July 21st, 2017

 

Daily Market Commentary

 

 

Canadian Headlines

• Growth may be broadening in Canada, but price pressures are a completely different story. Of 19 major components of the Consumer Price Index, the share with inflation rates below zero is the highest since 2013, even as the nation’s economic growth tops the Group of Seven leader board. The proportion of CPI components with a higher inflation rate relative to one year ago, meanwhile, hasn’t been this low since May 2013.
• It didn’t take long for provincial borrowers to adapt to Canada’s first interest-rate hike in seven years. The provinces have already sold C$1.6 billion ($1.3 billion) worth of debt at the long end of the yield curve where terms are now relatively more favorable.

 

 

World Headlines

• Exporters led declines in European stocks, extending a weekly decline, as a rally in the euro gained strength on expectations of slower monetary stimulus later in the year. The Stoxx Europe 600 Index fell 0.1 percent at 8:32 a.m. in London, with carmakers as the biggest losers. Banks and construction companies also declined.
• U.S. stock-index futures were little-changed close to a record-high level as investors looked ahead to a Federal Reserve meeting and manufacturing data next week. S&P 500 contracts expiring in September were almost flat at 2,472.25 as of 6:04 a.m. in New York, after the underlying gauge ended Thursday within one point of its record-high close.
• Asian equities fell for the first time in 10 days, as investors chose to take some profit off the table amid an investigation into the U.S. president that may stall his economic agenda.
• Oil edged toward its second weekly increase as OPEC and its allies prepare to review their plan to clear a global glut, which so far hasn’t worked as they’d hoped. Futures in New York were poised for an increase of 1.2 percent this week, extending a 5.2 percent jump in the prior period.
• Gold heads for the first back-to-back weekly advance since early June as the dollar slumps amid an investigation into U.S. President Donald Trump.
• The rally in zinc prices has the potential to jump this year to levels not seen in a decade as demand continues to outstrip supply amid mine output disruptions, according to Hindustan Zinc Ltd., Asia’s biggest producer by market value.
• Australia’s central bank whipsawed the nation’s currency this week, underscoring just how difficult policy makers are finding it to even discuss an end to ongoing stimulus. Minutes of the Reserve Bank of Australia’s July meeting released Tuesday included a discussion of the level of the neutral interest rate, which was estimated at about 3.5 percent — a long way from the current 1.50 percent.
• President Donald Trump’s interview with the New York Timeson Wednesday has stirred speculation he may consider firing Special Counsel Robert Mueller for investigating Trump’s business dealings as part of the Russia probe. But Trump can’t fire Mueller directly, according to the law that authorizes Mueller’s probe. If he tried, he could set off a chain-reaction that would throw the Justice Department into upheaval.
• ACS is considering a counter bid for Abertis Infraestructuras SAto rival a 16.3-billion-euro ($19 billion) approach from the Benetton family’s Atlantia SpA and keep the Barcelona-based toll-road operator in Spanish hands.
• Paysafe Group Plc said it received a conditional offer from Blackstone Group LP and CVC Capital Partners valuing the business at 2.9 billion pounds ($3.8 billion). The funds offered 590 pence a share in cash, according to a statement by the payments processing firm on Friday.
• The last time big U.S. banks made so much money, the financial world was heading toward the brink of collapse. This time, it’s stiff regulation that’s in danger. Ten of the nation’s biggest lenders including JPMorgan Chase & Co. and Bank of America Corp. together made $30 billion last quarter, just a few hundred million short of the record in the second quarter of 2007.
• The International Monetary Fund agreed to a new conditional bailout for Greece, ending two years of speculation on whether it would join in another rescue and giving the seal of approval demanded by many of the country’s euro-area creditors. The Washington-based fund said Thursday its executive board approved “in principle” a new loan worth as much as $1.8 billion. The disbursement of funds is contingent on euro-zone countries providing debt relief to Greece.
• China aims to make the artificial intelligence industry a “new, important” driver of economic expansion by 2020, according to a development plan issued by the State Council. Policy makers want to be global leaders, with the AI industry generating more than 400 billion yuan ($59 billion) of output per year by 2025.
• AAC Technologies tumbles as much as 15%, the biggest intraday loss since May 2010, with Jefferies Hong Kong analyst Rex Wusaying that the company warned Thursday of single-digit quarter-on-quarter revenue growth and that gross margin would narrow.
• General Electric Co. shored up its cash performance as Jeffrey Immelt tackled one of investors’ most pointed concerns in his final days as chief executive officer. Industrial operating cash flow rose to $1.5 billion in the second quarter, GE said Friday in a statement as it reported earnings.
• Honeywell International Inc.’s effort to juice revenue growth from existing businesses is paying off, potentially giving its new chief executive officer ammunition to fend off a campaign by activist investor Dan Loeb to break up the company.
• Toshiba Corp. and Innovation Network Corp. of Japan will hold an initial public offering of their stakes in energy-metering companyLandis+Gyr AG in Switzerland, raising 269.4 billion yen ($2.4 billion).
• South Africa is evaluating assets it could sell to pay for this month’s 2.2 billion rand ($169.5 million) bailout of unprofitable carrier South African Airways, Finance Minister Malusi Gigaba said in letter to parliament.
• InterGlobe Aviation Ltd., which runs India’s largest airline, has picked banks including Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley to work on an institutional share sale, according to people with knowledge of the matter.
• A London judge rejected an application by a group representing 46 million consumers to pursue a lawsuit against Mastercard that would have been the largest of its kind since U.S.-style class actions were introduced in the U.K. The 14 billion-pound ($18 billion) lawsuit initiated by Walter Merricks, a lawyer who once led the U.K. organization that handles consumer disputes with banks, and Quinn Emanuel Urquhart & Sullivan LLP, came three years after a European Union court ruled the processing fees the company had charged for cross-border transactions were unfair.
• Dalian Wanda Group Co.’s plan to sell its theme park and hotel assets to Sunac China Holdings Ltd. and Guangzhou R&F Properties Co. has sparked swings in their bonds and created trading opportunities at Wall Street banks. Analysts at bond trading desks have voiced diverging views on whether their clients should be buying or selling those debentures.
• J&F Investimentos SA, the holding company controlled by Brazilian brothers Joesley and Wesley Batista, is close to selling its dairy company Vigor Alimentos SA to Grupo Lala SAB de CV for about 6 billion reais ($1.92 billion), according to a person with direct knowledge of the matter.
• Archer-Daniels-Midland Co., one of the world’s largest agricultural-commodity trading companies, is cutting jobs after a review of its business amid tough market conditions.
• Schlumberger Ltd., the world’s largest oilfield-services provider, agreed to buy a controlling stake in Russia’s market leader Eurasia Drilling Co., after opposition from the nation’s regulators derailed a similar plan two years ago. Schlumberger plans to buy 51 percent of EDC, the two companies said late Thursday in statements that didn’t disclose the terms. The deal will again require approvals from Russian regulators.

 

 

 

*All sources from Bloomberg unless otherwise specified