July 11th, 2019
Daily Market Commentary
- Canadian Headlines
- Canadian stocks closed with a small gain after coming within about 30 points of a record high earlier in the day, amid mixed messages from central bankers on both sides of the border. The S&P/TSX Composite Index added 0.1% to 16,563.29 after a volatile day of trading that saw the benchmark gain as much as 0.6% before dipping briefly into the red. The move came after Bank of Canada officials left interest rateson hold and showed little willingness to consider easing. Meanwhile, U.S. Federal Reserve Chairman Jerome Powell said the central bank is preparing to cut rates.
- The Bank of Canada’s firmly entrenched holding pattern on rates will be put to the test by the country’s ability to withstand a deceleration in the world’s largest economy and its biggest trading partner. The Ottawa-based central bank left the overnight rate unchanged at 1.75% on Wednesday for a sixth straight decision, and indicated it’s in no rush to introduce easier policy, despite a mounting drag from the U.S.-China trade war and a widely-anticipated interest rate reduction by the Federal Reserve later this month.
- World Headlines
- The Stoxx Europe 600 Index was headed for the first advance in five days, spurred by energy companies, though it came off its highs for the session.
- U.S. equity futures climbed alongside Asia stocks while European shares erased an advance as investors weighed the latest signals from central bankers on interest rates. Treasuries were steady and the dollar edged lower. Contracts on the main American gauges gained after the S&P 500 briefly topped 3,000 for the first time Wednesday on signals that Federal Reserve Chairman Jerome Powell is willing to lower rates, citing a slowing global economy and trade issues.
- Asian stocks climbed for a second day, led by energy and technology firms, as Fed Chair Jerome Powell signaled the prospect of an imminent rate cut and the dollar weakened. Most markets in the region rose, with Hong Kong and South Korea leading gains. The Topix closed 0.5% higher, snapping a three-day losing streak, even as Japan’s worst dispute in decades with South Korea dragged on. Nintendo Co. helped bolster the gauge after introducing a cheaper version of its Switch gaming machine. The Shanghai Composite Index added 0.1%, supported by large banks and insurers. China’s Finance Minister Liu Kun expressed confidence that the country’s economic growth will remain in a range of 6% to 6.5%.
- Oil extended gains after closing at a seven-week high as a third of the Gulf of Mexico’s crude output was halted by a storm and U.S. crude inventories declined more than expected. Futures in New York rose as much as 0.8% after settling above $60 a barrel on Wednesday for the first time since May. Major producers from BP Plc to Chevron Corp. have evacuated crew from offshore installations due to the storm, which could grow into a hurricane this week. A fourth weekly draw in American stockpiles and signs that the Federal Reserve is prepared to cutinterest rates also supported prices.
- Gold rose after Federal Reserve Chairman Jerome Powell said concerns over trade and global growth continue to weigh on the U.S. economic outlook, spurring bets on a cut in interest rates this month. Copper posted the biggest gain since February.
- European Central Bank policy makers were united in June on the plan to stand ready to provide more stimulus to the euro-area economy, while expressing some differing views on how to calibrate their tools. “There was broad agreement that, in the light of the heightened uncertainty, which was likely to extend further into the future, the Governing Council needed to be ready and prepared to ease the monetary policy stance further by adjusting all of its instruments, according to an account of the Governing Council’s June 5-6 meeting, which was held in Vilnius.
- A week after OPEC agreed to keep oil production restrained until early next year, the group’s first forecasts for 2020 showed it faces an even longer and tougher challenge. The Organization of Petroleum Exporting Countries, which pumps 40% of the world’s oil, estimated that it’s producing about 560,000 barrels a day more than will be needed next year as the ongoing surge in U.S. shale threatens to deliver another surplus. Supplies from the cartel’s rivals will grow by more than twice as much as global oil demand, it forecast.
- The British navy intervened to stop Iran from blocking a commercial oil tanker leaving the Persian Gulf, heightening friction just as European nations scramble to salvage a landmark nuclear accord with the Islamic Republic. The BP Plc-operated British Heritage, which can carry as much as 1 million barrels of oil, was attempting to pass through the Strait of Hormuz, a shipping chokepoint at the mouth of the world’s largest oil-producing region, when three Iranian vessels tried to impede it, according to a U.K. government statement. Iran denied the charge.
- President Donald Trump said he plans to hold a press conference Thursday on his effort to include a citizenship question on the 2020 U.S. Census, the latest sign he could continue to fight after being rebuffed by the Supreme Court. In a tweet previewing today’s social media summit at the White House, Trump said, “At its conclusion, we will all go to the beautiful Rose Garden for a News Conference on the Census and Citizenship.” Trump “is pushing everyone in the White House and the Department of Justice to find all the various ways he can” move ahead with plans to ask people their citizenship status as part of next year’s questionnaire, U.S. Citizenship and Immigration Services acting Director Ken Cuccinelli said Wednesday.
