June 29th, 2017

 

Daily Market Commentary

 

Canadian Headlines

• Canadian stocks gained as rising bond yields and oil prices injected some life into the lackluster benchmark. The S&P/TSX Composite Index rose 74 points or 0.5 percent to 15,355.58, its first gain of the week. Financial shares added 0.9 percent to their highest level since April 26 as bond yields spiked.
• Famed investor Warren Buffet’s interest in Home Capital Group Inc. is paying off for the troubled Canadian mortgage firm, as millions of dollars in investor deposits are now flooding back into the company. The company gained more than $100-million in new deposits between June 20 and 27, including the company’s Oaken Financial savings products and guaranteed investment certificates. (Globe and Mail)
• Canada’s IPO market rebounded following a dismal 2016 as investors look to diversify from financial, energy and materials stocks that dominate domestic indexes. Nine companies raised at least C$100 million ($77 million) each in initial public offerings year to date, with luxury jacket maker Canada Goose Holdings Inc. the best performer, gaining 59 percent from the offer price
• A longstanding dispute over softwood lumber shipments from Canada to the U.S. is likely to drag on, according to people closely following the saga, despite reports that a deal could be reached soon. Major hurdles remain before a new agreement would be possible, said a Canadian government official who asked not to be identified because they weren’t authorized to comment publicly on the subject.

 

World Headlines

• European stocks erased an earlier advance as losses in utilities countered gains in lenders that followed U.S. peers higher. The Stoxx Europe 600 Index fell 0.1 percent at 9:38 a.m. in London, after sliding in the past two sessions. Lenders led gains after U.S. peers including JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. announced surprisingly big payouts for shareholders after passing annual stress tests.
• Asian stocks rallied as financial shares across the region gained, tracking overnight increases in the U.S. as comments from central bank officials renewed the risk appetite of investors. The MSCI Asia Pacific Index climbed 0.6 percent as of 5:10 p.m. in Hong Kong, more than erasing a two-day slump. A regional gauge of financial stocks surged to the highest in almost two years as lenders from Japan to Australia rose.
• Oil headed for its longest winning streak in two months after declines in U.S. crude production and gasoline inventories allayed some concerns that world markets remain oversupplied. Futures rose as much as 1.1 percent in New York to the highest in two weeks after advancing 5.2 percent in the previous five sessions.
• Gold headed lower for the first time in three sessions as a rally in stocks sapped demand for havens.
• The pound rose for a seventh day versus the dollar, set for its longest winning streak since April 2015, after Bank of England Governor Mark Carney said Wednesday that the Monetary Policy Committee may need to raise interest rates despite a weakening economy.
• The Trump administration will introduce new restrictions on travel to the U.S. by refugees and migrants from six countries as of 8 p.m. eastern time Thursday, according to a person familiar with the matter. The rollout of the measures, which follows a U.S. Supreme Court decision Monday allowing parts of an executive order to proceed, is being led by the State Department.
• Samsung Electronics Co. announced investments worth $1.9 billion in two U.S. plants as South Korean President Moon Jae-in prepares for a summit with U.S. President Donald Trump. Samsung will spend $1.5 billion on its semiconductor factory in Texas and build a $380 million plant in South Carolina for home appliances. Both investments will be carried out until 2020, according to statements from the company and South Korea’s chamber of commerce.
• The Senate panel that authorizes defense expenditures has approved a $700 billion national security measure that would permit $60 billion of war spending, exceed President Donald Trump’s budget proposal and bust through budget caps.
• Sycamore Partners, the private equity firm that still has faith in retail, is making its biggest bet yet. On Wednesday, it agreed to acquire Staples Inc. for about $6.9 billion in one of the largest retail deals of the year, a wager that the office-supply chain can re-emerge as a modern seller of business services.
• What was supposed to be Europe’s largest gold mine may now turn into one of its biggest compensation battles as developer Gabriel Resources Ltd. seeks $4.4 billion from Romania for destroying the value of the long-stalled project. Gabriel will log the claim Friday with the World Bank’s international settlement arm, the company said in a statement Thursday.
• Cheap gasoline — the fruit of America’s shale bounty — is abundant enough to satisfy the U.S. and its southern neighbor, even in the midst of a Mexican supply crisis. Retail gasoline prices in the U.S. and Canada dropped to the lowest level of the year at a time when North Americans are typically driving more than ever.
• Carrefour SA’s Brazilian unit has filed for an initial public offering that may raise as much as 5.6 billion reais ($1.7 billion), inching closer to a long-planned transaction despite a recent decline in the country’s stock market.
• Unicaja Banco SA raised about 688 million euros ($783 million) in an initial public offering that turned into a test of confidence in Spanish banks after this month’s demise of a larger lender.
• Artificial intelligence may not be so threatening after all. Amid warnings of the economic disruption that robots and automation could unleash on the world economy as traditional roles disappear, researchers are finding that new technologies will help fuel global growth as productivity and consumption soar. AI will contribute as much as $15.7 trillion to the world economy by 2030, according to a PwC report Wednesday. That’s more than the current combined output of China and India.
• Siemens AG and Bombardier Inc. are exploring options including two rail joint ventures as part of their planned train-equipment tie up, according to people familiar with the matter.
• Oil trader Mercuria Energy Group Ltd. is planning to make an offer for all the shares of Andes Energia Plc it doesn’t already own, according to people with knowledge of the matter, giving it a foothold in one of the most prospective areas for shale oil and gas outside North America.
• Dismantling aging oil and gas fields in the U.K. North Sea could cost about 60 billion pounds ($78 billion), but it should be possible to do the job for much less, saving money for taxpayers and oil companies, the government watchdog said.
• Banks in Japan, South Korea and Australia rise as global central bankers signal that the cost of money is heading higher. Separately, every U.S. lender passed annual stress tests for the first time since the Fed began the reviews in the wake of the 2008 financial crisis.
• BHP Billiton Ltd. Chairman Jacques Nasser said the timing of its $20 billion spree into U.S. shale in 2011 was a misstep and that if the miner could turn the clock back it wouldn’t have invested in the assets. The comments from Nasser, who will pass over the chairman’s baton to its youngest director Ken MacKenzie on Sept. 1, follow similar remarks from Chief Executive Officer Andrew Mackenzie, who said in May the deals were poorly timed.
• Zhongyuan Bank Co., a lender based in central China’s Henan province, has set the terms for a Hong Kong initial public offering that could raise as much as $1.1 billion. The lender and existing investors are offering 3.3 billion shares at HK$2.42 to HK$2.53 apiece
• Delivery Hero AG is set to complete Germany’s biggest tech listing in three years, after pricing the highly awaited 996 million euro ($1.1 billion) initial public offering at the top end of its range.
• Developer China Vanke Co., whose founder Wang Shi last week announced his exit as chairman, agreed to pay 55.1 billion yuan ($8.1 billion) for land and other assets owned by a bankrupt Guangdong company, according to the state-run Xinhua News Agency.

 

*All sources from Bloomberg unless otherwise specified