June 7th, 2018
Daily Market Commentary
- Canadian stocks staged a late-day rally, closing at the highest since Jan. 26, as health care and materials companies gained. The S&P/TSX Composite Index added 62 points, or 0.4 percent, after trading near or below the previous session’s closing price for most of the day. Cannabis stocks rose for a third day as the Canadian Senate prepares to voteThursday on legislation that would legalize the drug for recreational use. Aurora Cannabis Inc. was the biggest gainer, adding 13 percent to the highest since March.
- Ontario will vote in a new government Thursday after a tight election that offers two starkly different choices for Canada’s most populous province. Opinion polls show a neck-and-neck race pitting the left-leaning New Democratic Party with its platform of raising taxes to boost social spending, against the Progressive Conservatives, led by an irreverent populist promising to cut taxes. The incumbent Liberals, who have been in power since 2003, are staring at an historic defeat. The decision between the NDP’s Andrea Horwathand PC leader Doug Ford — comparisons toDonald Trump included — boils down to whether the province accelerates its tilt left after 15 years of increasingly progressive Liberal rule, or makes an about-face toward a smaller pro-business government and the spending cuts that may bring. Polls across the province will close at 9 p.m. Toronto time.
- European stocks and U.S. futures pared their gains on Thursday as the stellar rally in tech shares showed signs of easing. Treasuries added to recent losses, with 10-year yields crawling toward 3 percent. The Stoxx Europe 600 Index gave up much of its advance as the euro strengthened again and after disappointing data on euro-area exports and German factory orders.
- U.S. stock index futures were little changed, with Wall Street set to take a breather following recent gains that sent the S&P 500 to its highest level since mid-March, as investors turned their focus to trade issues ahead of the Group of Seven leaders summit in Quebec.
- Asian stocks rose, lifting the benchmark gauge toward its best week in almost four months, as investors bet on more robust global economic expansion, while signals from the European Central Bank on its quantitative easing program boosted Japanese stocks. The MSCI Asia Pacific Index rose 0.7 percent to 176.45 as of 4:15 p.m. in Hong Kong, extending its gain to 2.5 percent this week, set for the best such performance since Feb. 16. Benchmark stock gauges in Japan, Australia and Hong Kong rose and Philippine equities rallied the most in the region.
- Oil traded near $65 a barrel as investors searched for clues about OPEC’s next move on its supply curb agreement. Futures gained 0.7 percent in New York after falling 1.2 percent Wednesday following a surprise gain in U.S. crude stockpiles last week. The Organization of Petroleum Exporting Countries and its allies may fail to reach a consensus when they meet later this month as some producers push to revive supply and others oppose it, according to Sanford C. Bernstein & Co.
- Gold flat as stock market rally and higher bond yields curb demand, and failure to close above psychological level of $1,300/oz damps sentiment.
- China reiterated that it is willing to expand imports from the U.S. if the world’s two largest economies “meet half-way” in trade negotiations. The two countries had “deep and detailed” talks on agricultural and energy products last week, while those details are subject to confirmation, Gao Feng, a spokesman for the Ministry of Commerce, said at a regular briefing Thursday in Beijing. Gao said that China doesn’t want to escalate trade tensions with the U.S., and that boosting imports is an established strategy.
- The London Stock Exchange Group Plc resumed trading an hour late after its opening auction was delayed, the first major outage of its kind in seven years. Regular trading on LSE commenced at 09:00 U.K. time as the opening auction was postponed due to a technical issue that has been resolved, the exchange said on Thursday. The 217-year-old bourse operates one of Europe’s largest cash equity markets. LSE’s main equity market and Alternative Investment Market were among those affected.
- More than $1 billion a day. That’s the price tag for a Permian Basin pipeline crunch that’s increasingly affecting investors as much as it is West Texas oil drillers. Eight of the top explorers focused on the booming U.S. shale region have lost $15.6 billion in combined market value in about two weeks, as shipping constraints devour the profit they can fetch for a barrel of crude. Parsley Energy Inc. shares have wilted 16 percent in that time; Diamondback Energy Inc. has been defanged, down 18 percent.
- President Donald Trump will cut a lonely figure at a meeting of the world’s club for wealthy nations this week. From steel tariffs to Iran sanctions and climate change, the president will find himself isolated from other Group of Seven leaders at the summit in Quebec. The meetings on Friday and Saturday will be the first opportunity for America’s closest allies to express their frustration in face-to-face meetings with Trump after he imposed steel and aluminum tariffs last week. President Emmanuel Macron of France has warned that he will not sign the summit’s traditional joint statement unless progress is made on tariffs and other contentious issues, an official in his office said on Wednesday. Macron has concluded that other G-7 leaders must stand up to the American president, added the official, who requested anonymity in keeping with rules of the French president’s office.
