April 2nd, 2018
Daily Market Commentary
- Canadian stocks rose the most in nearly seven weeks, ending the worst quarter in two and a half years on an upbeat note. The S&P/TSX Composite Index gained 197 points or 1.3 percent to 15,367.29 Thursday. With markets closed Friday for a holiday, that brought the benchmark’s first-quarter loss to 5.2 percent, the biggest decline since the third quarter of 2015.
- Corporate issuance in Canadian dollars started the year strongly after a record 2017, rising to a three-year high of C$32.4 billion ($25.1 billion) in the first quarter. Investors have been kept busy by local banks: Bank of Nova Scotia sold C$2 billion of 10-year deposit notes in January, while Toronto-Dominion Bank last month reopened its four-year notes to win the bragging rights for amassing the country’s largest non-government debt security with C$3 billion outstanding.
- Hudson’s Bay Co., the Toronto-based department store operator, is investigating a data security issue at some of its North American stores. The probe concerns information from payment cards used at certain Saks Fifth Avenue, Saks Off 5th, and Lord & Taylor stores, the company said in a statement Sunday. Details from more than 5 million credit and debit cards are up for sale, according to a post from Gemini Advisory, a security firm. An external representative for Hudson’s Bay declined to comment on Gemini’s report.
- Canadian printing company Transcontinental Inc said on Monday it would buy U.S.-based plastics packager Coveris Americas for 1.70-billion (US $1.32-billion). Transcontinental will buy the privately held Coveris with cash and debt. The deal is expected to close in the third quarter of 2018. (Globe and Mail)
- U.S. stock futures dropped after an early equity rally petered out in Asia, where volume was low as many markets across the world remain closed for the Easter holiday. The dollar edged lower and Treasury yields increased. American shares look set to start April on the back foot after the S&P 500 Index and Dow Jones Industrial Average posted their first quarterly losses since 2015.
- Asian shares started the second quarter fluctuating in thin trading, as declines in health-care companies countered a consumer rally. Markets in Hong Kong, Australia and New Zealand were closed for holidays. The MSCI Asia Pacific Index was little changed at 172.76 as of 4:33 p.m. in Hong Kong.
- Oil’s rally above $65 a barrel is being propelled by a sign that American explorers have curtailed drilling activity as well as speculation that the U.S. could reimpose sanctions on OPEC producer Iran. Futures added 0.5 percent in New York after capping a third straight quarterly gain, the longest winning streak since 2011. U.S. drillers idled seven working rigs last week, easing concerns over surging shale production. Meanwhile, analysts from Mitsubishi UFJ Financial Group Inc. and UBS Group AG said there are upside risks to oil prices from the potential resumption of sanctions on Iran, which could disrupt the nation’s crude exports.
- Gold advances amid concern trade tensions may escalate between U.S. and China, with investors awaiting details of Washington’s next round of levies on mainland shipments.
- Alibaba Group Holding Ltd. is buying full control of the startup Ele.me as it steps up efforts to expand in China’s fast-growing market for local delivery of food and other services. The deal implies an enterprise valuation of $9.5 billion for Ele.me, Alibaba said in a statement Monday, without saying how much it’s paying. Alibaba and affiliate Ant Small and Micro Financial Services Group Co. already owned about 43 percent of the startup’s voting shares. Alibaba paid all cash in the deal and has acquired all the shares formerly held by Baidu Inc., according to a person familiar with the matter.
- China urged trade talks with the U.S. to prevent greater damage to relations while saying that previously announced retaliatory measures on American imports took effect Monday. The U.S. didn’t respond to China’s March 26 request for consultation on Washington’s steel and aluminum tariffs, the Commerce Ministry said in a statement Monday, adding that officials have widespread public support for tougher measures and repeating Beijing’s stance that disputes should be resolved with dialogue. China previously planned to seek compensation for trade lost because of the U.S. metals actions.
- ICICI Bank Ltd., India’s second-largest private lender by assets, is set for its biggest fall in more than two years on reports federal agencies are looking into alleged links between the lender’s Chief Executive Officer Chanda Kochhar and the Videocon Group. The Central Bureau of Investigation has started a so-called preliminary enquiryinto an alleged nexus between chairman of the Videocon group, Venugopal Dhoot, and Deepak Kochhar, the husband of Chanda Kochhar, the Times of India reported on Saturday, citing people it didn’t identify. A preliminary enquiry is the first step to verify allegations of corruption.
