August 10th, 2017
Daily Market Commentary
- Canadian stocks fell as investors continued to reel from growing tension between the U.S. and North Korea and energy stocks took a hit from an unexpected increase in gasoline supplies. The S&P/TSX Composite Index fell 39 points or 0.3 percent to 15,217.33. Health-care stocks tumbled 5.1 percent. Valeant Pharmaceuticals International Inc. lost 9.6 percent as investors continued to digest earnings that included lower revenue guidance for the year.
- Montana billionaire Dennis Washington has hired Patrick Evans to run Dominion Diamond Corp. after he agreed to buy the business for $1.2 billion last month. Evans is the former chief executive officer of Mountain Province Diamonds Inc., which owns the Gahcho Kue diamond mine with De Beers in Canada.
- Callidus Capital Corp. fell the most on record following a report that its parent private equity firm is the subject of whistle-blower complaints to a Canadian securities regulator. The company disputed the report. The shares tumbled 21 percent to the lowest since March 2016 after the Wall Street Journal reported that at least four individuals have filed whistle-blower complaints with the Ontario Securities Commission.
- Canada is approving increasing numbers of pharmaceutical patents and rejecting fewer applications, while the rate of challenges by generic manufacturers has dropped dramatically. The statistics on patent applications and challenges suggest a more positive environment for brand-name manufacturers, but the trends may be somewhat exaggerated by pending amendments to the regulations governing pharmaceutical patents.
- European equities headed for their biggest back-to-back decline in more than a week as geopolitical tensions between North Korea and the U.S. persisted. The Stoxx Europe 600 Index lost 0.3 percent at 8:30 a.m. in London. The benchmark slid 0.7 percent yesterday, joining a global selloff, after U.S. President Donald Trump heightened his rhetoric against the regime of Kim Jong Un to an unprecedented level.
- The U.S. equity market has largely remained placid even as tensions surrounding North Korea intensified, but something is stirring underneath the surface. The CBOE VVIX Index — a measure of VIX volatility, or vol of vol — surged to a fresh peak relative to the gauge of S&P 500 Index swings. That’s a sign investors are positioning for big moves in volatility, paying up to hedge against renewed turbulence in the stock market.
- Asian equities fell on Thursday, retreating for a third consecutive session from their almost 10-year intraday high touched on Tuesday, as tensions between Washington and Pyongyang continued to temper risk appetite.
- Oil held gains above $49 a barrel in New York as U.S. production eased and crude inventories extended declines, trimming a glut. Futures advanced 0.3 percent after climbing 0.8 percent Wednesday. Output slid for the second time in three weeks, according to Energy Information Administration data, while stockpiles dropped by 6.45 million barrels, almost triple the median forecast in a Bloomberg survey.
- Gold advances to highest in eight weeks after demand for haven assets surged as tensions escalated between the U.S. and North Korea.
- The U.K. economy ended the second quarter on a disappointing note as manufacturing stagnated and the trade deficit unexpectedly widened, figures published Thursday show. Total industrial production rose 0.5 percent in June, more than economists forecast, but the gain was due to higher oil production as summer maintenance shutdowns failed to materialize.
- Glencore Plc built a war chest in the first half of the year, continuing to cut debt as the world’s largest commodities trading house prepares to ramp up acquisitions. While profits improved during the first half, Glencore kept its dividend unchanged and used the extra cash to pay down borrowings. Net debt was $13.9 billion by June, down more than 60 percent from mid-2014 when the company was digesting its merger with Xstrata Ltd.
- After deleveraging in the aftermath of the last U.S. recession, Americans have once again taken on record debt loads that risk holding back the world’s largest economy. Household debt outstanding — everything from mortgages to credit cards to car loans — reached $12.7 trillion in the first quarter, surpassing the previous peak in 2008 before the effects of the housing market collapse took its toll, Federal Reserve Bank of New York data show.
- OPEC boosted estimates of demand for its crude this year and next amid stronger-than-expected fuel consumption and a weaker outlook for rival supply. The Organization of Petroleum Exporting Countries raised forecasts for the amount it needs to supply in 2017 and 2018 by about 200,000 barrels a day for each year, according to a report from its secretariat in Vienna.
