FINWIRES · TerminalLIVE
FINWIRES

Canada's Fiscal Room Creates Scope for Tariff Relief, Stimulus, Rosenberg Research Says

By

Canada's ample fiscal room leaves scope for tariff relief and broader stimulus as the US trade dispute intensifies, said Rosenberg Research in a Tuesday note.

Canada is set to announce retaliatory tariffs against the US on Tuesday, with the countermeasures due to take effect on Sept. 8, according to Rosenberg Research.

Canada and the US broke off trade talks late Friday. The following day, US tariffs on Canadian goods worth C28 billion took effect.

Finance Minister Francois-Philippe Champagne is expected to unveil support for sectors hit by the trade war, potentially including expanded Employment Insurance benefits, added Rosenberg. Tuesday's measures could mark the start of broader stimulus extending into the fall budget.

Canada has significant fiscal room, second only to Germany among G7 economies, giving Ottawa scope to cushion households and businesses from tariffs while supporting economic activity in the second half of the year, according to Rosenberg.

Related Articles

International

Australian Consumer Confidence Continues to Rise, ANZ Says

The ANZ-Roy Morgan Australian Consumer Confidence rose 1 point to 77.5 in the week of Aug. 24 to Aug. 30, with the series now at its highest level since the escalation of the conflict in the Middle East, ANZ Research reported Tuesday.The four-week moving average rose 1.6 points to 75.9 points, per the report.The rise was underpinned by an improvement in the financial conditions subindices, as well as households' views about buying a major household item, according to ANZ economist Madeline Dunk.Across the housing cohorts, confidence improved most for households paying off a mortgage, Dunk added. Confidence among outright homeowners is at its highest since June, and among those paying off a mortgage, at its highest since March.Weekly inflation expectations rose to 6.1%, while the current financial condition indicator for 12 months decreased to 68 from 69. The future financial conditions for the next 12 months rose to 84.2 points from 88.3 points.Short-term economic confidence for the next year increased to 72.7 from 68, while medium-term economic confidence for the next five years rose to 82.4 points from 80.4 points.The "time to buy a major household item" subcategory rose to 80.4 points from 76.6.

ASX 200
International

RBA Weighed Pre-Emptive Rate Hike Before Holding at 4.35%

The Reserve Bank of Australia's Monetary Policy Board considered raising the cash rate by 25 basis points at its August meeting before ultimately deciding to hold, with members debating whether upside risks to inflation warranted pre-emptive action or whether existing policy settings were already sufficiently restrictive, according to minutes of the meeting released Tuesday by the bank.The case for a rate rise centred on several upside risks to the inflation outlook, including the potential for a prolonged Middle East conflict to push oil prices sharply higher, the possibility of broader cost pass-through to consumer prices than assumed, among other factors, the minutes showed.The case to hold rested on a judgment that the three rate lifts of this year had left financial conditions somewhat restrictive, that inflation had come in slightly below forecast in the June quarter, and the unemployment rate had risen slightly more than expected.The board also discussed downside risks that could offset the upside scenario, including the potential for the labor market to ease more rapidly than assessed, a larger-than-expected drag on activity from weak consumer confidence and the housing downturn, and greater constraints on firms' ability to pass on cost pressures, the minutes added.Several members judged it quite possible that upside risks would crystallize and require further tightening, while others pointed to the potential for downside risks to offset them, but all members agreed that upcoming decisions would benefit from additional information and reconfirmed their commitment to returning inflation to target in a timely way, the minutes showed.

ASX 200
International

Market Chatter: Japan Weighs Tax Relief on Non-Core Asset Sales

Japan is considering indefinite deferrals of the roughly 30% corporate tax on non-core business disposals, provided proceeds are reinvested in core operations within several years, Reuters reported Tuesday, citing two sources familiar with the matter.The proposal aims to accelerate corporate restructuring and capital redeployment, the report said.The plan is expected to be included in tax reform requests later this month, with final details to be finalized by year-end, Reuters said.The Ministry of Finance Japan could not be immediately reached for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Nikkei 225