January 23rd, 2018
Daily Market Commentary
- Canadian stocks slipped as railways and miners retreated, offsetting gains in financials and consumer staples. The S&P/TSX Composite Index lost five points or less than 0.1 percent to 16,347.98. Industrials were the biggest decliners, falling 0.8 percent as Canadian National Railway Co. lost 1.6 percent ahead of earnings scheduled for Tuesday.
- Ontario Teachers’ Pension Plan Board has held talks with other investors about a potential deal to take U.S. mall owner Macerich Co.private, according to people familiar with the matter. The Canadian pension fund, which owns about 16.5 percent of real estate investment trust Macerich, has held discussions with firms including sovereign wealth funds about backing the potential bid, the people said, asking not to be identified as the details aren’t public. Talks are at an early stage and may not lead to a deal, the people said.
- The 11 remaining members of a Pacific trade pact abandoned by U.S. President Donald Trump have agreed on a revised agreement, with the nations to work toward signing the deal by early March, according to Singapore’s government. Senior officials resolved outstanding issues, finalized the list of suspended provisions and completed the legal verification of the agreement, concluding negotiations on what has been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Singapore’s trade ministry said Tuesday in a statement.
- Cara Operations to pay Keg Restaurants owners C$105m cash and 3.8m subordinate voting shares valued at C$24.93 and may pay added C$30m cash upon achievement of certain milestones.
- European stocks advance, following overnight gains in the U.S. and as companies from Logitech to EasyJet climb after earnings. The Stoxx Europe 600 Index rises 0.3%, with gains tempered by a slide in miners. Asian and European markets are in the green as U.S. equities climbed following an end to a government shutdown for now.
- Major indexes staged another rally while Treasuries erased gains after lawmakers voted to end a partial government shutdown that lasted just over the weekend. S&P 500 Index rose pacing its third straight weekly advance as investors awaited about 80 earnings reports this week. The dollar resumed a downward slide after briefly rallying on the end of the government stalemate.
- Asian shares advanced from Sydney to Mumbai and Jakarta to Shanghai, sending benchmark indexes to new highs as investors cheered an end to a U.S. government shut down and as the Bank of Japan stood pat on monetary policy. The MSCI Asia Pacific Index rose 1 percent to 185.69 as of 4:36 p.m. in Hong Kong, set to end at a new record high for a third consecutive day.
- Oil headed toward $64 a barrel in New York before U.S. inventory data that may show a record run of declines. March futures advanced 0.5 percent as a survey showed stockpiles probably shrank for a 10th week, which would mark the longest run of declines in weekly data since 1982. Inventory figures will be released by the government Wednesday, with a steer due from the American Petroleum Institute Tuesday.
- Gold holds steady as Bank of Japan keeps stimulus unchanged, and Governor Haruhiko Kuroda says the central bank must continue current easing program. Investors weigh outlook for dollar after President Donald Trump signs spending bill Monday evening that ends partial shutdown.
- Iron ore’s in the firing line. Futures sank by the most this year as steelmakers in China facing a decline in profitability switch back to using more lower-grade material, cutting into demand for higher-quality ore, according to China Merchants Futures Co.
- Britain recorded its smallest budget deficit for any December in 17 years as value-added tax receipts reached a record and the Treasury received a bumper credit from the European Union. Net borrowing narrowed to 2.6 billion pounds ($3.6 billion), well below the median forecast of economists, from 5.1 billion pounds a year earlier, figures showed Tuesday. It left the shortfall in the first nine months of 2017-18 at 50 billion pounds, 12 percent lower than a year earlier.
- After a year of chest thumping, President Donald Trump has finally delivered the type of trade blow his political base has been craving. Trump slapped tariffs on imported solar panels and washing machines on Monday in his first major move to level a global playing field he says is tilted against American companies. The decision came two days after the one-year anniversary of his inauguration as he prepares to travel to the World Economic Forum in Davos, Switzerland, where his “America First” stance is likely to beat odds with the global business and political elite.
- The London-listed subsidiary of Kazakhstan’s state oil company will delist following more than a decade as a public company after securing the support of minority shareholders for a $1.95 billion share buyback. The buyback is the third attempt by state-owned KazMunayGas National Co. to consolidate control over its London-listed unit KazMunaiGas Exploration Production JSC. Its success could pave the way for an initial public offering of the parent company as the oil-rich Caspian Sea state pursues an ambitious privatization plan.
- A Washington-based auto safety group is repeating its call for Ford Motor Co. to recall more than a million Explorer sport-utility vehicles, citing an increase in the number of complaints about exhaust fumes seeping inside the vehicles. Nearly 1,400 complaints about the exhaust fumes in the sport utility vehicles have been lodged with regulators, according to a tally by the Center for Auto Safety. Hundreds of people said they had been affected by fumes, and the complaints included reports of more than 80 injuries.
