July 10th, 2017
Daily Market Commentary
- If Governor Stephen Poloz does the expected and raises Canadian interest rates on Wednesday, it may be time to load up on potash, copper and gold stocks. A review of equity performances following Bank of Canada tightening cycles over the past dozen years shows that materials stocks including Lundin Mining Corp. and Potash Corp. of Saskatchewan Inc. significantly outperform all other sectors of the Canadian market.
- Cincinnati Bell Inc. is close to acquiring Hawaiian Telcom Holdco Inc. and OnX Enterprise Solutions Ltd. for about $850 million, according to people familiar with the matter. Cincinnati Bell plans to pay a mixture of cash and stock for Honolulu-based Hawaiian Telcom, said the people, who asked not to be named as the details are private. Toronto-based OnX is likely to be bought with cash, they said.
- Valeant Pharmaceuticals International, Inc. today announced that following the recent closure of the sale of Dendreon Pharmaceuticals LLC, the Company has used the net proceeds of the sale to pay down $811 million of its senior secured term loans. With this transaction, all mandatory amortization has been paid through 2019. In aggregate, Valeant has now reduced its debt by more than $4.3 billion since the end of the first quarter of 2016.
- European stocks advanced in a broad rally as robust Chinese inflation data added to investor optimism over gains in U.S. jobs. The Stoxx Europe 600 Index rose 0.2 percent at 8:29 a.m. in London. Lenders, real estate and energy companies were among the best gainers. The Stoxx 600 slipped less than 0.1 percent on Friday, as oil and gas shares fell to their lowest level since November.
- Stocks rose and the dollar was steady as investors prepare to parse second-quarter earnings for more evidence global economic growth is back on track after a positive batch of data from Europe and the U.S. The dollar was steady against most major currencies and bond yields were little changed after a selloff last week.
- Asian equities rose, rebounding from their biggest weekly drop in four months, following stronger than expected U.S. hiring data that boosted investor confidence in a global economic recovery. A gauge of technology shares led the advance.
- Oil traded near the lowest closing price in two weeks, erasing earlier gains after an OPEC minister said Libya and Nigeria may be requested to cap their production. Futures were little changed in New York. The two African producers, exempt from the OPEC-led cuts because of internal strife, have been invited to a July 24 meeting in Russia to discuss whether their production has stabilized.
- Gold touches lowest level in almost 4 months after unexpectedly strong U.S. hiring data boosts confidence over global growth. Silver falls to lowest in more than a year.
- Buyout firms Bain Capital and Cinven plan to make a second attempt to buy Stada Arzneimittel AG, raising their offer to 5.4 billion euros ($6.2 billion) and seeking backing from regulators for the overture two weeks after their first foray failed.
- Royal Dutch Shell Plc plans to spend as much as $1 billion a year on its New Energies division as the transition toward renewable power and electric cars accelerates. Shell sees opportunities in hydrogen fuel-cells, liquefied natural gas and next-generation biofuels for air travel, shipping and heavy freight — areas of transport for which batteries aren’t adequate.
- Sunac China Holdings Ltd. agreed to buy hotels, land and projects from Dalian Wanda Group Co. for 63.2 billion yuan ($9.3 billion) in China’s largest property deal, as billionaire Chairman Sun Hongbin moves to take advantage of competitors shedding assets.
- Westar Energy Inc. and Great Plains Energy Inc. agreed to merge to form a holding company that will operate regulated electric utilities in Kansas and Missouri. The companies boards of directors have unanimously approved a stock-for-stock merger that would create a electric utility with a combined equity value of about $14 billion, according to a joint statement Monday.
- Noble Group Ltd.’s newest major shareholder is upping the ante. Goldilocks Investment Co. raised its holding in the embattled Hong Kong-based commodity trader to become the fifth-largest investor in a buying spree that’s helped to boost its battered stock price.
- Japan’s investors returned to developed bond markets in May, mopping up Treasuries, German bunds and French debt one month before a global selloff sparked by hawkish comments from major central banks. Investors bought a net 1.32 trillion yen ($11.6 billion) of U.S. sovereign debt in May, the most in nine months, according to Japan’s balance-of-payment data released on Monday.
- India’s largest exchange resumed trading in its stock and equity derivatives markets Monday, after keeping traders on tenterhooks for about three hours with conflicting messages about what time operations would resume.
- While the Bank of Japan faced down the market on Friday with its offer to buy an unlimited amount of bonds, the battle over yield control may have only just begun. The swift action allowed the BOJ to quickly assert authority over the 10-yearyield, bringing it down from a five-month high of 0.105 percent.
- Support for Japanese Prime Minister Shinzo Abe slumped to record lows in three media polls over the weekend, as public trust in the premier evaporated amid a stream of scandals, while a former minister called for him to be replaced.
- A month ago, money managers were the most optimistic on gold this year. Now, they can’t seem to unload bullion fast enough. Hedge funds’ net-long positions, or the difference between bets on a price increase and wagers on a decline, fell last week by more than half, the biggest reduction since 2015. Exchange-traded products backed by precious metals saw cash outflows over the past month.
- China is the new leader of shipping trade to the Americas. State-owned Cosco Shipping Holdings Co.’s $6.3 billion offer to buy Orient Overseas International Ltd. would create an entity that’s the biggest shipping company moving boxes to the North American continent from Asia, beating Copenhagen-based A.P. Moller-Maersk A/S and France’s CMA CGM SA.
- Norsk Hydro ASA agreed to acquire Orkla ASA’s 50 percent interest in Sapa for a total enterprise value of 27 billion kroner ($3.2 billion), giving it full control of the global leader in extruded aluminum.
- Saudi Aramco, which plans what could be the world’s biggest initial public offering, will invest more than $300 billion over the next decade to maintain its spare oil-production capacity and explore for more natural gas, President and Chief Executive Officer Amin Nasser said.
- H2O Asset Management is acquiring a majority stake in systematic investment firm Arctic Blue Capital as the $14.6 billion macro hedge-fund manager diversifies its business.
- The world’s biggest industrial metals exchange is taking on the most powerful players in the gold market with the launch on Monday of its first futures contract for the commodity since the middle of the 1980s.
- Senate Republican leaders head into a difficult fight this week to win support for their health-care legislation after returning from a recess where some GOP lawmakers fielded angry complaints from constituents about the measure. Senate Majority Leader Mitch McConnell has made little progress on winning over his party’s holdouts as he negotiates with them over revisions to a bill he proposed last month that combines tax cuts with deep reductions in health spending.
- Wall Street investors have gone cold on one of the main mechanisms banks invented to fund the green-energy revolution. The business structure, known as the yieldco, feeds dividends from operating solar and wind farms to investors. Yieldcos raised $7.9 billion in public equity in 2014 and 2015 but only $1 billion since then, according to Bloomberg New Energy Finance.
- After President Donald Trump’s exuberant visit to Warsaw last week, where he encouraged Poland and its east European neighbors to buy U.S. liquefied natural gas, it’s time for sober calculations by Poland’s gas company. PGNiG SA Chief Executive Officer Piotr Wozniak said in an interview that the state-controlled company is already in talks with potential suppliers to fill the capacity of its LNG terminal in the Baltic Sea port of Swinoujscie as Poland diversifies away from its dominant supplier.
- Carillion Plc plunged the most on record after the British construction company said first-half profit will be lower than expected, dividend payments will be suspended and the chief executive officer has stepped down.
*All sources from Bloomberg unless otherwise specified