and the UK. Japan's 10-year fell to -0.04%.
- The pound sterling was this week's biggest gainer, rising 1.3% on hopes for a Brexit deal at the end of March. The Euro rose 0.4% while the yen was little changed.
Equity markets were enthused by news that the US and China appear to be moving closer to finalizing a trade deal.
The Hong Kong and Shanghai exchanges rose 3.3% and 4.5%, respectively, for the week.
In New York, the NYSE and NASDAQ exchanges both rose 0.7%. The Dow Jones Industrial Average and S&P 500 both gained 0.6%, marking the ninth consecutive week of gains for both indices. Materials and utilities led to the upside.
The TSX also booked its ninth week of gains, rising 1.1%. Mining and precious metals stocks were the best performers this week.
European markets all rose about 1%, while the Nikkei rallied 2.5%. London's FTSE was the only notable exception, dipping slightly due to a strengthening pound.
The S&P 500 energy sector posted a 0.5% loss, while the TSX energy sector rose 0.6%. Most Canadian subsectors averaged a gain for the week. US producers and energy service providers posted the biggest losses south of the border.
|Suncor Energy||SU||44.92||▲0.1||35.53||55.47||D W|
|Imperial Oil||IMO||36.00||▼-0.6||33.43||44.91||D W|
|Husky Energy||HSE||15.90||▲1.8||13.33||22.99||D W|
|Pembina Pipeline||PPL||47.83||▼-1.7||37.60||49.05||D W|
|Inter Pipeline||IPL||21.14||▼-0.8||18.60||25.66||D W|
|Gibson Energy||GEI||21.21||▼-0.3||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||36.89||▲0.1||30.11||49.08||D W|
|Cenovus Energy||CVE||11.69||▲1.8||8.74||14.84||D W|
|Vermilion Energy||VET||33.01||▲1.3||26.67||49.67||D W|
|Pason Systems||PSI||20.71||▲1.4||16.61||24.57||D W|
|Mullen Group||MTL||12.34||▲3.6||11.26||16.93||D W|
|Secure Energy||SES||8.59||0.0||6.25||8.91||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||37.55||▼-2.2||27.96||47.45||D W|
|Exxon Mobil||XOM||78.42||▲0.9||64.65||87.36||D W|
|Kinder Morgan||KMI||19.32||▲2.8||14.62||19.47||D W|
|Williams Co||WMB||27.11||▼-0.6||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||95.53||▼-4.7||82.04||133.53||D W|
|Occidental Petro||OXY||65.93||▼-1.9||56.83||87.67||D W|
|Anadarko Petro||APC||43.69||▼-3.4||40.40||76.70||D W|
|Pioneer Natural Res||PXD||142.13||▼-2.2||119.08||213.40||D W|
|Baker Hughes||BHGE||26.35||▲2.0||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||28.48||▼-4.5||24.27||49.08||D W|
|Marathon Petro||MPC||65.02||▼-0.2||54.29||88.45||D W|
|Phillips 66||PSX||97.36||▲1.4||78.44||123.97||D W|
|Valero Energy||VLO||85.32||▲1.1||68.81||126.98||D W|
- Shell releases LNG Outlook 2019
- API Weekly Statistical Bulletin
- March contract expiry for Henry Hub
- Q4/2018 earnings: Husky Energy, Civeo
- StatsCan Consumer Price Index (Jan 2019 data)
- StatsCan Payroll, Earning and Hours (Dec 2018 data)
- EIA Weekly Petroleum Status Report
- StatsCan Industrial Product and Raw Material Price Indexes (Dec 2018 data)
- US Q4/2018 GDP (initial estimate) and Q3/2018 GDP (third estimate)
- EIA Weekly Natural Gas Storage Report
- April contract expiry for Brent and March contract expiry for gasoline
- Q4/2018 earnings: Encana, AltaGas, Storm Resources, Vermilion Energy
- StatsCan real GDP by industry (December) and Q4/2018
- EIA Petroleum Marketing Monthly (Dec 2018 data)
- Baker Hughes Weekly Rig Counts