August 11th, 2017
Daily Market Commentary
- As copper producers from Freeport-McMoRan Inc. to BHP Billiton Ltd. ponder what to do with the windfall from surging prices, First Quantum Minerals Ltd. has no such dilemma. Unlike most of its peers, First Quantum’s copper sales are fully hedged — at an expected average price of $2.37 a pound for the second half of the year. That means it’s largely watching from the sidelines as the metal surges above $2.90 for the first time in more than two years.
- Telus 2Q wireless network rev. up 7.2% to C$1.7b, reflecting higher ARPU as customers move to higher-rate plans, increased data usage, continued postpaid subscriber growth, including subscribers acquired from MTS, higher roaming rev.
- European equities dropped, headed for their worst week since November, as volatility spiked amid intensifying geopolitical tensions between the U.S. and North Korea. The Stoxx Europe 600 Index dropped 0.6 percent at 8:31 a.m. in London, its third day of losses, as U.S. President Donald Trump stepped up his warning to North Korea over its threats to American allies.
- S&P index futures signaled U.S. stocks may follow suit as the CBOE Volatility Index climbed to the highest level in eight months. Escalating tension between the U.S. and North Korea has dominated sentiment in financial markets this week as the spat threatens to boil over into military confrontation, with Trump stepping up his campaign of pressure. Investors are also keeping one eye on fundamentals, with U.S. inflation data set to provide more clues about the health of the world’s biggest economy and the path of rate increases.
- Asian equities excluding Japan slid the most in eight months on Friday as the rhetoric between U.S. and North Korean leaders intensified. The MSCI Asia Pacific Index excluding Japan lost 1.6 percent to 155.61 as of 4:57 p.m. in Hong Kong, set for its longest losing streak since July 4, as five stocks declined for each one that advanced.
- Oil headed toward a second weekly loss after the International Energy Agency reduced demand estimates for OPEC crude and said the group’s commitment to drain a global glut is fading. Futures declined 0.5 percent in New York. Neither a pledge by the two biggest Organization of Petroleum Exporting Countries producers to strengthen their commitment to output curbs nor shrinking U.S. crude stockpiles is managing to lift prices.
- Gold advanced to the highest in two months as the spike in tensions between the U.S. and North Korea fanned demand. Bullion for immediate delivery rose as much as 0.2 percent to $1,289.07 an ounce, the highest level since June 7.
- Iron ore and steel, darlings of commodity markets in recent weeks, are suffering. Futures sank as a leading industry body in China warned about recent gains, investors cut risky assets on rising Korean tensions, and regulators introduced trading curbs.
- Romanian inflation surged to the fastest since 2014, bolstering the case to end a record pause in borrowing costs as economic growthoutshines most of the European Union. Consumer prices rose 1.4 percent in July after a 0.9 percent advance in June, the National Statistics Institute said Friday. That’s more than the 1.3 percent median estimate in a Bloomberg survey of nine economists. Prices grew 0.3 percent from the previous month.
- Treasury futures and U.S. stock options indicate that investors aren’t overly perturbed by tensions between the U.S. and North Korea, and see a negligible chance of the war of words ballooning into a military conflict. President Donald Trump on Thursday stepped up his rhetoric against North Korea, warning the regime of a massive response to any strike against the U.S. or its allies.
- India’s central bank halved its annual dividend to the government, a move that’s likely to put a strain on public finances and imperil Prime Minister Narendra Modi’s aim of reining the fiscal deficit. Marking a five-year low, the Reserve Bank of India transferred 306.6 billion rupees ($4.8 billion), which was more than 50 percent lower than the 658.76 billion rupees transferred last year.
- Metals are the undisputed kings of commodities and among the world’s best performing major investments thanks to Chinese state power. While energy and farming prices wallow in glutted markets, the top six raw materials in the Bloomberg Commodity Index this year are all metals, mostly due to China’s pledges to use its control of local producers to rein in supply.
