March 23rd, 2018
Daily Market Commentary
- Canadian stocks fell the most since September 2016 but still managed to outperform U.S. benchmarks amid the growing threat of a trade war with China. The S&P/TSX Composite Index fell 275 points or 1.8 percent to 15,399.93, the lowest close in nearly three weeks. Consumer discretionary shares tumbled 2.4 percent as auto suppliers retreated in the face of renewed trade threats. Magna International Inc. lost 5.4 percent and Linamar Corp. fell 4.4 percent.
- Alberta is looking beyond its oil industry as it works to end years of red ink. Still, a recovery to balanced budgets is a long ways off. Canada’s top oil-producing province on Thursday projected a narrower budget deficit next year, despite declining revenue from non-renewable resources. While it expects that revenue stream to rebound in future years, by the time the province returns to balanced budgets in six years, it will mark a smaller share of the government’s revenue than historical averages.
- U.S. President Donald Trump may be helping to revive Canada’s dream of a liquefied natural gas export industry to supply growing markets in Asia. The tariffs Trump formally ordered against $50 billion in Chinese goods threaten to raise construction costs for LNG projects in Texas and Louisiana, providing a leg up to rival projects on Canada’s Pacific Coast. With a global gas glut tightening faster than expected, Royal Dutch Shell Plc and its partners in a proposed British Columbia complex are closing in on a final investment decision.
- Stock declines deepened globally on Friday, with European equities sliding to the lowest in more than a year and gauges tumbling across Asia as the negative news cycle for risk assets continued. The Stoxx Europe 600 Index fell for a third day after equity indexes from Tokyo to Shanghai tumbled well over 3 percent.
- U.S. stock futures slipped further after the S&P 500 Index closed down 2.5 percent, the most in six weeks. Adding to the image of the ascendance of the “America first” faction, Trump said he is replacing White House National Security Adviser H.R. McMaster with John Bolton, a controversial foreign-affairs specialist whom the U.S. Senate declined to confirm as President George W. Bush’s ambassador to the United Nations.
- Asian shares erased all of their gains for 2018 as a trade war between the U.S. and China dimmed the outlook for global economic growth. The MSCI Asia Pacific Index fell 2.6 percent to 171.99 as of 4:13 p.m. in Hong Kong, giving up year-to-date gains, after China announced plans for reciprocal tariffs on $3 billion of imports from the U.S. in the first response to President Donald Trump’s ordering of levies on Chinese metal exports.
- Oil advanced on concerns that the U.S. president’s choice of a noted hawk as his new security adviser could inflame political tensions in oil-producing regions. President Donald Trump’s plans to appoint hardliner John Bolton as White House national security adviser raises the likelihood the U.S. will re-impose sanctions on Iran, the third-largest oil producer in the Middle East, analysts say. Prices are headed for their biggest weekly gain in a month, despite slumping Thursday after Trump’s call for tariffs on at least $50 billion of Chinese imports fanned worries about global economic growth.
- Gold heads for biggest weekly gain in five as investors seek havens on concerns that a trade war will hurt global growth after President Donald Trump imposes tariffs on China and the latter fires back with reciprocal levies.
- The trade conflict between China and the U.S. escalated, with Beijing announcing its first retaliation against metals levies hours after President Donald Trump outlined fresh tariffs on $50 billion of Chinese imports and pledged there’s more on the way. On Friday, China unveiled tariffs on $3 billion of U.S. imports in response to steel and aluminum duties ordered by Trump earlier this month. The White House then declared a temporary exemption for the European Union and other nations on those levies, making the focus on China clear. Though Beijing’s actions so far are seen by analysts as measured, there may be more to come.
- The Senate narrowly averted a government shutdown by passing a $1.3 trillion spending bill early Friday that increases military and domestic spending and strengthens background checks for gun buyers. The 65-32 vote came after Republican conservatives objected to the higher spending and Republican Rand Paul of Kentucky held open the possibility that he’d delay the vote past a Friday midnight deadline that would have triggered a cloture.
- GlaxoSmithKline Plc investors are getting their hopes up the U.K. pharmaceutical company won’t have to resort to cutting its dividend now that it has withdrawn from bidding for Pfizer Inc.’s consumer-health unit, a deal that might have cost it as much as $20 billion.
