Daily Wrap-up: Historic interest rates decision gives markets an end-of-week boost

Daily Wrap-up: Historic interest rates decision gives markets an end-of-week boost

Daily Wrap-up: Historic interest rates decision gives markets an end-of-week boost Historic interest rates decision gives markets an end-of-week boost
For a change it wasn’t US interest rates that were in focus by the world’s stock markets but Japan. Friday’s decision by the Bank of Japan to introduce a three-tier policy, including a negative rate, sent a wave of higher sentiment around the globe.

Asian, European and North American markets all gained as the surprise BoJ news spread and oil prices gained with US crude up more than 1 per cent and Brent up almost 2.5 per cent. US GDP figures were part of the equation too though as analysts viewed weaker growth as likely to slow the Fed’s interest rate rises.
 
The S&P/TSX Composite Index closed up 223.4 (1.77 per cent)
The Dow Jones closed up 393.9 (2.45 per cent)
Oil is trending higher (Brent $34.73, WTI $33.62 at 4.20pm)
Gold is trending higher (1118.00 at 4.20pm)
The loonie is valued at U$0.7132
 
Canadian economy grew in November but unlikely to boost Q4
Statistics Canada reported Friday that real GDP rose 0.3 per cent in November, mainly as a result of increases in wholesale and retail trade, oil and gas extraction as well as manufacturing. The gain in November follows a 0.5 per cent decline in September and no growth in October.

The gains are not expected to do much to improve growth for the fourth quarter though. As US figures showed Friday, it was not a good period south of the border with GDP down to 0.7 per cent from 2 per cent in Q3; that’s unlikely to have helped Canada with the rebound that was needed.
 
No royalty rate hike for Alberta’s oil sands
The oil industry in Alberta has been given some good news. Firms were expecting that a review by the NDP government would result in a hike in royalty rates, a focus for the party during the election. However the review has concluded that the royalties paid are comparable with other jurisdictions and will not be increased. Premier Rachel Notley noted that current economic conditions mean working to protect the province’s economy. While the government will miss out on additional revenue from oil it may receive some extra federal help. Finance Minister Bill Morneau acknowledged that there may be payments available under the fiscal stabilization program.