July 18th, 2017
Daily Market Commentary
- Canadian stocks slipped as a big gain in miners on better-than-expected Chinese growth wasn’t enough to offset declines elsewhere. The S&P/TSX Composite Index fell nine points or 0.1 percent to 15,165.36. Materials stocks jumped 1.5 percent as copper rose to the highest in four months and gold posted its biggest two-day gain in almost six weeks. First Quantum Minerals Ltd. added 8.8 percent and Hudbay Minerals Inc. rose 6.6 percent.
- Renova Energia SA’s board has cleared the way for Brookfield Asset Management Inc. to pursue a non-binding offer for a stake in the Brazilian renewable energy producer, which would bring Canada’s largest alternative-asset manager one step closer to taking majority control of the company. The approval at a meeting in Sao Paulo Monday means the companies could start exclusive talks.
- Wildfires sweeping across British Columbia, the world’s biggest exporter of softwood lumber, sent timber prices surging and forced the closure of two copper mines in the western Canadian province. More than 375 fires have swept across the province, burning forests, displacing an estimated 37,000 people from their homes, and forcing sawmills and mines to shut down or evacuate. Lumber futures on Monday jumped by the exchange limit in Chicago to the highest in more than two months. Imperial Metals Corp. and Taseko Mines Ltd. both said Monday that they’ve idled mines in the region.
- Canadian Finance Minister Bill Morneau is set to announce new proposals that may close loopholes often used by doctors and lawyers to reduce their tax burden, part of the government’s pledge to level the playing field for middle-income earners. Morneau has scheduled a press conference for Tuesday morning in Ottawa to announce steps to provide “fairness for the middle class.” A spokesman for Morneau declined to comment Monday evening, though referred to a Morneau speech from May that focused on tax fairness.
- Rio Tinto Group’s pursuit of new diamond output to tap rising demand in Asia is focusing on an unheralded exploration project in the Canadian forest. The world’s second-biggest miner on Tuesday added the Fort a la Corne joint venture, about 60 kilometers (37 miles) east of Prince Albert in Saskatchewan, to its published list of advanced projects after striking an agreement last month to take as much as a 60 percent stake.
- President Donald Trump said the U.S. wants to reduce trade imbalances with Mexico and Canada and boost exports of everything from farm goods to financial services as it prepares to kick off talks to revamp the North American Free Trade Agreement. The office of Trump’s top trade negotiator on Monday released the administration’s list of negotiating objectives for talks with Mexico and Canada that are expected to begin as early as Aug. 16.
- European stocks fell as investors bet a stronger currency will drag on exporters’ earnings, and miners snapped a six-day winning streak. The Stoxx Europe 600 Index lost 0.4 percent at 8:17 a.m. in London. The euro strengthened to its highest level in 14 months as a setback for U.S. President Donald Trump’s economic agenda weakened the dollar, just as the European Central Bank prepares for its two-day monetary policy meeting this week.
- The dollar slid back to a 10-month low as President Donald Trump’s economic revitalization agenda once again faltered. The greenback lost ground against all but one of its G-10 peers on signs Trump’s health-care reform bill is effectively dead in its current form, after two more Republican senators announced their opposition to the plan.
- Chinese stocks reversed losses in the last hour before the market close, led by gains in materials and property companies. Sunac China Holdings Ltd. tumbled in Hong Kong after a local media report said banks are reviewing the company’s credit risk.
- Oil traded near $46 a barrel as crude production rebounded in Libya, an OPEC member exempt from output curbs. Futures gained 0.3 percent in New York after sliding 1.1 percent Monday. Libya has increased output to 1.1 million barrels a day, according to a person familiar with the matter. The country will attend a meeting with some OPEC members as well as Russia to share its production plans.
- Gold climbs for sixth day in seven as the dollar sags to 10-month low amid concern that U.S. President Donald Trump will struggle to implement his agenda following a health-care setback.
- U.K. inflation unexpectedly slowed in June, giving respite to Bank of England policy makers concerned that price growth was getting out of hand. The inflation rate slipped to 2.6 percent, the Office for National Statistics said on Tuesday. It’s the first drop in the annual rate since October, and economists had forecast that it would hold at the four-year high of 2.9 percent reached in May.
- China’s banking regulator told some lenders to lower the rates they offer on wealth-management products, people familiar with the matter said, as officials move to reduce financial risks and stimulate the economy. Banks, including some big lenders, received the order from the China Banking Regulatory Commission earlier this month, said the people, asking not to be identified as they aren’t authorized to speak publicly. The requirement applies to on-balance sheet wealth-management products, which account for about a fifth of the nation’s more than $4 trillion of so-called WMPs, according to one of the people.
- Toshiba Corp. surged the most in five months after David Einhorn’s Greenlight Capital revealed a position in the struggling Japanese conglomerate, while expectations rose it will soon close a $20 billion deal to sell its memory business.