- Binance, the world’s largest cryptocurrency exchange by traded value, is seeking a fresh start in the Mediterranean. The company, founded last year in Hong Kong, is planning to open an office in Malta, Chief Executive Officer Zhao Changpeng said in an interview. Binance will soon start a “fiat-to-crypto exchange” on the European island nation, and is close to securing a deal with local banks that can provide access to deposits and withdrawals, he said, without providing a timeframe.
- To get a picture of how PPF Group NV’s arrival might shake up the telecommunications markets in Hungary and the Balkans, look at what it did in the Czech Republic. The private financial group of Petr Kellner, the richest man in the European Union’s east with a $12.6 billion fortune, will lock horns with industry heavyweights such as Deutsche Telekom AG, Vodafone Group Plc and Telekom Austria AG. While a relative newcomer in the industry, local analysts and officials said it should bring a penchant for experimentation, a war chest to invest while controlling costs and an understanding of the former communist markets.
- Daniel Ek, Spotify Technology SA’s co-founder and chief executive officer, was in a celebratory mood on Feb. 28, the day his streaming music company filed to go public on the New York Stock Exchange. And like any modern CEO with faith in technology to reorganize the world, he celebrated by threatening anyone who stands in his way. Spotify, he wrote to investors, will render record labels and publishers obsolete by connecting artists directly to fans. “The old model favored certain gatekeepers,” he said, but today “artists can produce and release their own music.”
- New York City’s population reached a record high last year of over 8.6 million and has climbed 5.5 percent since 2010, according to a Department of City Planning analysis of new Census Bureau population estimates. There were 8,622,698 people in the city last year, 447,565 more than were counted in the 2010 census. City demographers said the new total was the culmination of an average annual gain not seen since the first half of the 20th century, when the city became dominant in everything from finance to culture and communications — and also had strong manufacturing and shipping sectors with thousands of jobs.
- Meituan Dianping, the Chinese food reviews and delivery giant backed by Tencent Holdings Ltd., has begun discussions on a Hong Kong initial public offering as soon as this year, according to people familiar with the matter. The company is weighing a valuation of at least $60 billion and is considering a listing in China as well if policy conditions allow, the people said, asking not to be named because the matter is private. Discussions however are at a preliminary stage and deal details could change, they added. Meituan declined to comment.
- Galaxy Entertainment Group. Ltd. agreed to buy a stake in Wynn Resorts Ltd., in a surprise move linking two of the biggest operators in Macau and Las Vegas that could reshape the gaming landscape in the Chinese territory. The investment comes as Steve Wynn separately sold his remaining 8 million shares in Wynn Resorts, eliminating one of his last ties to the casino company he founded after quitting last month amid sexual harassment allegations. Wynn Resorts sold 5.3 million newly issued shares of common stock to Galaxy, giving the competing Macau casino operator an estimated 5 percent stake in the company, according to a statement Thursday. The new shares were sold at close to market price at $175 each, for a total of about $927.5 million.
- MTN Group Ltd.’s Ghanaian unit lifted its target for an upcoming initial public offering by more than a half to 3.48 billion cedis ($787 million), according to two people familiar with the matter. Africa’s biggest mobile-phone company by subscribers is preparing to list a 35 percent stake in its Ghanaian business on the local stock exchange, valuing the unit at about $2.2 billion. While the bourse estimated the value of the stake at about 2 billion cedis in February, the assessment was raised after a fresh valuation of the company, said the people, who asked not to be identified because they’re not authorized to speak publicly about the matter.
- Jerome Powell dissed the dots when he was a Federal Reserve governor. Now he’s doing the same as central bank chairman. In his first press conference since taking over as Fed chief, Powell advised investors against reading a lot into the central bank’s dot-plot projection for interest rates in 2020, saying policy makers “don’t have the ability to see that far into the future.”
- Jindal Steel & Power Ltd., the Indian steelmaker controlled by billionaire Savitri Jindal’s family, plans to sell stakes in overseas businesses to help reduce debt by 29 percent by fiscal 2020. The firm is in talks with investment banks about selling as much as 30 percent of its Oman unit, which operates a 2 million metric-tons-a-year steel plant, in about a year, Chief Financial Officer Deepak Sogani said in a phone interview. The sale, in addition to offloading stakes in African and Australian coal mines, should help cut debt by $2 billion, to $5 billion in two years, he said.
*All sources from Bloomberg unless otherwise specified