Morning Market Brief: February 5, 2024

Canadian labour market data on the docket 

Now that several major central banks have made their first interest rate announcements of 2024, investor attention will turn to economic data and how it might impact the decisions of those central banks. Financial markets have been a bit unsettled so far in 2024 with investors trying to predict when central banks will begin lowering interest rates. Here are the key economic announcements to monitor this week. 

• S&P Global will release Canada’s business activity in January today. Business activity in Canada shrank in December with relatively muted demand weighing on its manufacturing and services sectors.
• Attention will turn to Canada’s labour market data on Friday. Canada’s labour market showed signs of slowing as 2023 ended. In December, the economy added a meagre 100 jobs. Canada’s unemployment rate ended the year at 5.8%, its highest level since January 2022. The slowdown in Canada’s labour market has fueled expectations the Bank of Canada could begin lowering rates in 2024.
• There will be critical economic announcements from around the world. These will include one on the US services sector activity today, European retail sales on Tuesday, the US trade balance on Wednesday and China’s inflation rate on Wednesday night.
• Watch for key corporate earnings results. In Canada, key earnings include TMX Group, Sun Life, BCE, Cineplex, Brookfield, Saputo, TELUS and Enbridge. South of the border, notable earnings include McDonald’s, Chipotle, Ford, Uber, Walt Disney and Pepsi.

The critical economic announcements this week are sure to drive financial markets and set the stage for the next interest rate decisions of major central banks. Signs are pointing to rate cuts on the horizon, but those might be further down the road in 2024. In the meantime, central banks will try to slow inflation further while navigating a relatively soft landing for their respective economies.

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