Morning Market Brief August 26, 2024

Look out for Canadian GDP

The final week of August will bring few economic announcements out of Canada, but very important ones, nonetheless. The Bank of Canada (BoC) has noted it will closely monitor economic data before any future rate decisions, making each announcement relatively important. South of the border, attention will turn to a measure of US inflation that will likely help guide the next decision of the US Federal Reserve Board (Fed). Here’s what to watch for this week.

• Statistics Canada will release an estimate on Canada’s wholesale sales for the month of July today. Wholesale sales have dropped for two consecutive months, and four of six overall in 2024, amid a slowdown in consumer demand.
• Canada will come into the spotlight on Friday when its gross domestic product for the second quarter of 2024 is announced. The economy expanded by 1.7%, annualized, in the first quarter, benefiting from a rise in spending on services. A Bloomberg survey of economists estimates another expansion in the second quarter.
• Turning to our southern neighbour, the US personal consumption expenditure price index (PCE) will be released on Friday. The PCE is the preferred inflation gauge of the Fed, meaning this will likely have a significant impact on its next interest-rate decision.
• Looking elsewhere, China’s industrial profits will be announced tonight, European consumer confidence on Thursday, Japan’s industrial production on Thursday night and European inflation on Friday.
• In Canada, earnings from the Big Banks take centre stage. CIBC is set to report earnings on Thursday. In the US, notable earnings include NVIDIA, Salesforce and several big retailers.

Canada will garner a lot of attention on Friday when we get a glimpse into the health of its economy over the second quarter of 2024. We have seen signs of weakening economic conditions, which prompted the BoC to cut rates at two straight meetings, with the potential of a third straight cut in September.

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