March 21st, 2018
Daily Market Commentary
- Canada’s stock benchmark closed higher, boosted by technology and consumer discretionary shares, but failed to erase Monday’s tech-driven selloff. The S&P/TSX Composite Index added 27 points or 0.2 percent to 15,616.36. Technology shares were the biggest gainers as they rebounded from Monday’s decline, adding 1.8 percent. Shopify Inc. jumped 5.2 percent to a record high.
- Global Logistic Properties Ltd., a Singapore warehouse operator, plans to set up a joint venture with Brookfield Asset Management Inc. that will invest $2 billion over the next five years to develop rooftop solar projects in China, capitalizing on the country’s new-energy push. GLP and the Canadian alternative asset manager will have equal stakes in the venture, which will initially develop and operate the projects on rooftops managed by the Singaporean company, GLP Chief Executive OfficerMing Mei said in an interview in Shanghai. The venture plans to develop 300 megawatts of projects in the next three years and is targeting a development pipeline of 1 gigawatt.
- Zambia handed First Quantum Minerals Ltd. a $7.9 billion tax bill and said it’s planning an audit of other mining companies going back six years. The Canadian miner’s shares fell the most in almost two years. First Quantum received a letter from the Zambia Revenue Authority dated Monday “noting an assessment for import duties, penalties and interest on consumables and spare parts,” the Vancouver-based company said Tuesday in a statement. The southern African nation accounts for 84 percent of its revenue.
- Shares in Europe retreated and the dollar fell as traders await the Federal Reserve’s first policy decision since Jerome Powell took the helm. Treasuries steadies and oil touched a the highest in almost seven weeks. Miners and travel companies were among the biggest losers in the Stoxx Europe 600 Index, following a mixed performance in Asian equities. An index tracking the dollar’s value against trading partners dropped the most in two weeks.
- Asian stocks were mixed, paring an earlier advance before the Federal Reserve policy decision, as a rally in oil companies failed to maintain momentum even after a surge in the price of crude oil. The MSCI Asia Pacific ex-Japan Index dropped 0.2 percent at 583.65 as of 4:39 p.m. in Hong Kong as declines in healthcare stocks outweighed advances made by the region’s oil companies.
- Oil extended gains as investors assessed geopolitical risks with speculation that the U.S. president and Saudi Arabia’s crown prince discussed countering the influence of Middle East producer Iran. Futures rose 0.2 percent after climbing to the highest level in more than three weeks on Tuesday. Donald Trump hinted at a withdrawal from a deal curbing Iran’s nuclear program as a U.S. visit by Saudi Arabia’s Mohammed Bin Salman began. Such a decision would raise the risk of the OPEC member’s oil exports being curbed by sanctions. Meanwhile, industry data was said to signal an unexpected decline in American crude inventories last week.
- Gold rises as dollar slides ahead of Federal Reserve’s meeting later Wednesday to decide on U.S. rates, and which should provide clues on tightening path over remainder of year.
- U.K. wages are rising at their fastest pace since the end of 2016, signaling the yearlong squeeze on living standards is coming to an end. Basic wage growth accelerated to 2.6 percent in the three months through January, the Office for National Statistics said Wednesday, while faster increases may also lie ahead.
- Congressional Republicans missed another target to unveil a $1.3 trillion spending bill, as talks continued early Wednesday with just days remaining for House and Senate votes to avert a third government shutdown this year. Lawmakers had hoped to announce a bill by the end of the day Tuesday, but disagreements persisted over immigration, border security, tax breaks and a rail tunnel under the Hudson River between New York and New Jersey. Current government funding expires at the end of the day Friday. House Republicans had already delayed their planned vote by a day, to Thursday. Now, under current rules, a vote might not be held until Friday, leaving little time for the Senate to act. Otherwise, another stopgap spending bill would be needed to keep the government open.
- The tripling in lithium prices over three years is poised to fuel a multi-billion dollar rush of deals as major players jostle for dominance to supply the metal needed for the electric vehicle battery revolution. China’s expected to lead a mergers and acquisition bonanza as companies seek to wrest more control of the market from Western rivals. The Asian nation accounted for more than half of global electric vehicle sales last year, which exceeded 1 million for the first time. And that’s just a taster of what’s to come as the government targets 7 million vehicles by 2025.
- The Taiwan Stock Exchange asked BNP Paribas Securities if it can explain erroneous orders that knocked the country’s third-biggest stock down almost 10 percent at the close of trading Wednesday. The bourse operator said in a text message to Bloomberg News that it has asked the brokerage what caused the orders in shares of Formosa Petrochemical Corp. and how much they were worth. BNP is shown in data compiled by Bloomberg as having handled 26 times as much sell volume in the stock as any other broker.
