August 16th, 2017
Daily Market Commentary
- Canadian stocks weakened for the fifth day in six as losses in energy and materials stocks overcame gains in health care, amid diminishing rhetoric between North Korea and the U.S. The S&P/TSX Composite Index fell 0.2 percent to 15,097.84. Energy stocks dropped 0.6 percent, cementing a six-day slump, as Precision Drilling Corp. lost 5.6 percent and CES Energy Solutions Corp. slipped 3 percent.
- Apple Inc. sold C$2.5 billion ($1.96 billion) of seven-year bonds in Canada to fund stock buybacks and dividends in the biggest single debt offering by a foreign issuer in Canadian dollars.
- A Canadian mining company asked a judge in Delaware to authorize the seizure of shares in the owner of Citgo Petroleum Corp. to satisfy a $1.4 billion arbitration award over a gold mine in Venezuela. Crystallex International Corp. is attempting to seize shares of state oil producer Petroleos de Venezuela SA’s PDV Holding Inc., which controls Citgo. PDVSA is on the hook for the arbitration award, which Crystallex won after former Venezuelan leader Hugo Chavez nationalized the Las Cristinas gold reserve in 2011.
- British Columbia to start by hiking minimum wage by 50 cents, or 4.6%, to C$11.35 per hour effective Sept. 15, with an eventual goal of bringing it to C$15 an hour “over time,” new government announces instatement.
- European stocks advanced amid growing optimism over the region’s economy. The dollar and Treasuries were largely steady as investors tread water before the release of the latest Federal Reserve minutes.
- The Federal Reserve’s impact on U.S. stocks has faded away since the central bank started raising interest rates. Fed-announcement days accounted for more than 60 percent of the S&P 500 Index’s advance from 2008 through the October 2015 meeting. But the index has barely budged on decision days since officials started hiking rates in December 2015.
- Asian shares were mixed as Japanese stocks closed little changed even after the yen slumped on strong U.S. retail sales. South Korea’s benchmark extended gains as trading resumed after a holiday.
- Oil halted its slide near $48 a barrel as industry data showed U.S. crude stockpiles declined again, further trimming an inventory surplus. Futures rose 0.5 percent in New York after slipping a second session Tuesday. Inventories dropped by 9.2 million barrels last week, the American Petroleum Institute was said to report.
- Gold seems to have hit a wall. Three times it’s charged at $1,300 this year and three times it’s failed. The threat of nuclear war between the U.S. and North Korea could in theory have been enough to push prices above that, especially as they were also buoyed last week by tame American inflation data, which damped the chances of the U.S. increasing interest rates this year. But the rally faded as fears of a conflict lessened and a surge in U.S. retail sales pushed up bond yields.
- Zinc burst above $3,000 a metric ton amid persistent global deficits and aluminum scaled new heights as China reined in illegal capacity, adding fresh impetus to the rally even as some investors expressed doubts.
- Iron ore in the $70s a ton may be as good as it gets for some time. After rallying hard in June and July, the commodity may see its gains unravel over the second half as steel production in China eases back from a record pace just as global miners pump up volumes.
- The euro-area economy gathered pace in the second quarter as more nations joined the recovery. The 0.6 percent expansion matched an Aug. 1 estimate and was supported by continued growth in Germany, the region’s largest economy, and the strongest Spanish performance in almost two years. But after years of unprecedented stimulus, the upswing is finally starting to spread across the 19-nation region.
- The squeeze on U.K. consumers continued in the second quarter, when the fastest inflation in four years ate into workers’ income. Basic wages rose an annual 2.1 percent in the three months, lagging behind a surge in price growth driven by the pound’s decline in the wake of the Brexit vote. That left real incomes down 0.5 percent year-on-year.
- Positions for foreign-exchange purchases on the Chinese central bank’s balance sheet last month fell the least since 2015, suggesting China sold fewer dollars to support the yuan as the currency strengthened and outflows eased. The stockpile dropped by 4.6 billion yuan ($690 million) to 21.5 trillion yuan in July, the smallest decline since October 2015 when it last rose, according to data released by the People’s Bank of China on Wednesday.
