December 29, 2021

Daily Market Commentary

Canadian Headlines

  • Ontario, Quebec Weigh Shorter Isolation Period After CDC Shift. Canada’s two largest provinces are considering cutting quarantine times for people with Covid-19 after U.S. health officials recommended reducing the isolation period to five days for people who are no longer experiencing symptoms. Quebec, currently the hardest-hit province in Canada with new coronavirus cases, is for now loosening the rules only for health-care workers — allowing some to remain on the job even when testing positive. Ontario postponed a news conference by its chief medical officer to give officials more time to examine the evidence on isolation periods behind the new guidance by the Centers for Disease Control and Prevention. CDC Pares Omicron View to a Still-Dominant 59% of U.S. Cases Quebec reported a record 12,833 new cases on Tuesday, blowing past its previous high of 10,713. The province had a very high positivity rate of 26.8%, suggesting a significant number of cases are being missed in the official numbers.
  • H.K. Bans Cathay Flights From Los Angeles, Toronto for 2 Weeks. Hong Kong prohibits the landing of passenger flights from Los Angeles or Toronto operated by Cathay Pacific from Dec. 29 to Jan. 11,       according to a government statement. Flights operated by Cathay from Los Angeles on Dec. 26 and 28 each had two passengers who tested positive for Covid-19. Another flight from Toronto on Dec. 28 had three passengers who tested positive. Hong Kong reported 12 new imported omicron cases, bringing the total to 70.

 

World Headlines

  • U.S. equity-index futures were steady on Wednesday as investors assessed the economic implications of the omicron coronavirus outbreak. Treasury yields ticked higher along with the dollar. Contracts on the S&P 500 and Nasdaq 100 edged up after the rally in U.S. stocks paused on Tuesday. Tesla Inc. gained more than 2% in pre-market trading after Chief Executive Elon Musk sold a further $1.02 billion off shares, taking him close to his target of reducing his stake in the electric-car maker by 10%.
  • Alibaba Group Holding Ltd. is weighing options for its stake in the Twitter-like social media Weibo Corp. and is in talks with a state-owned firm for a potential deal, according to people familiar with the matter. The discussions between the technology giant and Shanghai Media Group could lead to the latter purchasing all of Alibaba’s roughly 30% stake in Weibo, the people said, asking not to be identified as the information is private.
  • As organizers prepare for a second unionization election at an Amazon.com Inc. warehouse in Alabama, one of the most significant challenges they face is the possibility that many people employed at the facility now may not be there when the vote is held. Amazon has recorded turnover above 100% across many of its facilities before and during the pandemic, according to a Wall Street Journal analysis. During the first election in Bessemer, union officials estimated that at least 1,000 workers left around the time voting took place during two months concluding at the end of March. The facility had roughly 6,000 eligible voters at the time and about half voted. Several of the Bessemer workers the Journal contacted during the first vote no longer work there.
  • John Madden, a Super Bowl-winning coach who became the pre-eminent sports commentator and was the brand name for the leading football video game, has died. He was 85. He died unexpectedly this morning, the National Football League said in a statement on Tuesday. No cause was given.  “There will never be another John Madden, and we will forever be indebted to him for all he did to make football and the NFL what it is today,” NFL Commissioner Roger Goodell said.
  • SpaceX Satellite Narrowly Missed Chinese Lab Before Complaint. A pair of dangerously close space encounters is adding to tensions between the U.S. and China, while underscoring the potential peril to astronauts as satellite constellations and debris proliferate in orbit. Two SpaceX satellites had near misses with China’s space station earlier this year — one of them within 4 kilometers (2.5 miles) — in the latest sign of dangerous overcrowding in low earth orbit. In both instances, the orbiting lab made evasive maneuvers to avoid the Starlink satellites operated by Elon Musk’s space venture. The margin for a near-miss in October could have been as little as a few hundred meters if the astronauts on board the space station hadn’t shifted to a different altitude, according to data compiled by astrophysicist Jonathan McDowell.
  • Alcoa to Curtail Spain Aluminum Plant for 2 Years on Energy Cost. Union workers have voted to support the plan. The smelter will continue to supply strategic clients, such as pharma or food industries, by remelting aluminum, with plans to maximize billet production of 65,000 tons per year
  • U.K. Retail Stocks Gain as England Holds Off on New Virus Curbs. U.K. retail stocks gain, outperforming the broader market, after the U.K. government ruled out tighter Covid-19 restrictions in England before the end of the year, despite the rapid spread of the omicron variant.
  • Netherlands to Require Quarantine for Travelers from the U.S.. The Netherlands will require travelers from the U.S. to self-quarantine for up to ten days upon arrival starting Dec. 30, according to an updated travel advisory that now classifies the country as a “very high risk area.”  Travelers will still have to provide a negative test. If travelers get tested on day five of self-quarantine and the result is negative, they may end quarantine. Home carrier KLM, which offers about 50 weekly flights to the U.S., told Dutch financial daily Het Financieele Dagblad that it’s “too early” to gauge the impact on bookings
  • Turkish lira drops as much as 5% against the dollar, extending this week’s loss to 15% with the 10-year Turkish government bond yield standing at an all-time high. The currency was traded 5.1% lower at 12.3969 per dollar as of 1:11pm in Istanbul
  • Russia expects certification of Nord Stream 2 operator to be completed in the first half of 2022, Deputy Prime Minister Alexander Novak says in interview with Russia’s RBC. “Based on the certification schedules I am aware of, it has to be completed within the first half of the year, the first half of the year is the maximum timeframe”
  • Base metals are mixed as investors try to gauge the outlook for the Chinese economy amid slowing growth and the potential for stimulus next year, while omicron infections raise globally. Copper rose as much as 1.4% reaching the highest in a month on Wednesday, while aluminum declined as much as 1.8% after London trading re-opened following two-day break. Nickel advanced 0.4% by 10:22am London. China’s economy expanded at a moderate pace in December on better business sentiment, although a slump in the property sector and weakening external demand continue to cloud the outlook, according to Bloomberg’s aggregate index of eight early indicators for this month. Property accounts for large proportions of demand for base metals and steel.
  • Gold price today falls sharply, down for third day in a row. “Gold declined as investors weighed evidence that the omicron virus variant doesn’t pose a major threat to global economic growth.  The metal breached the psychologically important $1800 an ounce level. Thin trading during the holiday season may be contributing to larger swings in the price,” said Ravindra Rao, Head Commodity Research at Kotak Securities.
  • Oil Holds Near One-Month High on Signs U.S. Stockpiles Falling. Oil held near a one-month high after industry data pointed to  another drop in U.S. crude inventories and traders bet the fast-spreading omicron variant would prove to be less severe than earlier virus waves. West Texas Intermediate was steady near $76 a barrel after gaining 11% over the past five sessions. The American Petroleum Institute reported nationwide crude holdings fell by 3.1 million barrels last week, according to people familiar with the data, which also showed an increase at Cushing, the biggest U.S. storage hub. The government releases the official tally later on Wednesday.

Happy Holidays

*All sources from Bloomberg unless otherwise specified