July 15, 2021

Daily Market Commentary

Canadian Headlines

  • Canada’s wireless spectrum auction is reported to have raised about C$8 billion ($6.4 billion), a record-breaking number that was higher than expected, according to RBC Capital Markets. The figure suggests the industry’s three dominant players — BCE Inc., Rogers Communications Inc. and Telus Corp. — may have spent heavily to boost their efforts to roll out faster 5G services across a country that is the world’s second-largest by area.
  • Canadian National Railway Co. told its customers on Wednesday that it’s temporarily suspending operations in parts of British Columbia due to wildfires, the latest snarl to rail traffic in the region after recent track damage left thousands of cars idled. The company isn’t currently running trains between Kamloops and Lytton, B.C., as there are several fires in the area, according to a letter to customers seen by Bloomberg. CN Rail didn’t immediately return a request for comment on Wednesday’s halt.
  • Environmental and indigenous groups including White Earth Band of Ojibwe, Red Lake Band of Chippewa, Sierra Club, Honor the Earth, Friends of the Headwaters, Youth Climate Interveners file in Minnesota Supreme Court over Public Utilities Commission’s 2020 approval of Enbridge Line 3 pipeline project, Sierra Club says in email.

World Headlines

  • U.S. stock-index futures fell, with Treasury yields sliding, as investors assessed a growth slowdown in China and Federal Reserve Chair Jerome Powell’s persistent dovishness despite a hawkish tilt across global central banks. Contracts on the S&P 500 Index declined, while Nasdaq 100 Index futures erased gains. The 10-year U.S. rate dropped to 1.33%. Netflix Inc. jumped in premarket trading on plans to expand into video games.
  • European equities eased from a record high amid accelerating inflation, while investors braced for a flurry of earnings reports over the coming weeks. The Stoxx 600 index closed down 0.1%, with rates-sensitive sectors like utilities and real estate declining as U.K. data showed consumer prices rose more than expected for a second month in a row.
  • Asian stocks crept higher after data from China showed its economic recovery steadied in the second quarter, while retail sales expanded more in June than analysts expected. The MSCI Asia Pacific Index rose as much as 0.3%, reversing an earlier decline of 0.2%. Information-technology and finance sectors advanced, while peers in healthcare and industrials fell. A gauge of mainland- and Hong Kong-listed financial companies climbed 2.5%, the most since May 25, after China rolled over 100 billion yuan ($15.4 billion) of medium-term policy loans.
  • Oil fell for a second day after a surprise jump in U.S. gasoline stockpiles tempered signs that the American market has returned to robust health. Futures in New York slid near $72 a barrel after falling 2.8% on Wednesday, the most since mid-May. American inventories of gasoline and distillates — a category that includes diesel — both rose last week. Demand for gasoline pulled back from record levels seen at the start of the month, but average levels of consumption are returning to normal.
  • Gold edged up to a one-month high as Federal Reserve Chair Jerome Powell reassured investors on the outlook for stimulus, even in the face of higher-than-expected inflation data.
  • Industrial metals including copper and iron ore climbed after China’s economic data pointed to signs of a steady recovery, while the stimulus outlook brightened in the U.S.
  • China’s economic rebound steadied in the second quarter and showed more balance as consumer spending picked up, providing support to a global recovery being shaken by resurging coronavirus cases. Gross domestic product in the world’s second-largest economy expanded 7.9% from a year earlier, the National Bureau of Statistics said Thursday, down from 18.3% in the previous quarter, with that slowdown largely reflecting base effects from last year’s pandemic. On a two-year average growth basis which strips out that effect, the economy grew 5.5% last quarter, slightly higher than in the previous three months.​
  • Two Bank of England policy makers signaled that stimulus measures may have to be trimmed back soon to keep inflation from overheating. Michael Saunders on Thursday joined Deputy Governor Dave Ramsden in noting that both growth and inflation in the U.K. economy have exceeded the central bank’s latest forecasts in May. The remarks sent the pound higher as much as 0.3% and prompted traders to bet on a BOE interest-rate increase in May 2022, almost a full year ahead of expected tightening by the U.S. Federal Reserve..
  • Federal Reserve Chair Jerome Powell said it was still too soon to scale back the central bank’s aggressive support for the U.S. economy, while acknowledging that inflation has risen faster than expected. “At our June meeting, the committee discussed the economy’s progress toward our goals since we adopted our asset purchase guidance last December,” Powell told the House Financial Services Committee Wednesday. “While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue.”
  • President Joe Biden’s agenda got a boost with Senate Democratic leaders outlining plans for more than $4 trillion in domestic programs, but enactment hinges on negotiating details on Medicare, taxes, immigration and infrastructure that have confounded Congress for a generation. The Senate is moving forward with a two-pronged approach to enacting Biden’s agenda, a $3.5 trillion tax and social spending plan, backed only by  Democrats, and a $579 billion bipartisan infrastructure bill.
  • BlackRock Inc. Chief Executive Officer Larry Fink says he sees the highest U.S. inflation in recent memory as more than a transient phenomenon. He backed up that view with a blanket raise for employees. The world’s largest asset manager will increase the base salaries of all staff at the director level and below by 8%, starting in September, according to a memo he and the firm’s president Rob Kapito issued Wednesday, coinciding with the company’s second-quarter earnings release.
  • American International Group Inc. said it agreed to sell a 9.9% equity stake in its life and retirement business to Blackstone Group Inc. for $2.2 billion in cash. The insurer and the private equity giant agreed to a “long-term strategic asset management relationship” for an initial $50 billion from the life and retirement portfolio, AIG said Wednesday in a statement. AIG will also sell affordable-housing assets to Blackstone for $5.1 billion.
  • European governments are growing increasingly frustrated with the Biden administration for refusing to lift travel rules that prevent most of their citizens from traveling to the U.S., citing inconsistent rules, economic costs and an outdated strategy for halting the coronavirus. The U.S. has scrapped the bulk of its domestic pandemic restrictions, but international travel has remained buttoned up more tightly amid the surge in cases of the highly contagious delta variant.
  • Verb Technology (VERB) rises 20% in premarket trading amid a broader rally among meme stocks. Other stocks favored among retail traders also advance with Sgoco Group (SGOC) climbing 3.9% and Exela Technologies (XELA) gaining 4%.
  • Netflix Inc., marking its first big move beyond TV shows and films, is planning an expansion into video games and has hired a former Electronic Arts Inc. and Facebook Inc. executive to lead the effort.
  • Europe’s biggest wind-turbine makers fell the most in months after a profit warning from Siemens Gamesa Renewable Energy SA put in focus the rally in steel and other commodity prices. Raw material costs have surged this year as demand reignites in line with recovering economies as restrictions from the pandemic ease, stoking inflation. Wind turbines, as tall as skyscrapers, require a range of commodities from steel to copper and plastics to make them.
  • China’s national carbon market will become the world’s biggest as begins trading on Friday. The system, will initially cover more than 2,200 companies in China’s power sector, the Shanghai Environment and Energy Exchange said in a statement on its website. The market previously missed a June 30 deadline to launch.

“Play by the rules, but be ferocious.”– Phil Knight

*All sources from Bloomberg unless otherwise specified