The big picture

China on the rise

China’s economy continued to improve in October – industrial production jumped to a 19-month high, up 16.1% from a year ago, while retail sales also beat expectations, up 16.2%. Exports were down 13.8% over the year, but that was a smaller decline than September (15.2%). China signalled it may be ready to allow the yuan to appreciate, a move that would be welcomed by countries around the globe that have complained the persistently weak yuan is a giant subsidy for China’s exports. Global shipping is still weak, with Maersk, the world’s largest shipping container company, expecting to lose US$1 billion this year.

The U.S. dollar hit a 15-month low on Wednesday as Fed officials warned that high unemployment and reluctant consumers would likely make a U.S. economic recovery weak and erratic. U.S. unemployment hit 10.2% in October, but new claims for unemployment insurance fell more than expected last week. The Bank of England said it may extend its extraordinary efforts to stimulate growth, as it forecast a long, slow economic recovery. Last week, the U.K. central bank expanded its bond-buying program to £200 billion (US$334.56 billion) from £175 billion. In Canada, new home prices rose 0.5% in September, the largest month-over-month increase since January 2008, with the biggest hikes in Vancouver, Ottawa and Calgary.

Markets

Dow breaks six-day winning streak

Canadian stocks surged early in the week as commodity prices jumped on better-than-expected industrial production in China, but on Thursday, gains were erased as commodity prices retreated because of a stronger U.S. dollar. The Dow broke a six-day winning streak as a guarded outlook from Walmart fueled consumer fears. Walmart reported higher-than-expected third-quarter profits due to cost cutting, but softened their expectations for the key holiday shopping season.

Hewlett-Packard plans to buy 3Com for US$2.7 billion, as it battles Cisco for market dominance. BCE earnings beat estimates, with its Bell division posting a 26% rise in operating income in the third quarter. Shoppers Drug Mart also showed strong results, with quarterly sales rising 8%. Jean Coutu, Canada’s second largest pharmacy, said it expects to double or triple revenues in its generic drug division in the next five years as patents expire on drugs like Lipitor, with annual sales of $1.8 billion in Canada. Apple beat Nokia with a third-quarter profit of US$1.6 billion, making it the most profitable cellphone maker just two years after entering the market. Cellphone sales are expected to grow between 5% and 8% next year, according to Gartner Research.