- A Chinese human-rights group called for the U.S. Congress and relevant government bodies to investigate HNA Group Co.’s ownership and its sources of funding. The U.S. should also investigate HNA’s transactions and hold an open hearing, the China Human Rights Accountability Center wrote in an open letter on Tuesday. Additionally, the U.S. shouldn’t grant HNA’s New York-based charity tax-exempt status and hold off on approving the Chinese conglomerate’s pending mergers until a probe is completed
- Indonesia’s economy is forecast to expand at the fastest pace in five years as higher tax revenue allows President Joko Widodo to trim the budget deficit while ramping up spending on building roads, bridges and seaports. Southeast Asia’s largest economy may grow 5.4 percent next year, the highest rate since 2013, Widodo, known as Jokowi, said in an address to the parliament on Wednesday that outlined spending priorities as well as key assumptions and risks for the economy in 2018.
- Fiat Chrysler Automobiles NV will join BMW AG and Intel Corp. in developing a platform for self-driving vehicles, giving the Italian-American automaker new technology partners and adding its heft to their existing coalition. FCA, which supplies plug-in hybrid Chrysler Pacifica minivans to Alphabet Inc.’sWaymo driverless-car unit, announced Wednesday it had signed a memorandum of understanding with the coalition.
- A.P. Moller-Maersk A/S said a cyberattack that hit the owner of the world’s biggest container shipping company at the end of June will wipe as much as $300 million off profits in the third quarter. The announcement was made in connection with second-quarter earnings, which showed Maersk missed analyst estimates after taking a writedown at the tankers unit that’s part of the energy business management has said it wants to get rid of.
- Companies from Alibaba Group Holding Ltd. to China Life Insurance Co. will participate in a 78 billion yuan ($11.7 billion) share sale by China’s second-largest wireless carrier as part of a government push to draw private capital into its state-owned enterprises. According to the plan, investors including Tencent Holdings Ltd. and Baidu Inc.will purchase about 10.9 billion shares, or 35 percent, of Shanghai-listed China United Network Communications Ltd. for 6.83 yuan apiece.
- Private equity firms Bain Capital and Cinven face a nail-biting midnight deadline again on their 5.4 billion-euro ($6.3 billion) takeover offer for Stada Arzneimittel AG, with the prospects of clinching the deal now in the hands of hedge funds who have but a few hours to hand over their stock.
- Goldman Sachs Group Inc.’s longtime dominance of the takeover advice business is finally translating into some success for its efforts to finance those deals. The bank has provided short-term bridge loans to help fund two of this year’s biggest deals, including Discovery Communications Inc.’s buyout of Scripps Networks Interactive Inc. and Amazon.com Inc.’s purchase of Whole Foods Market Inc. It’s been an important segment at a time when big deals involving U.S. companies are down by a third from a year ago.
- Tencent Holdings Ltd. posted a quarterly profit that surpassed all estimates as its marquee title Honour of Kings drove a 54 percent surge in mobile gaming revenue. China’s largest corporation reported a 70 percent surge in net income to a record 18.2 billion yuan ($2.7 billion) for the three months ended June, exceeding the 13.5 billion-yuan average of estimates compiled by Bloomberg. Sales rose 59 percent to 56.6 billion yuan, also topping projections.
- Cathay Pacific Airways Ltd. is slipping in its efforts to get passengers to pay more for its premium services in a test for new Chief Executive Officer Rupert Hogg as the company reported back-to-back losses. Passenger yields continued to decline in the first half of the year, led by its services to North America and Europe, as discounts to help fill seats took a toll on the key metric of profitability.
- Prudential Plc sold a U.S. broker-dealer network to LPL Financial Holdings Inc. as conflict-of-interest regulations make it harder for insurers to offer their own annuities in the world’s largest economy. An LPL subsidiary bought the network of National Planning Holdings Inc., which supports about 3,200 advisers and oversees $120 billion in client assets, the buyer said Tuesday in a statement. The purchase price is at least $325 million and could rise to as much as $448 million based on future performance, according to the statement.
*All sources from Bloomberg unless otherwise specified