Every week here at the Current we bring you the world’s biggest business stories. This week: oil drags down the loonie and the markets, food and house prices are on the rise, Walmart closes hundreds of stores and Iranian sanctions are lifted.
Oil drags the loonie down
Oil and the loonie both hit thirteen year lows on Friday. The Canadian dollar fell to a low of 68.74 cents before rebounding to 68.82 cents, the lowest level since April 2003. Crude oil prices meanwhile fell to $29.42 US a barrel, down nearly $2 from Thursday and reaching the lowest level since 2003. Overproduction and waning demand from China has pushed the price of oil down, and dragged the loonie down with it.
Wall Street was hit hard by low oil prices this week. The Dow Jones Industrial Average fell over 2.2% or 356 points to 16 022.19. The S&P 500 fell 2% or just over 39 points to 1, 882.80 and the Nasdaq fell 2.2% or over 100 points to 4 514.48. In the UK the FTSE fell 1.9% while the German Dax Index fell 2.6%.
Food prices up
The Canadian dollar’s decline is starting to impact the dinner table as food prices are on the rise. Many foods are imported from the US, especially fruits and vegetables, and as the loonie falls grocers are having to dig deeper to buy their products. Experts believe that every cent lost by the Canadian dollar is met with a corresponding 1% increase in food prices.
House prices in Canada grew by 12% in 2015. The average cost of a home in Canada is now $454 342. If Toronto and Vancouver – two of Canada’s hottest property markets – are excluded house prices still increased a sizeable 5.4% to an average cost of $336 994. Excluding Ontario and BC entirely shows a very different story, with house prices actually decreasing 2.2%.
Walmart axes stores
Walmart announced on Friday that it will be closing 269 stores worldwide. Holiday sales rose just 3% in November and December, short of an expected 3.7% boost. Online retailing, meanwhile, rose 9%, a significant jump but not enough to make up for lower in-store sales. Closing stores will allow the company to focus on competing with online retailers like Amazon, but could affect 16 000 employees globally.
Despite recent tensions between the US and Iran, the nuclear deal between the countries continued as planned and international sanctions on Iran have been lifted. Almost $100 billion Iranian assets will be unfrozen, Iran will increase its oil exportation by half a million barrels, the EU will lift restrictions on insurance, trade and shipping and the country will gain access to the global banking system. Other sanctions relating to terrorism will remain, and US businesses will not be able to trade with Iran.
Less Sanctions, More Oil
Lifting Iranian sanctions will add even more oil to the current surplus, and could depress oil prices even further. On Friday oil hit a 13 year low and stock prices in Saudi Arabia – the largest in the Arab world – fell 6%.
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