Everything You Need to Know on Friday: Canada's Finance Minister Foresees Canada on Track for Soft Landing

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

● S&P/TSX 60 Index Standard Futures are trading at 1,354.10, down 0.49% from previous.

● Canada's finance minister foresees soft landing: inflation down, interest rates declining, no recession expected

● U.S. weekly oil inventory report to provide market direction in coming week, Commerzbank says

● Survey indicates tech sector concerns over capital gains tax hike

Today, the Canadian dollar is trading at 73.09 cents US, a slight increase from previous close.

S&P/TSX 60 Index Standard Futures are trading at 1,354.10, down 0.49% from previous.

Canada's Finance Minister Chrystia Freeland expresses confidence in the country's economic trajectory, with falling inflation and interest rates, and no looming recession. Despite this, Prime Minister Justin Trudeau's popularity continues to wane amid public concerns over living costs and other issues.

Amid challenges faced by governments post-COVID, Freeland acknowledges the public's right to hold leaders accountable for economic hardships. Speculation about her tenure is rife following reports of Trudeau's discussions with Mark Carney, ex-governor of the Bank of Canada and the Bank of England, about a potential government role. However, no cabinet position was reportedly offered to Carney, and Freeland has been reassured of her job's security.

Despite polls indicating a lead for the Conservative Party and their leader Pierre Poilievre on economic growth, Freeland denies any tension with Trudeau's office and emphasizes her commitment to fiscal responsibility. She highlights Canada's strong fiscal standing compared to other G7 countries and rejects the idea of running higher deficits.

Freeland, who has faced criticism for increased spending and a recent capital gains tax hike, remains in regular contact with Carney, a long-time acquaintance and Liberal supporter. Carney has subtly critiqued Freeland's budget for focusing more on fairness than growth and resilience.

The U.S. weekly crude oil inventory report is likely to provide some direction to oil markets in the coming week due to a lack of other relevant releases, Commerzbank said in a Friday note.

In the last three weeks, U.S. crude oil inventories have fallen sharply and were recently 4.7% lower than usual at this time of year, the bank noted. As a result, oil prices bounced back after coming under pressure due to weak economic data from China.

However, some bearish signals emerged from the inventory report, such as a significant increase in gasoline inventories, Commerzbank said. This is partly because U.S. gasoline demand was the lowest since April despite the summer driving season.

If demand continues to be lower than expected in the coming week, this is likely to slow down the recovery in oil prices, the bank said.

The time spreads of the Brent forward curve also widened this week, which last occurred in April. The same applies to the price difference between the next maturing forward contract and the forward contract maturing six months later. A significant price premium must therefore be paid for oil available at short notice, indicating a tight oil market, according to Commerzbank.

The bank also noted that the Organization of the Petroleum Exporting Countries and allied producers' Joint Ministerial Monitoring Committee is set to confirm its early June decision at its August meeting, according to a Reuters report citing unnamed sources.

This means a planned gradual withdrawal of voluntary output cuts starting in October will remain in place, Commerzbank noted. However, it remains conditioned upon whether the market can absorb the additional supply.

A survey from the Council of Canadian Innovators shows that 90% of Canadian tech firms expect the federal government's capital gains tax increase to harm the industry. The recent change raises the taxable portion of capital gains to two-thirds, up from one-half, affecting both companies and individuals with gains over $250,000.

Conducted among 143 tech leaders, the survey reflects widespread worry that the change, effective as of June with legislation pending in the fall, will discourage investment and talent retention. 60% predict a "very negative" investment impact, and 86% believe it will make attracting and retaining talent more difficult.

Benjamin Bergen, the organization's president, cited that 122,000 Canadians, likely including tech professionals, migrated to the U.S. in 2022, attracted by higher salaries and easier funding. The sector's top challenge, as reported by 67% of respondents, is accessing capital.

Shopify Inc. President Harley Finkelstein criticized the tax change, framing it as detrimental to innovation rather than a wealth tax.

Tech workers, often shareholders or company owners, stand to be particularly affected; research suggests that 0.20% of tech workers versus 0.15% of non-tech workers will face the tax's impact.

The CCI has been lobbying against the tax since April, with over 2,000 tech workers signing an open letter to government leaders. Despite the setback, Bergen remains optimistic about the possibility of mitigating the policy's negative effects.