April 17th, 2019
Daily Market Commentary
- Canadian Headlines
- Canadian stocks dropped Tuesday, stopping a four-day advance, as the market took a steep drop in late trading. The S&P/TSX Composite Index lost 0.1 percent to 16,502. Information technology, materials and real estate lagged while health care and consumer discretionary outperformed. Cannabis companies will continue to miss analyst estimates and their own forecasts by “a thousand miles,” but shareholders will shake it off because of the industry’s long-term growth potential, a group of investors said Tuesday. Additionally, Tamarack Valley Energy Ltd. is literally going the extra mile to boost returns during tough times for the Canadian oil industry.
- Alberta became the third major province in Canada over the past year to elect a conservative-leaning government in a growing front of opposition to Prime Minister Justin Trudeau’s liberal vision for the country. The United Conservative Party, founded in 2017 as a merger of two right-of-center groups and led by former federal cabinet minister Jason Kenney, won a majority of legislative seats in the oil-rich province. His victory over New Democratic Party Premier Rachel Notley restores the status quo in a province that until her 2015 victory had a decades-long run of conservative leaders. The UCP was leading or had won 61 seats, versus 23 for the NDP, according to preliminary results late Tuesday.
- Mitsubishi Aircraft Corp. succeeded in getting a federal court to knock out claims of stealing trade secrets from Bombardier Inc.’s “C Series” narrow-body jetliners, but the fight isn’t over. Bombardier lacked facts to show Mitsubishi violated the Defend Trade Secrets Act and the Washington Uniform Trade Secrets Act, the U.S. District Court for the Western District of Washington ruled April 15. Bombardier has 15 days to amend its complaint and address factual shortfalls, the court said.
- World Headlines
- Stocks mostly edged higher on Wednesday as improving prospects for the world’s second-biggest economy helped lift investor sentiment as the earnings season rumbled on. Bond fell and the dollar nudged lower. Futures on the S&P 500 pointed to a gain at the New York open after data showed China’s economic growth, industrial production and retail sales all better-than-expected and Bloomberg reported the country’s leaders are considering more stimulus. The Stoxx Europe 600 Index erased a drop as an advance for car makers offset declines for healthcare companies. Shares rose in Japan and Shanghai. The yield on 10-year Treasuries climbed to a four-week high, while rates on European debt rose in concert. The euro strengthened even as Germany’s economy ministry revised its growth forecast lower.
- Oil rose after an industry report signaled an unexpected drop in U.S. crude inventories last week, while data showed China’s economy rebounded in the first quarter. Prices advanced as much as 0.9 percent in New York, while in London Brent futures reached a five-month high. U.S. stockpiles declined by 3.1 million barrels last week, the American Petroleum Institute was said to report. If confirmed by government data due later on Wednesday, that would be the first decline in four weeks and defy analyst forecasts for inventories to rise. China reported first-quarter economic growth that beat estimates, adding to crude’s upward impetus.
- Gold traded near the lowest level this year as world equities held near a six-month high on renewed optimism about global growth after China’s economy unexpectedly held up in the first quarter. China’s first-quarter GDP figures out Wednesday exceeded economist estimates and March retail sales and industrial production were also better-than-expected. That’s easing concerns about a slowdown that had rattled investors. A bearish technical indicator is also weighing on gold. The metal broke below its 100-day moving average on Monday, pointing to further weakness.
- Indian billionaire Mukesh Ambani’s Reliance Industries Ltd.is considering selling as much as 25 percent of its refinery business in a deal that could fetch at least $10 billion, people with knowledge of the matter said. Reliance is sounding out potential investors including state-owned Saudi Arabian Oil Co. and Abu Dhabi National Oil Co. to gauge their interest, according to the people, who asked not to be identified because the information is private. Aramco has also been considering investing in a new Indian refinery that Reliance is planning to build, the people said.
- China is drafting a series of stimulus measures to bolster sales of cars and electronics, according to people familiar with the matter. The draft includes subsidies for new-energy vehicles, smartphones and home appliances, said the people, who asked not to be named because they aren’t authorized to discuss the plan. The proposals are at a consultation stage with other government branches, and there is no guarantee that they’ll be approved, the people said. The National Development and Reform Commission, which is said to have drafted the plan, didn’t immediately respond to a fax seeking comment.
- Morgan Stanley’s brokers and bond traders weathered tough markets as the firm posted a smaller trading decline than analysts expected and a surprise jump in wealth-management fees. Bond-trading revenue fell 9 percent, a smaller drop than at rival Goldman Sachs Group Inc. and less than the 15 percent slump analysts had estimated. Revenue rose at the firm’s wealth and asset management units while other competitors saw declines. Those results helped Morgan Stanley counter the biggest slump in investment-banking fees on Wall Street.
- Intel Corp., whose products dominate the world of computing, said it’s going to wind down a multibillion-dollar, multidecade effort to grab a viable stake of the mobile phone industry. After its one significant customer, Apple Inc., said it will return to using Qualcomm Inc. chips, Intel announced Tuesday it will exit the 5G smartphone business and complete an assessment of the opportunities for existing chips and fifth-generation modems in personal computers.
- China’s economy rebounded through the first quarter, offering the government room for maneuver as trade negotiations with the U.S. enter a crucial stage. Gross domestic product rose 6.4 percent in the first three months from a year earlier — matching last quarter’s pace and beating economists’ estimates. Factory output in March jumped 8.5 percent from a year earlier, much higher than forecast. Retail sales expanded 8.7 percent while investment was up 6.3 percent in the year to date.
- Netflix Inc.’s underwhelming subscriber forecast hasn’t dissuaded bulls on Wall Street as the stock fights to turn positive in early U.S. trading. Strong first-quarter results, pricing power and improving margins were the focus of analyst reports in the wake of Netflix’s first-quarter earnings. The shares were up 0.8 percent pre-market on Wednesday after sinking 7 percent after hours Tuesday.
- Pinterest Inc.’s message to investors: don’t compare us to social media or a search engine. But as it wraps up a short roadshow and gets ready to list shares as soon as Thursday, such a comparison could help Pinterest drum up demand amid a flood of new listings this year. Pinterest operates in a crowded digital marketing space, where Google and Facebook Inc. get the lion’s share of ad dollars, and a smattering of smaller platforms like Twitter Inc. and Snap Inc. get the rest. The San Francisco-based startup, which serves as a sort of digital bulletin board for pictures and ideas for furniture, fashion, weddings, recipes and more, has a direct line to millions of people who are online looking for specific things to buy. That gives it an edge in making money from its user base compared with some of its peers.
*All sources from Bloomberg unless otherwise specified