- Gold is going digital. Blockchain technology may help keep track of the roughly $200 billion of the precious metal dug from remote mines, traded by middlemen and melted down by recyclers that’s sold each year to buyers scattered around the world. The London Bullion Market Association, which oversees the world’s biggest spot gold market, will seek proposals including the use of blockchain for tracing the origins of metal, partly to help prevent money laundering, terrorism funding and conflict minerals, according to Sakhila Mirza, an executive board director.
- The current earnings-report cycle was already off to a strong start when Netflix Inc. set an exceptionally high bar this week, blowing so far beyond subscriber estimates that the video service entered the exalted club of companies valued at more than $100 billion. Netflix joins the array of U.S., European and Asian companies whose earnings are getting a lift from quickened global economic growth. Meanwhile, U.S. tax cuts should give American companies like Wal-Mart Stores Inc. the chance to reward investors with goodies such as buybacks on top of bonuses they’ve already sprinkled out to workers.
- The three-day government shutdown battle may have hastened an immigration debate in the Senate, but it also deepened the acrimony and highlighted bitter divisions between the two parties that stand in the way of a compromise. Immigration hardliners and President Donald Trump’s White House exulted in what officials swiftly portrayed as a Democratic surrender. “Big win for Republicans as Democrats cave on Shutdown,” Trump said on Twitter late Monday night, though he also suggested that negotiations resume.
- U.K. regulators dealt a setback to 21st Century Fox Inc.’s planned 11.7 billion-pound ($16.3 billion) takeover of Sky Plc, saying the deal would give Rupert Murdoch too much control over the country’s media. Fox’s bid to buy the European pay-TV broadcaster wouldn’t be in the public interest, the Competition and Markets Authority said in provisional findings Tuesday in which it called for the companies to offer remedies. Sky shares jumped as much 3.7 percent, however, after the regulator dismissed concerns about broadcasting standards.
- Johnson & Johnson gave a 2018 profit forecast that’s higher than analysts anticipated, promising to invest more in innovation to the health-care sector after changes to the U.S. tax system. J&J, the first big U.S. drugmaker to report fourth-quarter earnings, is joining companies that are seeing benefits from the lower tax changes passed in law late last year. The world’s biggest health-care company didn’t provide many details on how it may use the extra money, saying only that the recent legislation enables it “to invest in innovation at higher levels.” The profit for this year will be $8 to $8.20 a share, excluding some items, J&J said in a statement Tuesday, higher than the $7.86 average of estimates compiled by Bloomberg.
- Procter & Gamble Co. delivered a message to activist investor and freshly minted board member Nelson Peltz: Things aren’t that bad. The company reported second-quarter profit that topped analysts’ estimates, helping counter the shareholder’s push for more radical changes at the world’s largest consumer-products company. P&G posted earnings of $1.19 a share, excluding some items, well ahead of the $1.14 projected by Wall Street. Sales also topped estimates, though just barely. The company reported revenue of $17.4 billion, compared with a $17.39 billion average prediction.
- From pharma to finance, dealmaking in 2018 is on fire around the globe. Just three weeks into the year, the value of mergers announced totals $152.5 billion. That’s the highest since the $374 billion racked up in the same period during the technology deal frenzy in 2000, according to data compiled by Bloomberg. While clouds loom, bankers say the U.S. corporate tax cut, robust economies and rising stock markets are giving executives confidence to sign off on billion-dollar transactions — and in some cases, to pay rich prices.
- Carrefour SA’s plan for fending off Amazon.com Inc. is to try to look more like Whole Foods Market Inc., the U.S. grocer the online giant acquired last year for $13.6 billion. The troubled French retailer’s new chief executive officer, Alexandre Bompard, on Tuesday laid out plans to quadruple sales from organic food to 5 billion euros ($6.1 billion) and increase own-branded products to one-third of sales by 2022. The company plans to shrink its big-box stores, cut 2,400 headquarters jobs and invest 2.8 billion euros in expanding its online presence.
- India is working toward a five trillion dollar economy by 2025, Prime Minister Narendra Modi said today at the opening session of the World Economic Forum in Davos. “Almost all areas of our economy have been opened to foreign direct investment,” said Modi, the first Indian prime minister in two decades to attend the forum of global business and political leaders. “More than 1400 archaic laws that were an obstacle to doing business” have been abolished in the last three years, he said.
- JPMorgan Chase & Co. plans to spend $20 billion over five years to raise wages, expand its branch network and boost gifts to charity. The investments are “made possible by the firm’s strong and sustained business performance, recent changes to the U.S. corporate tax system and a more constructive regulatory and business environment,” the New York-based company said Tuesday in a statement.
- Asian buyout firm Affinity Equity Partners agreed to acquire Trimco International Holdings Ltd., a Hong Kong-based maker of garment labels, from Partners Group Holding AG. Partners Group will sell Trimco for a total consideration of $520 million, the Swiss investment firm said in an emailed statement Tuesday. Affinity had been chosen as the preferred bidder after it trumped offers from Baring Private Equity Asia and Nike Inc. supplier Yue Yuen Industrial Holdings Ltd., people with knowledge of the matter said earlier this month.
*All sources from Bloomberg unless otherwise specified