- China took a major step toward seeing Alibaba Group Holding Ltd., Baidu Inc. and others list in its domestic market, announcing a trial program that would allow the technology giants to see their shares bought and sold in the world’s most populous country. The State Council unveiled the plans on Friday, less than a month after the idea was first made public — underscoring how keen authorities are to see foreign-listed firms come home. A pilot of Chinese depositary receipts would apply to companies that went public overseas and have a market value of more than 200 billion yuan ($32 billion). Firms can use corporate structures that aren’t permitted on the mainland, and monies raised can be moved offshore. Some private companies will also find it easier to list shares.
- A Chinese energy conglomerate and SoftBank Group Corp.signed a $930 million agreement to produce and sell solar equipment in India, a country that is trying to bolster local manufacturing and curb reliance on clean energy imports. Golden Concord Group Ltd. will invest in a 40 percent stake in the joint venture, with Japan’s SoftBank taking the rest, according to a March 31statement from a unit of the Chinese company to the Shenzhen Stock Exchange. The project will have a capacity of 4 gigawatts and be involved in producing and selling solar ingots, silicon wafers, batteries and components, according to the statement.
- Amazon.com Inc.’s shares, resilient in recent days through President Donald Trump’s tweets, could be tested again Monday after a fresh round of critical comments over the weekend about the e-commerce giant.
- The Trump administration’s concern about China’s growing technology clout is putting even more pressure on U.S. wireless carriers in their marketing battle over which company will be the first to offer 5G. Verizon Communications Inc., AT&T Inc. T-Mobile US Inc. and Sprint Corp. are rushing to deliver fifth-generation wireless service that will perform as much as 100 times faster than 4G. At stake is the potential to grab market share in an industry where consumers are fiercely loyal to their carriers. And the companies need to upgrade their networks quickly so they can quash the idea that government should intervene to accelerate the process.
- Bahrain, the smallest energy producer in the Persian Gulf, discovered its biggest oil field since it started producing crude in 1932, according to the country’s official news agency. The shale oil and natural gas discovered in a deposit off the island state’s west coast “is understood to dwarf Bahrain’s current reserves,” Bahrain News Agency reported, without giving figures. U.S. consultants DeGolyer & MacNaughton Corp. evaluated the field, and Bahrain plans to provide additional details on Wednesday about the reservoir’s “size and extraction viability,” BNA reported.
- Deutsche Bank AG is preparing to reshuffle its supervisory board as the future of Chief Executive Officer John Cryan and ChairmanPaul Achleitner is called into question. John Thain, a former CEO of Merrill Lynch, is expected to join the troubled German bank in May, according to a person with knowledge of the lender’s plans. He is one of four nominees invited by the supervisory board to fill positions coming open this year, said the person, who asked not to be identified because the matter isn’t public.
- A U.S. trucking shortage that has pushed up freight costs for everything from cereal to toothbrushes is about to get worse. On Sunday, police nationwide began enforcing rules requiring most big rigs to use electronic logging devices to record driver hours. While truckers have long been barred from driving more than 11 hours a day, the new ELDs prevent them from fudging their times on paper logs. That means more trucks are likely to be parked when drivers hit their limits.
- After waiting more than a year to learn the fate of its memory chip business, Toshiba Corp. investors are going to have to hold on a little longer. The Japanese technology giant said Friday it’s missed an initial deadline to close the 2 trillion yen ($19 billion) sale of the division by the end of March, pushing back the disposal of its biggest business by at least a month.
- Telegram Group Inc., an encrypted messaging app seeking to create its own cryptocurrency, has increased the proceeds from the world’s largest initial offering to $1.7 billion, according to a regulatory filing. Telegram raised $850 million from 94 investors in March in addition to $850 million it gained in February, and “may pursue one or more subsequent offerings,” the British Virgin Islands-registered firm said in a filing to the U.S. Securities and Exchange Commission on Thursday.
*All sources from Bloomberg unless otherwise specified