July 20th, 2017
Daily Market Commentary
- Canadian stocks rose as energy shares posted their biggest gain in two months and Rogers Communications Inc. hit an all-time high. The S&P/TSX Composite Index added 95 points or 0.6 percent to 15,244.71, its highest since June 23. Energy shares jumped 2.1 percent after U.S. government data showed significant declines in crude and gasoline stockpiles. Precision Drilling Corp. gained 13 percent and Crew Energy Inc. added 8.7 percent.
- Hydro One Ltd. has agreed to buy U.S. power supplier Avista Corp. for $3.4 billion, becoming the latest Canadian energy company to snap up assets south of the border in a search for higher returns. The merger will establish one of North America’s largest regulated utilities with assets totaling $25.4 billion (C$32 billion) and customers from Ontario to Montana.
- The Bank of Canada has embarked on what may be the slowest cycle of interest rate increases in more than three decades as it awaits evidence consumer prices are picking up. The central bank will raise borrowing costs in October, and then twice in 2018 to bring its benchmark interest rate to 1.5 percent, according to the median forecast of 16 economists in a Bloomberg survey.
- Billionaire Paul Singer’s Elliott Management Corp. added its voice to skeptics urging BHP Billiton Ltd. to show caution on plans to enter a potash market the miner forecasts could top $50 billion. The world’s largest miner could seek board approval as early as June 2018 to begin a $4.7 billion first phase of the Jansen project in Canada from as early as 2023.
- Canadian Pacific Railway Ltd. is halfway to meeting new Chief Executive Officer Keith Creel’s goal of restoring sales growth after last year’s drop. Second-quarter revenue rose 13 percent to C$1.64 billion ($1.3 billion), Canadian Pacific said in an earnings statement Wednesday. Higher demand for grains and metals and a rebound in potash shipments enabled Canada’s second-largest railroad to post its second consecutive quarterly sales increase.
- European stocks extended their biggest gain in a week as investors prepared for the European Central Bank’s rate decision and remarks by its president. The Stoxx Europe 600 Index climbed 0.3 percent at 8:29 a.m. in London. The benchmark is advancing for a second day after Tuesday’s selloff, the biggest in three weeks. Earnings reports are also providing impetus for stock traders this week.
- U.S. stock-index futures were little-changed, after the S&P 500 benchmark climbed to a second successive record, and as investors on Thursday look to earnings and an unemployment report to gauge the strength of corporate profits and the economy.
- Asian equities pared gains after earlier rising to the highest level since 2007 as investors wait to see whether European policy makers will echo the Bank of Japan’s decision earlier Thursday to keep its monetary stimulus program unchanged.
- Oil held gains near $47 a barrel as U.S. crude and gasoline stockpiles extended declines, easing concerns over a global supply glut. Futures were little changed in New York after rising 2.4 percent the previous two sessions. U.S. crude inventories slipped 4.73 million barrels last week, the Energy Information Administration reported Wednesday. Gasoline stockpiles dropped 4.45 million barrels, the most since March.
- Gold retreats from highest level in almost 3 weeks as dollar gains and investors await remarks from European Central Bank President Mario Draghi.
- Iron ore’s strong start to the second half and surge above $70 a metric ton will probably fade through the year-end as demand from top buyer China slows and global mine supplies remain robust, according to Sucden Financial Ltd. and Bank Julius Baer & Co.
- Three weeks after convulsing markets, Mario Draghi is about to try to give the euro area’s economic prospects some nuance. When the European Central Bank president speaks to reporters on Thursday after the Governing Council sets policy, he’ll have to balance optimism over the revival against a desire to move as slowly as possible when removing monetary stimulus.
- The Bank of Japan kept its monetary stimulus program unchanged even as it pushed back the projected timing for reaching 2 percent inflation for a sixth time. The downgraded price outlook will raise more questions about the sustainability of the BOJ’s stimulus at time when other major central banks are turning toward normalizing their monetary policy.
