December 9th, 2020
Daily Market Commentary
- Canadian shares continued its rally on Tuesday, as broader equity markets rose on U.S. stimulus talks. The S&P/TSX Composite index rose 0.3% to 17,639, nearing its record close of 17,944, reached on Feb. 20. The advance was led by health care and tech stocks, while consumer discretionary companies underperformed.
- The Bank of Canada is expected to keep extremely accommodative policy intact on Wednesday, with an outside chance it will do even more to support the recovery. Economists predict the central bank will restate a pledge to hold its overnight interest rate at 0.25% until at least 2023, while continuing bond purchases at the current pace of C$4 billion ($3.1 billion) per week. The bank releases its December policy decision at 10 a.m. in Ottawa..
- Xebec Adsorption said it agreed to buy the parent company of HyGear Technology & Services for EU82m and the assumption of EU18.4m in net debt. HyGear holders to receive ~C$65.2m in cash and 10.3m Xebec common shares at a price of C$6.03 per share. To fund cash portion with C$100m bought deal public offering of subscription receipts and concurrent private placement to CDPQ of C$50m. HyGear generated EU11.4m of revenue and EU3.4m of Ebitda in 2019 and is expected to see double-digit annual revenue growth from 2019 to 2021. Xebec also in non-binding letter of intent to acquire industrial gas generation technology and manufacturing business, as well as a non-binding LOI to acquire a specialty compressed air and air treatment services company; aggregate purchase price expected C$35m-C$60m.
- Whitecap Resources Inc. agreed to acquire TORC Oil & Gas for C$552 million. The offer represents a discount of about 4% to TORC Oil’s Tuesday close, according to Bloomberg data. The all-stock transaction is valued at about C$900 million, including TORC’s net debt, estimated at C$335 million as of Dec. 31. TORC holders will receive 0.57 Whitecap shares for each stock held. The pro forma entity is expected to have average production in 2021 of 99,000 to 101,000 boe/d on capital investments of C$280 million to C$300 million
- European stocks gained for a second day, with the region’s main gauge rising to the highest in more than nine months on optimism over progress in stimulus talks in both the U.S. and Europe. The Stoxx Europe 600 Index was up 0.6% as of 10:18 a.m. in London, with cyclical sectors including energy, automotive and banking leading the advance. Germany’s DAX Index rose the most among major country benchmarks, additionally boosted by Covestro AG’s jump after the chemicals firm boosted its guidance.
- Equity benchmarks in South Korea and Japan were the top gainers amid a broad Asia rally on signs of progress in U.S. stimulus talks.
- U.S. equities futures advanced, indicating the S&P 500 will extend gains after closing at a record high on Tuesday, as hopes for a U.S. stimulus deal overshadowed fears about a resurgence in coronavirus cases. Oil rose while the dollar dropped.
- Oil held near $49 a barrel after two tiny Iraqi oil wells were attacked and markets globally rose on the prospect of additional U.S. stimulus. Brent futures rose 0.2%, flipping between gains and losses. Civil defense teams are trying to put out a blaze at the wells in the Khabbaz field, local police said, though the nation’s oil ministry said the fields were only pumping 2,000 barrels a day at the time of the attack.
- Gold declined from a two-week high as investors weighed vaccine roll-outs against surging Covid-19 cases and fresh hopes for a U.S. stimulus deal.
- Boris Johnson said no British prime minister could accept the European Union’s Brexit demands as he prepared to head to Brussels for a showdown with the European Commission’s Ursula von der Leyen on Wednesday. The premier’s team hopes the face-to-face conversation with the Commission president will inject political impetus into the deadlocked process.
- Treasury Secretary Steven Mnuchin made a surprise re-entry into talks on a 2020 pandemic-relief package with a $916 billion proposal that opened a potential new path to a year-end deal despite objections from Democrats over elements of the plan. After largely leaving the task to Senate Majority Leader Mitch McConnell since Election Day, Mnuchin pitched a $916 billion stimulus plan to House Speaker Nancy Pelosi in a Tuesday afternoon telephone call, more than a week after she and Senate Democratic leader Chuck Schumer retreated from their previous insistence on a $2.4 trillion bill.
- Norway’s economy may weather the latest wave of the pandemic better than expected, strengthening the case for the central bank to be among the first to raise interest rates. Mainland gross domestic product, which adjusts for Norway’s offshore industry, expanded 1.2% in October from the previous month, the Oslo-based statistics office said on Wednesday. That’s three times the bounce expected by analysts surveyed by Bloomberg.
- Global central banks are embarking on fresh waves of bond-buying to fight the fallout from the pandemic, despite mounting claims that the once-mighty policy is losing its power to boost the economy. The U.S. Federal Reserve, Bank of England, Bank of Japan and the European Central Bank have splurged $5.6 trillion this year alone on quantitative easing, according to Bloomberg Economics. The ECB is expected to increase its own purchase plans by as much as 500 billion euros ($605 billion) when it meets on Thursday.
- People with a significant history of allergies should not currently receive the Covid-19 vaccine from Pfizer Inc. and BioNTech SE, the U.K.’s National Health Service said, after two people experienced reactions from the shots. The warning on Wednesday came a day after the U.K. became the first western nation to begin a Covid vaccination program, following approval of the shot last week by the Medicines and Healthcare Products Regulatory Agency.
- G4S Plc agreed to a 3.8 billion-pound ($5.1 billion) takeover bid from Allied Universal Security Services LLC, a deal that would combine two of the world’s largest security firms. Allied raised its offer to 245 pence per share, trumping a hostile proposal from Canadian rival Garda World Security Corp., G4S said Tuesday. The British firm’s directors plan to unanimously recommend the deal to shareholders, which confirmed an earlier Bloomberg News report.
- A one-off 5% tax on wealth in the U.K. could raise more than 260 billion pounds ($348 billion) to help fix the coronavirus-hit public finances, according to a panel of experts. In a report published Wednesday, the independent Wealth Tax Commissioncalled for a charge of 1% a year for five years on individual assets above 500,000 pounds. About 8 million residents would be affected.
- SoftBank Group Corp. is debating a new strategy to go private by gradually buying back outstanding shares until founder Masayoshi Son has a big enough stake he can squeeze out the remaining investors, according to people familiar with the matter.
- Bridgewater Associates, the world’s biggest hedge fund, is starting a strategy tied to global sustainability goals, the latest money manager to tap into surging demand for socially and environmentally conscious investing. Ray Dalio’s firm, which oversees $140 billion of assets, plans to open two sustainable funds in 2021.
- JPMorgan Chase & Co.’s Jamie Dimon wants to remind the world that his bank is looking to make an acquisition. “If you’ve got brilliant ideas, give me a call,” Dimon, the chief executive officer of the biggest U.S. bank, said at a conference Tuesday. “If you’re a competitor investment bank and you bring the idea, you get the fee.”
- As U.S. health authorities near emergency approvals for the first Covid-19 vaccines, companies are taking some of the first concrete steps to prepare for the unprecedented and complex task of distributing hundreds of millions of doses to the American workforce. Ford Motor Co. has procured deep-freezers to store vaccines at some of its factories. Sanderson Farms Inc., a top poultry producer, will administer vaccines to employees at health clinics erected at its facilities, and the CEO pledges to get inoculated on video to encourage workers to do the same.
*All sources from Bloomberg unless otherwise specified