- Atlassian Corp. has added almost $1 billion in market value since Microsoft Corp. confirmed Monday it was buying GitHub for $7.5 billion, a move that initially spooked investors about the possibility of tougher competition. It turns out the deal may actually bolster Atlassian’s Bitbucket business, which competes with GitHub in the business of storing code for companies and software developers. Monday was Bitbucket’s best day ever in terms of new user sign ups, according to Sean Regan, head of growth for software teams at Atlassian.
- Google faces fines for hindering competition with its Android mobile phone system as European Union antitrust watchdogs get ready to add to last year’s record 2.4 billion-euro ($2.8 billion) penalty against the U.S. tech giant, according to people familiar with the case. The EU is in the final stages of the Android probe and could issue a fine as soon as July, according to the people, who spoke on condition of anonymity because the process isn’t public. The Alphabet Inc. unit also risks potential penalties in two other cases, they said.
- Equity investors in China are taking a flyer on a strategy that hasn’t worked in years, speculating small caps will soar on the country’s sweeping plans to invigorate its fastest-growing firms. China’s three most popular exchange-traded funds in 2018 all track smaller stocks, luring some $3 billion in net new assets, data compiled by Bloomberg show. While that’s a tiny slice of the nation’s $7.4 trillion equity market, it’s nearly 60 percent of all the cash that’s gone into stock funds trading in Shanghai or Shenzhen, according to the data.
- GCL-Poly Energy Holdings Ltd. surged the most in almost three years after it announced plans to sell a majority stake of a polysilicon unit to Shanghai Electric Group Co. in a deal that could be valued at almost $2 billion. The world’s biggest maker of solar wafers jumped as much as 21 percent Thursday after saying it reached a framework agreement to sell 51 percent of Jiangsu Zhongneng Polysilicon Technology Development Co. to the Chinese utility. The entire unit is valued at as much as 25 billion yuan ($3.9 billion), according to the companies.
- Donald Trump and Congressional Democrats will be in court Thursday sparring over whether he’s personally profiting from his presidency. A group of almost 200 Democrats say he is because he’s decided to hang on to his global business holdings — enabling him to make money by doing business with foreign governments in violation of the U.S. Constitution’s foreign emoluments clause. Trump says they’re wrong and plans to ask a judge Thursday to throw the year-old case out of court.
- Afghanistan’s President Ashraf Ghani announced a rare and temporary ceasefire with the Taliban after the country’s Islamic Council this week issued an edict that forbade suicide bombing and had urged the group to join peace efforts. “The Government of the Islamic Republic of Afghanistan announces ceasefire from the 27th of Ramadan until the fifth day of Eid-ul-Fitr,” Ghani said on Twitter on Thursday, referring to the end of the holy Islamic month. It’s Ghani’s first offer to halt hostilities since he came to power in 2014. He urged the Taliban to use this opportunity to realize “their violent campaign is not winning them hearts and minds but further alienating the Afghan people from their cause.”
- HNA Group Co. sold a Minneapolis office tower to a unit of South Korea’s Samsung Group for $320 million, according to a person familiar with the matter. The building at 33 South Sixth Street, which counts Target Corp. as its biggest tenant, was sold to Samsung SRA Asset Management for about $5 million more than what HNA paid for less than two years ago, the person said, asking not to be identified discussing a private matter.
- A BNP Paribas SA executive fired after 36 years won 812,500 euros ($960,000) in a French employment lawsuit after the bank put him on a “blacklist” to appease American authorities during their probe into sanctions violations that led to $9 billion in penalties. Philippe de Gentile, former head of structured finance in the bank’s Geneva office, should get 450,000 euros in compensation for being dismissed without cause, a judge at the Paris employment tribunal said in a ruling released Thursday. Another 362,500 euros was awarded to make up for demands linked to his retirement plan, lost opportunities to buy shares and legal costs.
- Go-Jek, the Indonesian ride-hailing provider, has been offered at least $1 billion of new funding from existing investors eager to accelerate its overseas expansion, people with knowledge of the matter said. Current backers including Tencent Holdings Ltd., China’s biggest internet firm, and Warburg Pincus have informally discussed providing more funding to ensure Go-Jek’s first forays outside its home market are successful, according to the people. Go-Jek hasn’t decided whether it wants the additional capital, the people said, asking not to be identified because the information is private.
- Deutsche Bank AG is cutting onshore sales and derivatives coverage in individual markets across Asia-Pacific as part of a restructuring of its equities business in the region, according to a person familiar with the matter. The move will involve unspecified staff reductions, the person said, requesting anonymity because the changes haven’t been announced. The German bank plans to focus on its larger clients and its electronic equities business in the region, according to an internal memo seen by Bloomberg News.
*All sources from Bloomberg unless otherwise specified