- South Korea and Japan warned North Korea that it would face a strong response if it carried through with a threat to launch a missile toward the U.S. territory of Guam. Defense Minister Itsunori Onodera said it would be legal for Japan to intercept a missile aimed at Guam. North Korea’s threats to strike around Guam pose a serious challenge, a spokesman at South Korea’s Joint Chiefs of Staff told reporters on Thursday.
- The U.S. Securities and Exchange Commission has dodged a political hot potato — for now — by delaying a decision on whether to approve a Chinese-led group’s controversial takeover of the Chicago Stock Exchange. Facing a Wednesday deadline, the SEC, led by Chairman Jay Clayton, said its commissioners will review the proposed buyout, potentially setting up a vote at an unknown date on whether it should go through.
- “Fire and fury” didn’t do much to shake off market calm, but it did trigger a surge in CBOE Volatility Index wagers. More than 1.8 million VIX options changed hands Wednesday, the most since June last year, when traders positioned ahead of the U.K. vote on European Union membership. While the volatility gauge has rebounded from record-low levels, the S&P 500 Index is just 0.3 percent away from a peak hit on Monday.
- SoftBank Vision Fund will invest about $2.5 billion in Flipkart Group, swelling the Indian e-commerce players’ cash hoard as it vies withAmazon.com Inc., people familiar with the matter said. The investment includes approximately $1.5 billion directly into Flipkart and $1 billion for part of Tiger Global Management’s stake.
- The quest for a simple blood test to catch cancer early has attracted heavy hitters from Bill Gates to Merck & Co. Now there’s a glimpse of evidence that it can work, at least for one type of malignancy. A study led by Hong Kong-based researchers and published this week in the New England Journal of Medicine used DNA fragments in the blood to detect a kind of head and neck cancer called nasopharyngeal carcinoma. The procedure, known as a “liquid biopsy,” caught the cancer earlier and more accurately than existing methods — and ultimately boosted patients’ chances of survival.
- Germany’s effort to clean up diesel’s dirty image by getting older, more polluting models off the road is likely to spur a rush for trade-in deals from the country’s automakers.
- Invitation Homes Inc., the single-family rental home owner, plans to merge with real estate investment trust Starwood Waypoint Homes, the Wall Street Journal reported, citing Starwood Waypoint co-chairman Barry Sternlicht.
- China Mobile Ltd. shares soared in Hong Kong after the company said it would pay the first special dividend since 2008 to mark the 20th anniversary of its listing. The carrier is raising its payout to shareholders after China’s government this year mandated canceling long-distance roaming tariffs from October.
- The proposed acquisition of U.S. aluminum-product maker Aleris Corp. by Zhongwang USA LLC is at risk over national-security concerns raised by U.S. officials, who are increasing scrutiny of takeovers of American companies by Chinese buyers.
- The owners of Spanish wind-power firm Eolia Renovables de Inversiones SCR SA are exploring a sale amid bids from other energy providers, people familiar with the matter said. A sale could value the company, which is majority owned by U.S. buyout firm Oaktree Capital Group LLC, at more than 1 billion euros ($1.2 billion), the people said, asking not to be identified because the deliberations are private.
- Toshiba Corp. acknowledged that it’s having trouble reaching final agreement to sell its prized memory chip unit, raising the risk that it won’t be able to complete the divestment in time to avoid being delisted from the Tokyo Stock Exchange.
- Royal Dutch Shell Plc is aiming to return its Pernis refinery in Rotterdam to full operations by the end of this month, according to a local resident who was briefed on the matter by the company. The company held a meeting for about 200 local residents late Wednesday, giving a first indication of when Europe’s largest refinery would resume normal operations after a fire in late July halted both crude units.
- Aluminum Corp. of China Ltd., or Chalco, sought to take some of the heat out of its shares, which hit a six-year high on Wednesday, warning that market uncertainty persists despite surging metal prices and that its costs could rise.
- Billionaire Wang Jianlin is planning to reorganize billions of dollars of property assets stretching from Sydney to Chicago in an overhaul that would leave Wanda Hotel Development Co. focused on managing theme parks and hotels. The Hong Kong-listed unit agreed to sell controlling stakes in property projects in Australia, London, Chicago and the Chinese city of Guilin to affiliate Dalian Wanda Commercial Properties Co.
*All sources from Bloomberg unless otherwise specified