December 17th, 2020
Daily Market Commentary
- Sun Life Bets Billions on Japanese Return to Office. Real estate investor BentallGreenOak is wagering billions of dollars that Japanese workers will return to the office after the pandemic. The unit of Canada’s Sun Life Financial Inc. plans to double staff and invest $10 billion in Japan over the next two to three years, of which as much as 70% may go into office buildings in the country’s major business districts, said Chief Executive Officer Sonny Kalsi.
- Apollo’s Great Canadian Bid Wobbles as Top Holder CI, ISS Say No. Apollo Global Management Inc.’s bid for Great Canadian Gaming Corp. has hit more trouble, with a top shareholder publicly rejecting the deal and a major proxy advisory firm recommending investors turn down the $2.5 billion offer. CI Financial Corp.’s global asset management unit, which holds 14% of Great Canadian in various funds, said Wednesday that managers of those funds plan to vote against the offer. That announcement comes after Institutional Shareholder Services released a report recommending that investors reject it.
- Virus Spreads in Canada Oil Patch With Outbreak at Chevron Site. Chevron’s Kaybob operation in the Duvernay shale formation and Syncrude Canada Ltd.’s Aurora oil-sands mine were added to a government list that now figures 11 oil-production sites as outbreak locations. Other companies in the list include Canadian Natural Resources Ltd., Suncor Energy Inc. and Imperial Oil Ltd.
- Canada to Boost Hydrogen Sector to Meet Climate. Canada unveiled a national strategy for growing the hydrogen sector Wednesday to help the country meet its climate change pledges. The goal is to produce the world’s leading low-carbon hydrogen, and help Canada reach its net-zero greenhouse gas emissions target by 2050, Natural Resources Minister Seamus O’Regan said during a virtual news conference.
- European stocks climbed as authorities were said to be expediting the rollout of a Covid vaccine before Christmas, potentially giving a boost to the region’s battered economies. The Stoxx Europe 600 Index edged higher, pulled up by cyclical shares such as miners and retailers.
- The pound climbed as officials cautiously predicted a Brexit deal within days. S&P 500 futures gained, with Congressional leaders in the U.S. still haggling over the final details of nearly $900 billion in coronavirus aid. The dollar slumped. Bitcoin breached $23,000 for the first time. Oil held gains in the wake of a surprise decline in U.S. crude inventories. Stocks saw modest advances across Asia.
- Congressional leaders are still haggling over the final details of nearly $900 billion in coronavirus aid as staff members try to write the legislative language needed for House and Senate votes this week. If the aid deal, combined with a spending bill needed to fund the government, isn’t ready to get a vote in both chambers by Friday, another stopgap measure will be needed to avert a partial government shutdown after midnight Friday.
- Initial jobless claims are expected to decline modestly after surging in the prior week. The spike was partially a result of weakening labor-market conditions due to broadening business restrictions and increased volatility around the Thanksgiving holiday.
- Three Asian central banks left interest rates on hold to monitor the trickle-through effects of previous cuts. Indonesia kept its policy rate at 3.75%, and the Philippines also left its benchmark unchanged at 2%, as expected. Taiwan stood pat at a record low 1.125%, trapped between keeping currency gains in check and a desire to curb rising housing prices.
- Bitcoin breached $23,000 for the first time in history as more Wall Street names crowd into the world’s largest digital currency up 220% this year. As momentum builds, analysts predict more gains ahead. The digital coin jumped more than 9% on Thursday, touching a high of $23,256.92, according to a composite of prices compiled by Bloomberg. Bitcoin and the wider Bloomberg Galaxy Crypto Index have both more than tripled this year. Cryptocurrency-linked stocks in South Korea, Japan and China climbed.
- The last BOE decision of 2020 will be dominated by Brexit. The central bank will probably hold given talks are ongoing, but may signal its willingness to boost QE to counter disruption from a no deal, Bloomberg Economics said. The SNB held and renewed its pledge to counter upward pressure on the franc. Norway accelerated its outlook for gradual rate hikes to the first half of 2022. Mexico is expected to sit tight later today.
- Tyson Foods Inc. said it temporarily shut down its pork plant in Columbus Junction, Iowa, following a refrigeration failure. The company said Wednesday in a statement that it’s too early to determine a timeline for its reopening but it will likely be down for a few days after shutting because of a “mechanical malfunction in the refrigeration system Tuesday evening.” No one was hurt and the company will guarantee pay for full-time active employees, Steve Stouffer, group president of Tyson Fresh Meats, said in the statement.
- Pet subscription service BarkBox will be acquired by blank check firm Northern Star in a $1.6 billion deal, including debt, the WSJ reported.
- The White House has convened urgent meetings of officials across multiple agencies to address a breach of U.S. government computer systems attributed to Russia, according to a person familiar with the matter. The Trump administration is holding daily discussions on the hack that include representatives of the FBI, the Office of the Director of National Intelligence, Department of Homeland Security and National Security Agency, according to the person.
- Amazon.com Inc. workers at an Alabama warehouse were given the go-ahead by federal regulators to vote whether to form what would be the first union at a U.S. facility of the e-commerce giant. An organizing drive became public last month when representatives of the Retail, Wholesale and Department Store Union filed paperwork for an election to represent 1,500 frontline workers at the warehouse in Bessemer, Alabama. None of Amazon’s hundreds of thousands of employees in warehouses across the U.S. is represented by labor unions.
- The Bank of Japan is likely to extend an emergency Covid-related lending program at its two-day policy board meeting ending Friday, throwing its weight behind the latest fiscal effort to buttress the recovery. We expect it to leave its main policy levers unchanged.
- Copper stockpiles tracked by leading exchanges have dwindled to the lowest level in six years, and should outflows be sustained, holdings may soon hit the smallest since 2008. The slump highlights tightness in the global market, with prices rallying toward $8,000 a ton as economies recover and the US dollar retreats. Morgan Stanley says its “all systems bullish” for the key metal, while Goldman expect a substantial deficit will pave the way for prices to test $10k.
*All sources from Bloomberg unless otherwise specified