- Ericsson AB cautioned that turning around the beleaguered phone-equipment maker will require even steeper cost cuts, testing the patience of investors who sent the stock tumbling the most this year. Ericsson fell as much as 11 percent to 54 kronor in Stockholm after the company posted a second-quarter loss and warned that a faltering market amid technology shifts could cause as much as 5 billion kronor ($600 million) of operating income to evaporate over the next 12 months.
- Gecina SA, Paris’s biggest office landlord, started a 1 billion-euro ($1.2 billion) rights offering to help fund its purchase of French real estate investment trust Eurosic. Existing stockholders will be offered one new share at a price of 110.50 euros each for each seven they hold, the Paris-based company said in a statement Tuesday.
- ITC Ltd., Asia’s second-largest cigarette maker by value, plunged the most in 25 years after India surprised investors by raising levies on tobacco products. The stock slumped 12 percent to 285.1 rupees at 3:12 p.m. in Mumbai, erasing $7.5 billion from the company’s market value. Godfrey Phillips India Ltd., which counts Philip Morris International Inc. as an investor, tumbled 3.7 percent. The government on Monday increased the cess on cigarettes by as much as 10 percent.
- Some officials at the Bank of Japan are increasingly concerned about the sustainability of the BOJ’s purchases of exchange-traded funds, according to people familiar with discussions at the central bank. But the chances of any change at this week’s policy meeting are low, they said, with no need for an immediate change to the program.
- UnitedHealth Group Inc. is putting its Obamacare struggles behind it just as Republicans in the Senate are trying to do the same. The biggest U.S. health insurer reported second-quarter results Tuesday showing expanded membership as it moved away from the Affordable Care Act and added customers mainly in the government funded programs for the elderly and poor: Medicare and Medicaid.
- Petronet LNG Ltd. sees a lifeline arriving for its loss-making Kochi liquefied natural gas import terminal by 2019 after it boosts capacity use fourfold.
- Sunac China Holdings Ltd. shares and bonds plunged after a local media report that domestic banks are reviewing its credit risk following a deal to buy assets from Dalian Wanda Group Co., a firm that has attracted scrutiny from China’s leaders for its prolific deal binge. The shares fell 7.3 percent to HK$15.94, in Hong Kong after earlier plunging as much as 13 percent, the biggest intraday drop since July 2015.
- Johnson & Johnson is reporting second-quarter net income of $3.83 billion. On a per-share basis, the New Jersey, company had net income of $1.40. Per-share earnings, adjusted for non-recurring costs and amortization costs, were $1.83.
- China Three Gorges Corp., a state-owned electricity producer, has emerged as the leading bidder for Odebrecht SA’s Chaglla hydropower plant in Peru, according to people with knowledge of the matter. Odebrecht aims to reach a deal with the Beijing-based company in the next few weeks on the sale of the 456-megawatt power plant, the people said, asking not to be identified because the information is private. A deal could value the project at more than $1 billion including debt, the people said.
- Deutsche Lufthansa AG stock retreated from nine-year highs as the German airline looked poised for a difficult second half with pressure on fares set to intensify amid a struggle to rein in costs. Lufthansa shares fell as much as 4.3 percent, the steepest intraday drop since April 27, even after the carrier raised its 2017 operating profit forecast to gradually catch up with analyst estimates. While first-half earnings almost doubled on stronger traffic, investors focused on the airline’s lingering need to confront lower-cost rivals as it said ticket prices will decline.
- Citigroup Inc. has chosen Frankfurt as its newest trading hub in the European Union and plans to present that option to its board of directors this week for approval, according to a person with knowledge of the decision.
- Konstantin Vyshkovsky has shown he can dodge sanctions imposed against Russia by pulling off three Eurobond sales in just over a year. But the Finance Ministry’s debt chief may yet meet his match as the country looks to swap $4 billion of old foreign bonds for new ones. The exchange, which Russia had planned to conduct “closer to the fall,” may spook holders of debt purchased before the Western penalties who may be concerned the new notes would run afoul of any curbs, Vyshkovsky said in an interview.
- Flipkart Online Services Pvt has made a revised bid to acquire rival Snapdeal for about $950 million, an offer that could lead to a final agreement between India’s two largest local e-commerce providers within three weeks, according to people familiar with the matter.
- BC Partners is close to a deal to acquire PlusServer GmbH, a German internet-services unit of GoDaddy Inc., according to people familiar with the matter. The transaction could value the business at less than 400 million euros ($461 million), the people said, asking not to be identified as the details aren’t public. No deal has been finalized and details may still change, the people said.
- Asia’s biggest buyout has placed the spotlight on how much debt Global Logistic Properties Ltd. could be saddled with, in a risk factor for its credit score. The S$16 billion ($11.7 billion) price tag that a management-backed group including private equity firms Hillhouse Capital Management and Hopu Investment Management put on the warehouse operator has prompted concerns that GLP could be forced to assume a significant amount of debt.
*All sources from Bloomberg unless otherwise specified