August 8th, 2017
Daily Market Commentary
- Canada’s biggest builder is keeping its focus at home even as U.S. President Donald Trump pledges to ramp up infrastructure spending next door. SNC-Lavalin Group Inc. is bidding on projects such as light-rail lines in Ottawa and Toronto and a C$6 billion ($4.7 billion) rapid-transit system for Montreal, as Prime Minister Justin Trudeau follows through on a pledge to invest C$120 billion on infrastructure over 12 years.
- A lull in European stocks continued as the earnings season lost momentum, while mining shares declined from their highest level in almost four months. The Stoxx Europe 600 Index was little changed at 381.63 as of 8:29 a.m. in London, with the volume of shares traded about a third lower than the 30-day average.
- Asian stocks swung between gains and losses as investors assessed China’s export and import data. Earnings results continue to flow through in Japan and Australia and parts of Southeast Asia.
- Oil traded above $49 a barrel in New York after Saudi Arabia was said to cut crude sales to Asian buyers as part of its pledge to reduce exports and shrink a global glut. Futures rose 0.7 percent after dropping Monday. Saudi Arabia will supply lower volumes than some customers requested for September, with the cuts spanning grades.
- Gold gains as investors weigh comments by Federal Reserve officials ahead of U.S. inflation data due Friday, and track N. Korea developments amid tensions over missile plans.
- Silver’s poor performance this year is leading investors to finally start pulling out their assets. Holdings in exchange-traded funds backed by the metal have fallen 1.6 percent, or 331 metric tons, since reaching a record on July 18, according to data compiled by Bloomberg. For a 15-day span, that’s the fastest drop since December.
- Aluminum cemented its spot as the best commodity so far of 2017 as prices jumped to $2,000 a metric ton for the first time in almost three years. Prices have rallied as China ramps up efforts to curtail illegal or polluting capacity. The metal added 1.9 percent to $2,001.50 as of 12:03 p.m. in London, bringing gains for the year to 18 percent.
- China’s yuan strengthened past 6.7 for the first time since October amid signs of steadier fund flows and renewed dollar weakness. The onshore exchange rate rose as much as 0.37 percent to 6.6963 per dollar in Shanghai. It pared the advance to 0.33 percent as of 5:33 p.m. local time. The offshore rate gained 0.44 percent — the biggest rally in Asia — to 6.7019, the highest since October.
- Republicans struggling to pass a major tax overhaul that doesn’t add to the federal deficit are discussing a kind of compromise: mixing permanent revisions with temporary rate cuts for individuals and businesses. Officials on the House and Senate tax committees are talking with the White House about a hybrid approach that would combine lasting tax code changes to deter offshore profit shifting by corporations with lower rates for a number of years, according to three people familiar with the discussions.
- Standard Life Plc had 3.7 billion pounds ($4.8 billion) of net outflows in the first half ahead of its merger with Aberdeen Asset Management Plc as clients pulled money from its flagship fund.
- The U.K.’s most senior judge said the government must provide a clearer picture of how European Union legal decisions should continue to affect British law after Brexit. Lawmakers must be specific about how judges should interpret decisions of the European Court of Justice, the EU’s highest court, to which U.K. law is currently subject, Supreme Court President David Neuberger said. It can’t blame judges for misinterpretations if they fail to do so, he said.
- Avis Budget Group Inc. plunged after slashing its annual profit forecast and missing earnings estimates, as rental-car companies struggle with bloated inventory and threats to their business model. Avis now sees full-year adjusted earnings per share in the range of $2.40 to $2.85, according to a statement Monday. The company had previously said profit could be as much as $3.50 a share. Avis also missed analysts’ average second-quarter earnings estimate.
- Uniper SE jumped to a record after the German utility increased its dividend forecast and said earnings this year will be at upper end of an initial estimate. The Dusseldorf-based company’s stock climbed the most since June 1 in Frankfurt on Tuesday as it reported first-half earnings that beat analysts’ expectations. Uniper has soared 44% this year, the second-best performer on Stoxx Europe 600 Utilities index.
- The fuse on the public pension time bomb got a little longer. Record-breaking equity markets boosted U.S. state and local-government pension investments the most in three years in fiscal 2017, easing pressure on governments that have to put more money into plans when investment returns fall short of expectations.
- Pfizer Inc. is considering a sale of its Caverject erectile dysfunction injections as the U.S. drugmaker seeks to streamline its portfolio, according to people familiar with the matter. Other pharmaceutical companies and buyout firms may be interested in buying the treatment, which could fetch about $300 million, the people said, asking not to be identified because the deliberations are private. A representative for Pfizer declined to comment.
- Chinese acquirers will spend $1.5 trillion buying companies and investing overseas in the next decade, 70 percent more than the previous 10 years, even as regulators at home and abroad block deals, Linklaters LLP said in a report Tuesday.
- British buyout firm Intermediate Capital Group Plc agreed to buy German software company ProAlpha Business Solutions GmbH from Bregal Investments, the private-equity investment arm of the Brenninkmeijer family, according to people familiar with the matter. The deal values the software maker at more than 400 million euros ($472 million), the people said, asking not to be identified because the deliberations are private.
- The Abu Dhabi Investment Authority has agreed to sell the Ecowest office development in Paris to AGC Equity Partners Ltd., according to three people with knowledge of the deal. The sovereign-wealth fund was seeking about 700 million euros ($825 million) for the property, which is leased to companies including L’Oreal SA, the people said, asking not to be identified because the agreement isn’t yet public. ADIA bought the 58,000 square meter (625,000 square foot) development for 477 million euros in 2015
- Private equity giant KKR & Co. has agreed to buy American Medical Response Inc., a medical transportation business, fromEnvision Healthcare Corp. for $2.4 billion in cash.
- Reliance Industries Ltd. plans to refinance a significant portion of about $12 billion of borrowings that mature over the next three years and may sell bonds to repay the debt, according to company executives with knowledge of the matter.
- Japanese investors sold Australian sovereign securities for the first time in 14 months, booking gains after the Aussie surged. They also sold German debt following hawkish comments by the European Central Bank. Investors offloaded 221.6 billion yen ($2 billion) of Aussie debt in June, the most since January 2013, after buying 99.4 billion yen a month earlier, according to Japan’s balance-of-payments data released on Tuesday. The data also show China sold 2.77 trillion yen of Japanese short-term debt in June, the most on record going back to 2005.
- The markets are alive with the sound of ‘zzzzzz’ as the latest trading session marks yet another another record low for volatility gauges. Bank of America’s MOVE Index, which gauges volatility in the U.S. Treasury market, has tumbled to an unprecedented 46.9 at the close of Monday’s trading session.
- Nissan Motor Co. is selling its battery business to Chinese private equity firm GSR Capital for about $1 billion, a person with knowledge of the matter said, as the Japanese carmaker seeks ways to improve competitiveness of its Leaf electric cars while reining in costs.
- CVS Health Corp. said its pharmacies saw an increase in drug orders, driving revenues and earnings higher even after the departure of some of its major customers. Revenues from pharmacy services gained 9.5 percent to $32.3 billion in the second quarter, the company said Tuesday in a statement. Increased claim volume, branded drug prices and more use of high-priced specialty drugs all helped boost sales, the company said.
- Saigon Beer Alcohol Beverage Corp., Vietnam’s biggest brewer that’s seen its market value surge to $7 billion, expects to sell the first of three tranches of the government’s 90 percent stake in the fourth quarter, according to people familiar with the matter.
*All sources from Bloomberg unless otherwise specified