- Zai Lab Ltd., a Chinese drug developer working on cancer treatments, has picked banks to arrange a planned U.S. initial public offering that could raise about $150 million, people with knowledge of the matter said. The Shanghai-based biopharmaceutical company, started by former Pfizer Inc.senior scientist Samantha Du, is working with Citigroup Inc. and JPMorgan Chase & Co., according to the people.
- For all the talk that Janet Yellen’s plan to shrink the Federal Reserve’s balance sheet will hurt Treasuries, U.S. mortgage bonds face a bigger test. The securities are already lagging behind Treasuries for the first time since 2011. Investors are demanding 29 basis points of extra yield to buy the bonds instead of Treasuries.
- China’s online watchdog has launched an investigation into reports of multiple violations at news services run by Tencent Holdings Ltd.,Baidu Inc. and Weibo Corp., as the government continues to tighten scrutiny over internet content.
- Credit Suisse Group AG is barring its traders from buying or selling certain Venezuelan securities and business as the political and economic crisis in the South American country intensifies. The Zurich-based bank will no longer trade two bonds issued by the government and the state oil company or any notes from a Venezuelan entity issued after June 1, according to an Aug. 7 company memo seen by Bloomberg.
- President Donald Trump laid out a path for Senate Majority Leader Mitch McConnell to get back in his good graces: replace Obamacare, overhaul the U.S. tax code and find a way to pay for big infrastructure improvements. Yet clearing Trump’s agenda anytime soon is close to impossible in the narrowly controlled Republican Senate that already has a packed agenda of must-pass legislation.
- Utility giant NextEra Energy Inc. and investment fund Global Infrastructure Partners are among at least seven companies looking into buying renewable energy assets from NRG Energy Inc., the U.S. power generator under pressure from billionaire investor Paul Singerto streamline.
- Snap’s second quarter as a public company was not much better than its first, with daily active users and revenue once again missing estimates. Analysts slashed their 12-month price targets for the stock, concerned about slower user growth and continued Android technology issues.
- SoftBank Vision Fund will invest about $2.5 billion in Flipkart Group, swelling the Indian e-commerce players’ cash hoard as it vies with Amazon.com Inc., people familiar familiar with the matter said.
- The U.S. is moving forward with a criminal investigation into money stolen from a Malaysian state investment fund that allegedly was used to acquire about $1.7 billion in real estate, art, jewelry and other assets. Court filings by the Justice Department Thursday show the U.S. is escalating its probe in a worldwide effort to track how much of the money that was raised by1Malaysia Development Bhd. was used to pay for luxury real estate in New York, London and Beverly Hills, film productions, private jets, yachts and more.
- A rift is deepening between Poland and its biggest financial backer, but you wouldn’t know it from looking at the nation’s debt and currency markets. The zloty and bond yields have barely budged since the European Union opened an unprecedented probe late last month into a move by the government to strip the judiciary of its independence.
- Telit Communications Plc, a once-hot Internet of Things stock, had the equivalent of a cold shower this week, losing more than half its market value in a matter of days as the company hired lawyers to investigate reports linking Chief Executive Officer Oozi Cats to an old fraud case.
- Singapore’s economy posted faster growth in the second quarter than previously estimated by the government as a recovery in global trade helped to buoy manufacturing.
- Cochin Shipyard Ltd, the state-run company building India’s first indigenous aircraft carrier, surged 22 percent in its trading debut in Mumbai as investor demand for the stock in its IPO exceeded the shares offered by 76 times.
- As tension between the U.S. and North Korea escalates and volatility returns to the market, an exchange-traded note tracking VIX futures is becoming the most popular among American traders. VXX, or the iPath S&P 500 VIX Short-Term Futures ETN, saw more than 253 million shares change hands on Thursday and 121 million on Wednesday. That’s two consecutive record days, with volume double that of SPDR S&P 500 ETF Trust — known as SPY.
*All sources from Bloomberg unless otherwise specified