- India approved the sale of a stake in state-run refiner Hindustan Petroleum Corp. to the country’s biggest oil and gas explorer, according to a person with knowledge of the decision. The move fulfills a plan, first outlined in February, to create an Indian oil giant through consolidation and mergers, forming a company comparable with international rivals that could weather crude-price volatility. Bringing HPCL into its fold will make Oil & Natural Gas Corp. the nation’s No. 3 refiner after Indian Oil Corp. and Reliance Industries Ltd. The stake is valued at about 299 billion rupees ($4.6 billion)
- Ingenico Group SA agreed to buy Swedish rival Bambora for 1.5 billion euros ($1.7 billion) in the latest deal to jolt the payments industry as the French company accelerates a shift away from hardware to gain scale in online transactions.
- Sunac shares rise as much as 16%, biggest intraday jump since November 2014, after Guangzhou R&F said it would pay $2.9 billion to join China’s largest property deal between the company and Dalian Wanda.
- Central banks were once again front and center in global markets on Thursday, with stocks trading near a record as investors await the ECB’s latest rate decision. The Bank of Japan maintained its mega monetary stimulus, sinking the yen and lending momentum to a dollar advance.
- Kinder Morgan Inc. plans to boost its payout to investors 60 percent next year and buy back $2 billion of its shares as its finances have improved since the end of 2015. The Houston-based pipeline giant said it expects to declare an 80-cent dividend for next year, up from 50 cents estimated for this year, and to reach $1.25 by 2020, according to its second-quarter earnings report Wednesday.
- Overseas insurers including Prudential Plc are pursuing plans to sell stakes in their Malaysian units, in deals that could raise at least a combined $2 billion and help them comply with foreign ownership limits, people with knowledge of the matter said.
- Mol Nyrt. is buying licenses from Evonik Industries AG and Thyssenkrupp AG, part of the Hungarian energy group’s investment of as much as $1 billion in a polyol plant to help diversify its offerings from motor fuels.
- Etihad Airways agreed to sell its shares in Darwin Airline as the Persian Gulf carrier rethinks its investment strategy following troubled engagements with Alitalia SpA and Air Berlin Plc. Slovenia’s Adria Airways will buy Darwin, which currently operates as Etihad Regional, including the Abu Dhabi-based airline’s stake, Darwin said in a statement on Thursday.
- Volvo Car Group is open to retro-fitting some of its older diesel models to reduce emissions as automakers reel from the technology’s decline amid the threat of driving bans in cities. The Swedish manufacturer is prepared to fix vehicles equipped with Euro 5-standard emissions-control systems as municipal restrictions loom for those cars or models with earlier technology.
- Software giant SAP SE raised its annual revenue outlook and said it would buy back up to a half billion dollars in stock after reporting a better-than-expected jump in sales, lifted by a revamped version of its flagship software. The German maker of applications that run businesses’ finances, manufacturing and personnel is projecting sales of 23.3 billion euros ($26.8 billion) to 23.7 billion euros this year, based on constant currencies.
- Clariant AG said the pair of investors seeking to scupper its $6.4 billion acquisition of Huntsman Corp. have boosted their stake, increasing pressure on the Swiss chemical company’s management to rally support for the deal ahead of a shareholder vote.
- Guangzhou R&F Properties Co. is the latest Chinese developer to bet that racking up debt is better than being left behind in the race to expand. R&F, a surprise entrant to a $9.4 billion deal previously inked between Sunac China Holdings Ltd. and Dalian Wanda Group Co., will pay about $2.9 billion to triple its portfolio of hotels to become the largest such operator in the nation.
- Tata Group, the Indian conglomerate that manages more than 100 operating companies, is weighing a plan to streamline its technology and infrastructure businesses, people with knowledge of the matter said. The conglomerate is considering a restructuring that would see several of its technology businesses moved under publicly traded Tata Consultancy Services Ltd.
- Genealogy website Ancestry.com is close to hiring banks to lead an initial public offering of the company this year, people with knowledge of the matter said. The private equity-backed company is working with Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. as it plans for the IPO, which could give Ancestry.com a market value of more than $3 billion, said the people, who asked not to be identified because the information is private.
- Saudi Arabian Oil Co. is weighing a buyout of partner Jadwa Investment Co.’s stake in a refining company as the private equity firm considers exiting the joint investment, according to people familiar with the matter. Aramco, as the energy giant is known, may also bring in another firm to buy Jadwa’s 30 percent stake in Saudi Aramco Base Oil Co.
*All sources from Bloomberg unless otherwise specified