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Daily Pulse

Canada

The Canadian stock market flirted with a new high Thursday as the intraday record faded in late afternoon trading. The benchmark S&P/TSX Composite Index closed 0.2% higher at 16,643.28, paring a record high reached midday, as trade tensions between the world’s two largest economies showed signs of easing. The key stock gauge is now about 23 points away for closing at a new high. Technology and financial shares were the biggest gainers, while the health-care sector fell, dragged down by pot stocks after Aurora Cannabis Inc. reported a quarterly loss and revenue that missed its own guidance.

A group of investors including the hedge fund founded by billionaire John Paulson said “significantly mismanaged” gold companies could unlock $13 billion in value through mergers and cost cuts.

At least two portfolio managers are boosting their exposure to what had, until recently, been out-of-favor Canadian energy stocks. With fading sentiment toward U.S. shale plays, including the Permian Basin, Calgary-based Canoe Financial is turning its attention back home instead, boosting its Canadian energy holdings after exiting many domestic stocks in 2015 and 2016, senior portfolio manager Rafi Tahmazian said on BNN Bloomberg late Wednesday.

United-States

Traders rushed back into risk assets and trimmed their haven exposure on optimism that global central bankers will shower markets with stimulus and boost economic growth. Equity funds attracted $14.4 billion during the week through Sept. 11, the biggest inflow since March 2018, according to Bank of America Corp. and EPFR Global data. U.S. stocks were the primary beneficiary of a renewed appetite for riskier investments, posting the 10th-biggest inflow on record at $17 billion.

Oracle Corp. shares fell on Thursday after it reported first-quarter revenue that was slightly below expectations, underlining the software company’s rocky transition to focusing on the cloud. While the results were largely in line with the average estimates, analysts expressed caution over the unexpected departure of Chief Executive Officer Mark Hurd, who is taking a leave of absence for health reasons. Multiple firms wrote that the news added an element of execution risk to the stock. Shares dropped as much as 4.8% in the stock’s biggest percentage decline of the year.

Europe

European equities are already pricing in much more bad news than U.S. stocks, UBS Asset Management strategists Evan Brown and Ryan Primmer write in note, showing preference for Europe and Japan over the U.S.

Boris Johnson will travel to Luxembourg for his first face-to-face talks with European Commission President Jean-Claude Juncker on Brexit on Monday. The prime minister has said he’s hopeful of striking a deal and that both sides “can see the rough area of landing space” for it.

Asia

China said it is encouraging companies to buy U.S. farm products including soybeans and pork, and will exclude those commodities from additional tariffs, in the latest move to ease tensions before the two sides resume trade talks. The Commerce Ministry’s announcement on Friday follows a move earlier this week to exempt a range of American goods from 25% extra tariffs put in place last year, as the government seeks to lessen the impact from the trade war.

Japanese government bond yields leapt higher on Friday, taking them back within the central bank’s target range as investors positioned for key monetary policy meetings next week. The yield on benchmark 10-year notes climbed as much as 5.5 basis points to minus 0.16%, the biggest intraday increase since August 2018, outpacing moves in U.S. Treasury yields during Asian trading.

The author

Michel Doucet

Michel Doucet

Vice-President and Portfolio Manager
After obtaining a Bachelor's degree from the Faculty of Social Sciences at the Université du Québec in Montréal and his Master’s degree, Michel Doucet began his career as a junior economist at the National Bank head office in Montreal. In 1992 he joined the institutional equities and fixed income group at Lévesque Beaubien Geoffrion as an economist and market analyst. Over the years, he has led various projects related to the North American and international economies as well as Canadian public finances. In 1996, the team of institutional economists to which he belongs was ranked first in Canada by Brendan Wood International. In August 1997, Mr. Doucet joined the personal services division of Lévesque Beaubien Geoffrion where he served as an economist, fixed income market analyst and vice president. In 2004, he joined the Desjardins Securities full service team as Vice President. He now occupies the roles of fixed income strategist, economist and portfolio manager. He manages the Securities Portfolio Advisory Group, advisor marketing and distribution of financial planning and insurance.