- China’s regulators are seeking more protections for local companies before approving Qualcomm Inc.’s proposed purchase of NXP Semiconductors NV, according to people familiar with the matter, jeopardizing the U.S. chipmaker’s strategy for surviving as an independent company. China’s Ministry of Commerce isn’t satisfied with the remedies that Qualcomm has offered and has told the U.S. chipmaker to propose more, said the people, who asked not to be identified because the discussions are private. Many Chinese companies are lobbying the powerful ministry, arguing the deal will hurt them and should be blocked. They’re particularly concerned the combined entity would extend Qualcomm’s patent licensing business into the areas of mobile payments and parts for autonomous driving systems, the people said.
- China Southern’s unit Xiamen Airlines signed contract with Boeing to buy twenty B737-8 aircraft and ten B737-10 aircraft at base price of $3.24b in total, according to a statement to Shanghai stock exchange.
- Negotiations between the leaders of Italy’s two populist parties, ostensibly focused on appointing speakers for the new parliament, are prompting conversations about a broader agreement to form the next government, according to party officials. While Five Star’s Luigi Di Maio and the League’s Matteo Salvini work out how to allocate the key posts in the lower house and the Senate, the chances of a deal on governing are starting to rise, according to party aides who declined to be named discussing confidential talks.
- Telenor ASA agreed to sell its businesses in central and eastern Europe to Czech billionaire Petr Kellner’s investment firm PPF Group for 2.8 billion euros ($3.4 billion) as the Norwegian phone company focuses on markets in Asia and Scandinavia. Telenor will share some of the proceeds with its shareholders via a special dividend, the Fornebu, Norway-based company said in a statement Wednesday. The sale includes Telenor’s mobile operations in Hungary, Bulgaria, Montenegro and Serbia and the technology service provider Telenor Common Operation. The businesses contributed about 9 percent of Telenor’s revenues and 8 percent of profit last year, the company said.
- China boosted its hold on Middle Eastern crude supply in a $1.18 billion deal for stakes in two oil and natural gas concessions in Abu Dhabi. State-run China National Petroleum Corp. agreed to take 10 percent stakes in the Lower Zakum field and in the Umm Shaif and Nasr concession, Abu Dhabi National Oil Co. said Wednesday. The deal adds to the amount of crude CNPC produces in the United Arab Emirates after last year joining the partnership that pumps from the emirate’s biggest onshore fields. CNPC also produces at Iraq’s largest deposit, Rumaila.
- Vivendi SA is selling its 27 percent stake in French gamemaker Ubisoft Entertainment SA in a 2.01 billion euro ($2.46 billion) deal after its typical strategy of seeking creeping control failed to pan out. Under the deal announced Tuesday, Ubisoft’s founding Guillemot family will once again be Ubisoft’s top shareholder and will be joined by Tencent Holdings Ltd. and the Ontario Teachers’ Pension Plan as equity investors. Tencent will acquire about 5 percent of Ubisoft and the Canadian pension will gain a 3.4 percent stake. Vivendi can’t acquire any position in the Montreuil, France-based company for five years.
- Bayer AG cleared one big hurdle for its $66 billion takeover of Monsanto, winning European Union approval for the deal after agreeing to bolster BASF SE by selling it seeds, pesticides and digital agriculture technology. Bayer and BASF “need to provide further evidence” of BASF’s ability and incentives to build the business into an important competitor in order for BASF to get approval to buy the more than 6 billion-euro ($7.4 billion) package, the EU said. The EU didn’t specify a buyer for Bayer’s vegetable seeds unit. Bayer has suggested BASF should take it over.
- Abu Dhabi is combining two of its investment firms to create a wealth fund with assets of about $250 billion as the oil-rich emirate moves ahead with consolidation of state-controlled companies. Abu Dhabi Investment Council will become part of Mubadala Investment Co., according to state-run WAM news agency. The council’s incorporation into Mubadala is in line with Abu Dhabi’s efforts to accelerate economic diversification in the United Arab Emirates, said Mohammed Bin Zayed Al Nahyan, Abu Dhabi’s crown prince and chairman of Mubadala.
- Deutsche Bank AG is set to sell shares in its asset management division DWS near the middle of the proposed price range as it approaches the conclusion of the initial public offering. The lender narrowed the range to between 32 euros ($39.30) and 33 euros apiece, it said in a statement Wednesday, and had sought as much as 36 euros a share. The books are covered throughout the new range and will close Thursday at 2 p.m. CET, it said. DWS may now be valued at as much as 6.6 billion euros.
- Brazil’s growing economy, lower interest rates and leaner companies are leading investors to believe there is more upside for the Ibovespa — even after a record number of the companies beat fourth-quarter earnings estimates. Sixty percent of the companies on the benchmark index that have released results reported better-than-expected sales, according to Bloomberg data. And at least 16 of the 64 groups that comprise the index had record quarterly revenue, signaling the worst may be behind in Latin America’s largest economy. The good news should keep flowing, investors say.
*All sources from Bloomberg unless otherwise specified