The Keystone oil pipeline has returned to service much to the relief of the Canadian oil industry. The pipeline has been shut since Oct. 30 when a drop in pressure was detected and more than 9,000 barrels of oil leaked out. Keystone, which pumps 590,000 barrels a day or 17% of Alberta’s monthly output, is a crucial artery for getting Canadian oil to the United States. Outages from leaking pipelines have posed another headwind to Canada’s oilpatch, along with fears about global demand and the lack of pipelines, says CIBC Capital Markets. While optimism about U.S., China trade relations have supported global oil prices, Canadian oil prices (WCS) have fallen to their weakest this year, and the spread between WTI and WCS has grown to its widest level since December 2018, says CIBC.
Markets are in Risk Off mood this morning because of an escalation in the violence in Hong Kong today. Hong Kong police shot and critically wounded a protester and a man was set on fire. The MSCI world equity index slipped 0.2%, with Hong Kong’s Hang Seng index falling 2.6%, pushing Asian stocks toward their worst day since August, Reuters reports. The nerves spread to Europe too with the Euro STOXX 600 down 0.4%, and London shares losing 1.1%. Wall Street futures also fell 0.4%. Gold rose 0.5%. “At some stage I think it is likely that there will be a more fully-fledged crackdown,” said Stéphane Barbier de la Serre, a strategist at Makor Capital Markets told Reuters. “And if you see a crackdown, you could see markets collapsing.”
Sixty-eight seconds into Alibaba’s Singles’ Day sales hit US$1 billion. About two-thirds of the way through the 24-hour shopping marathon sales had already passed last year’s record to hit US$30.7 billion. That’s more than 80% of what Amazon.com sells in an entire quarter. The event, which serves as a measure of Chinese consumer sentiment, this year is also a showcase for Alibaba, which plans to sell $15 billion worth of shares in Hong Kong this month.
Don’t get too bent out of shape by Canada’s jobs plunge, economists say, but if the poor data continues it may prompt the Bank of Canada to trim rates sooner rather than later. Canada lost 1,800 jobs in October, data showed Friday, when forecasters had expected a gain of almost 16,000. Manufacturing employment slumped by 23,000, which may be an indication that weak global demand is starting to weigh on the economy. Moreover, that was the second weak indicator that week after trade figures also missed forecasts on lower exports. Markets have priced in a 24% chance the Bank will cut interest rates next month, but that could change. CIBC economists see employment in Canada cooling further in the fourth quarter. “If, as we expect, November sees a reversal of some of the gains tied to the election, it will be another step in that direction, and nudge the Bank of Canada closer to the rate cut we expect to see in January,” wrote CIBC’s Royce Mendes.