- It’s among the top stock markets in the world this year and inching closer to an all-time high. Australia’s benchmark S&P/ASX 200 Index has surged 19% this year, adding about $216 billion in value despite a sluggish economy and a housing slump. Investor concerns eased after a federal election and the Royal Commission’s inquiry into the financial sector stopped short of demanding a structural overhaul in the sector. Still, analysts have been divided on where Aussie stocks will go after this year’s rally with Citigroup Inc. and Morgan Stanley Wealth Management cheering the surge, and Goldman Sachs Group Inc. taking the other side of the trade and downgrading the market to underweight.
- France won’t back off from its planned tax on companies like Facebook Inc. and Alphabet Inc.’s Google even after the U.S. suggested it may use trade tools against the levy. The French Senate passed a bill on Thursday to impose a 3% tax on global tech companies with at least 750 million euros ($845 million) in worldwide revenue and digital sales totaling 25 million euros in France. The U.S. said Wednesday that it will examine whether the tax would hurt its tech firms, using the so-called 301 investigation, the same tool President Donald Trump deployed to impose tariffs on Chinese goods because of the country’s alleged theft of intellectual property.
- Dozens of new solar and wind projects are sprouting up on tribal lands across the U.S. as Native Americans seek new ways to boost their economies beyond casinos and untaxed cigarettes. In the fall, Wirsol Solar AG expects to start building a 110-megawatt solar project on the Pine Ridge Reservation in South Dakota. And last month, the Moapa River Indian Reservation in Nevada was announced as the site for two solar arrays expected to produce 500 megawatts of electricity, enough to power 180,000 homes. They already have a prominent customer: NV Energy Inc., the utility owned by Warren Buffett’s Berkshire Hathaway Inc.
- Reckitt Benckiser Group Plc agreed to pay as much as $1.4 billion to settle an investigation into the sales and marketing of a treatment for opioid addiction by former unit Indivior Plc. Shares of the maker of Durex condoms and Lysol cleaning products rose as much as 3.3% after it disclosed the deal. Indivior surged as much as 41% in London after lifting its outlook for sales and profit, fueled by resilient demand for the addiction drug Suboxone film. The U.S. government is investigating how a deadly epidemic of opioid abuse spun out of control, killing tens of thousands of people annually, and how a product sold as a solution came to exacerbate the crisis. Prosecutors argue that the marketing of the addiction treatment deceived doctors about its dangers.
- The North Sea was once one of the world’s most important oil and gas regions. As its fields run dry, disused platforms and pipelines could play a part in developing Europe’s energy future. A pilot project commissioned by the Dutch government in partnership with industry aims to create the world’s first offshore hydrogen plant on an oil platform 13 kilometers (8.1 miles) from The Hague. By 2020 it should be using electricity generated by nearby wind turbines to convert sea water into hydrogen gas, which will then be sent to another platform via an existing pipeline.
- Avast Plc said it will keep expanding through acquisitions as the emergence of super-fast communication networks opens new business opportunities for the Czech internet-security provider. A purchase of rival AVG Technologies in 2016 turned Avast into the world’s biggest producer of consumer anti-virus protection. But its new chief executive officer, Ondrej Vlcek, says the company isn’t that good at reaching corporate clients, and buying someone who is will be an option for further growth.
- Prime Minister Narendra Modi’s administration has asked global warship makers to submit proposals to build six conventional submarines in India to boost local shipyard capability and plug gaps in the navy’s underwater warfare fleet. France’s Naval Group SA, German Thyssenkrupp Marine Systems GmBH, Swedish Saab Kockums, Spanish Navantia SA and Russian Rosoboronexport OJSC were asked to show if they can transfer technology to build the diesel-electric powered submarines in India, people familiar with the matter said in New Delhi, asking not to be identified as the discussions were private.
- Carlyle Group LP has raised more than $4.5 billion for two funds as the largest alternative asset managers rake in money from investors. The Washington-based firm’s credit opportunities fund gathered $2.4 billion and has already made investments that include a founder-owned homebuilder and a publicly traded media company, Carlyle said. The infrastructure fund, which amassed $2.2 billion, is involved in projects such as Terminal One at New York’s John F. Kennedy International Airport and a crude-oil export terminal.
- Barclays Plc is cutting about 20% of jobs in its wealth management business in Dubai, according to people with knowledge of the matter. The layoffs will include senior positions and support staff within the division that employs about 100 members of staff and more cuts could be made, the people said, asking not to be identified because the plans aren’t yet public. The lender offered to relocate some employees to Geneva or London instead of eliminating their roles, one of the people said. Barclays “confirms that it has completed a review of its operational model in the U.A.E. to ensure a sustainable and efficient business platform, a spokesman for the U.K.-based lender said in a statement. It “considers the U.A.E. and MENA region as a key market and remains fully committed to continue serving clients based there.”
*All sources from Bloomberg unless otherwise specified