RBC’s Top Picks in Global Mining: Nine Canadian Stocks Stand Out

Bank of Canada Likely to Hike Interest Rates, Says CIBC Economist

Bank of Canada’s Rate Hike Decision

According to CIBC economist Andrew Grantham, there is a growing possibility that the Bank of Canada will hike interest rates. Grantham had previously been in the camp predicting that the Bank would not hike rates this month, but now believes that the evidence of an outperforming economy may be enough to warrant a rate increase.

Evidence Supporting a Rate Hike

Grantham points to the latest labor force report, which suggests that the drop in employment observed in May was merely a statistical anomaly caused by volatility in youth employment. The rebound in jobs during June, along with an unemployment rate that remains low compared to pre-pandemic levels, may have tipped the scales in favor of an immediate rate hike, Grantham argues.

Grantham’s shift in stance reflects a change in sentiment among forecasters, who had initially predicted a rate hike following the previous increase. However, Grantham’s cautious approach highlights the need for the Bank of Canada to accumulate sufficient evidence before pulling the trigger on another rate hike.

Updated List of Top Ideas in the Mining and Materials Sector

The RBC mining and materials equity team has made some changes to its list of top ideas in the sector. Norsk Hydro has been added to the list while IGO Ltd. has been removed. The team also downgraded the rating on the fertilizer sector from overweight to market weight.

The current list includes CF Industries, Nutrien, Capstone Copper, First Quantum, Norsk Hydro, Ivanhoe Mines, Pilbara Minerals, Adriatic Metals PLC., Centamin, G Mining Ventures, Gold Fields, Northern Star Resources, Pan American Silver, Regis Resources, Royal Gold, Cameco, Ecora Resources, Champion Iron, Glencore, Mineral Resources, South32, and Teck Resources.

Morgan Stanley Analyst Highlights 10 Tactical Market Debates

Morgan Stanley equity analyst Edward Stanley has compiled a list of 10 big tactical market debates for the remainder of 2023. These debates include discussions on margin pressure, inventory and deflation, critical infrastructure in a multipolar world, downround IPOs and bankruptcies, ESG rate of change, radical decarbonization debates, decarbonizing steelmaking, the rise of Saudi Arabia, multi-earning in a GPT era, and the potential for smart chemotherapy.

Citi’s Quarterly Outlook: US Downgraded, Europe Upgraded

Citi global equity strategist Beata Manthey has released the firm’s quarterly outlook. The report downgrades the US market to neutral and upgrades Europe to overweight. The European market is trading at a discount to the US and is pricing in a more realistic earnings per share (EPS) growth path. Citi forecasts a 5% global EPS contraction for this year and a modest 5% expansion in 2024, suggesting a slowdown rather than a recession. The outlook acknowledges potential risks but maintains a constructive medium-term view, with a sector strategy focused on quality and selective cyclicals.

Editor’s Notes

In this roundup, we discussed the possibility of a rate hike by the Bank of Canada, changes in the mining and materials sector’s top ideas list, Morgan Stanley’s 10 tactical market debates, and Citi’s quarterly outlook. These insights provide valuable information for investors looking to make informed decisions in the current market climate.

For more news and analysis, visit the GPT News Room.

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