Everything You Need to Know on Tuesday: Financial Experts See Lower Recession Risk and Slower Rate Cuts According to BoC Survey

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,318.40, up 0.05%.

● Financial experts see lower recession risk, slower rate cuts: BoC survey

● Higher US LNG deliveries, easing geopolitical tensions to put pressure on EU natural gas prices, Commerzbank says

● Canada aims to attract Honda and others with EV tax incentives

● Stocks to watch: Shell, TotalEnergies

Today, the Canadian dollar is trading at 72.94 cents US, a slight decrease from Monday.

The S&P/TSX 60 Index Standard Futures (SXF) are currently trading at 1,318.40, which is up 0.05% from the previous close.

Financial experts in Canada now expect more hesitation about interest rate cuts and consider a recession less likely in the short term, according to the latest Bank of Canada (BoC) market participants survey.

The first-quarter survey canvassed 27 economists and financial strategists from March 7 to 15, ahead of inflation data released in mid-April that largely matched expectations.

In the survey, the median expectation for real GDP growth in 2024 rose to one per cent from 0.8 per cent in the survey from the fourth quarter of 2023. Expectations for a recession in the next six months dropped, with the median probability at 35 per cent in the most recent survey, versus 48 per cent in the previous survey.

The experts’ median forecast for the BoC’s benchmark interest rate at the end of 2024 is unchanged at four per cent (from the current level of five per cent), but fewer think it will go lower than that. At the end of 2023, the 25th percentile of responses was 3.5 per cent, meaning a quarter of those surveyed expected the rate to be 3.5 per cent or less. In the most recent quarter, the 25th percentile view has risen to four per cent.

Expectations for interest rates in 2025 are similar. The median forecast is three per cent, unchanged now from views in the fourth quarter of 2023, but the experts’ median forecasts for the months leading up to December 2025 see the cuts rolling out more slowly, hitting 3.5 per cent in Q2 2025 and 3.25 per cent in Q3. At the end of 2023, the median forecast was for rates to reach three per cent in Q2 2025.

Forecasts on inflation were largely unchanged, with the median forecast on annual consumer price index in 2024 remaining 2.3 per cent and 2.1 per cent in 2025.

A recovery in US liquefied natural gas deliveries and easing tensions between Iran and Israel could put downward pressure on European natural gas prices, Commerzbank said in a Tuesday note.

Title Transfer Facility gas prices have already begun to fall back below 30 euros per megawatt-hour, the bank noted. This comes after TTF prices rose from around 25 euros/MWh at the beginning of April to a peak of almost 34 euros/MWh last week.

"Comfortable" levels of natural gas inventories in Europe at the start of the restocking season speaks against a significant price increase, according to Commerzbank. Gas Infrastructure Europe posted EU natural gas storage facilities at 62% of capacity, four percentage points higher than a year ago and around 20 percentage points higher than the 10-year average.

The Liberals are reportedly close to finalizing a package of incentives for Honda to build a battery cell and EV manufacturing complex on a scale larger than anything else in the country. Bloomberg, citing unnamed sources, reported the company is nearing a multibillion-dollar commitment to build a plant in Ontario that will be announced within a week.

Honda has long built vehicles and engines in Alliston, Ont., but it has yet to say how it will adapt those operations before Canada’s zero-emission vehicle mandate kicks in between 2026 and 2035.

The two global energy companies, along with Japan's Mitsui & Co., are seeking equity in the Ruwais facility, as well as contracts to buy LNG from it, according to the people. A final decision on the project could occur as soon as next month, said the people, who asked not to be named because the information is private, Bloomberg reported.

Source: BNN Bloomberg, Financial Post, MT Newswire