March 2nd, 2018
Daily Market Commentary
- Canadian stocks fell further after posting their worst month since December 2015, with consumer discretionary and industrials losing the most ground. The S&P/TSX Composite Index fell 49 points or 0.3 percent to 15,393.95, the lowest close in more than two weeks. Consumer discretionary stocks led the decline, losing 1 percent with Magna International Inc. down 2.7 percent.
- Canada is vowing to retaliate if U.S. President Donald Trump makes good on his pledge to impose steep tariffs on steel and aluminum producers — while holding out hope that it could be exempt. Trump said he intends to slap a 25 percent duty on steel imports and 10 percent on aluminum in order to protect the national industry, though details remain unclear. His words sent U.S.-based producers rallying but could hurt companies that ship steel and aluminum from Canada, including Rio Tinto Group and Stelco Holdings Inc., without an exemption.
- SNC-Lavalin Group Inc. expects to bolster margins in its mining and metals business as soon as this year amid a rebound in commodities such as copper and fertilizers. A pickup in demand will help Canada’s biggest engineering and construction company boost earnings before interest and taxes in the sector to 7 percent of revenue over time, Jose Suarez, who runs the mining unit, said this week. EBIT fell to 4.7 percent of revenue last year — the worst performance among SNC’s five engineering and construction units.
- European stocks fall for a fourth day as U.S. President Donald Trump’s vow to impose tariffs on foreign steel and aluminum spark worries about a potential trade war. The Stoxx Europe 600 Index drops 0.7%, with carmakers and tech stocks leading a broad decline across industry groups.
- U.S. index futures point to a lower open following Asian and European equities after a selloff sparked by President Donald Trump’s promise to impose tariffs on foreign metal imports. Geopolitical concerns about a potential global trade war persist as Europe pledged to respond “firmly” to any new tariffs and Canada called the measures unacceptable.
- Asian stocks headed for a four-day drop as the U.S. rattled the region’s investors with the risk of higher interest rates and a trade war. The MSCI Asia Pacific Index slid 0.8 percent to 174.30 as of 2:01 p.m. in Hong Kong, extending its losing streak to the longest since last month’s market correction.
- Oil is set for the first weekly decline since early February as fears over booming shale output mingled with a broader selloff in risk assets as U.S. President Donald Trump’s tariffs threatened to spark a global trade war. Futures in New York slipped 0.4 percent, putting them on course for a 4.5 percent drop this week. U.S. oil production reached a record of more than 10 million barrels a day in November, government data showed this week. Equities fell across the globe after Trump said he’ll impose tariffs on steel and aluminum imports to protect national security.
- Gold set for fourth weekly loss in five as investors weigh comments from Federal Reserve Chairman Jerome Powell, who pushed back against notion U.S. economy is close to overheating, and President Trump’s vow to impose stiff tariffs on steel and aluminum.
- Iron ore’s getting caught in the crossfire from Donald Trump’s pushback against overseas steel. Futures sank on Friday after the U.S. president vowed to slap steep tariffs on imports, a move that could pressure mills in Asia and end up hurting steel prices in the top-producing region.
- On a day when U.S. economic tailwinds were highlighted by the new Federal Reserve chairman and evident in several reports, President Donald Trump decided to add a headwind. Trump said on Thursday the U.S. will impose tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time.” Stocks and Treasury yields tumbled on concern that the move could spark a trade war and hold back the economy, with shares of big exporters such as Boeing Co. and United Technologies Corp. among those hit hard.
- Helios Towers Plc, one of the largest sub-Saharan telecommunications tower operators, plans an initial public offering in early April to let shareholders such as Soros Fund Management LLC reduce their stakes. Helios plans to sell shares in London and Johannesburg, the company said in a statement Friday. Helios expects at least 25 percent of its shares will be freely traded after the sale, and it’s not selling any new stock.
- Total SA bought Marathon Oil Corp.’s assets in Libya for $450 million, a rare expansion in the war-torn North African nation by a major international company. Total adds the Libyan assets to a string of recent acquisitions, including the $7.45 billion purchase of A.P. Moller-Maersk A/S’s oil unit and a $1.95 billion offshore deal in Brazil. The agreement represents a vote of confidence in the North African country, which has struggled to maintain its oil production amid years of political turmoil.
- The world’s biggest steelmaker, ArcelorMittal, and Japan’s top mill will form a partnership to bid for Essar Steel India Ltd., the insolvent producer that could fetch at least $6 billion. Arcelor and Nippon Steel & Sumitomo Metal Corp. said in a statement they have joined the bidding for Essar, which is on the block after entering an Indian government-mandated process designed to clean-up companies that can’t repay their debts.
- The biggest problem with President Trump’s steel and aluminum tariffs isn’t what they’ll do to the price of a can of beer, which is made from aluminum, or a gallon of gasoline, which is extracted, refined, and delivered by an infrastructure of steel. Nor is it the risk of retaliation by China, which has launched a probe into imports of sorghum from the U.S. and is studying whether to cut back on American soybeans. The biggest problem is the precedent the tariffs set. The U.S. is invoking national security to bust out of the delicate web of trade agreements that it’s spent decades carefully spinning. The World Trade Organization is far from perfect, but if countries begin to ignore it and start slapping high tariffs and quotas on one another, global trade growth could shudder to a halt. That would harm everyone.
- Earlier this year, when Bitcoin’s price fell by more than 60 percent from its record close, a less-noticed Bitcoin figure also plunged: the number of daily transactions. There are many explanations for the fall-off in trading, from software- to news-related. What’s less understood is why the level hasn’t recovered as Bitcoin’s price made a 50 percent comeback since Feb. 5. That’s left some investors wondering whether the cryptocurrency is waning in popularity. The average number of trades recorded daily has roughly dropped in half from the December highs and touched its lowest in two years last month, even as Bitcoin became a household name and roared back to near $11,000.
- Theresa May will tie herself to a promise that leaving the European Union won’t destroy jobs, in a big Brexit speech that her divided Cabinet was haggling over until the eve of its delivery. EU leaders want May to be realistic and stop pretending — as they see it — that the U.K. can “cherry pick” the benefits of membership without accepting the responsibilities.
- HNA Group Co. put its $1.4 billion stake in Park Hotels & Resorts Inc. up for sale, the latest in a slew of asset disposals that have emerged as the embattled Chinese conglomerate scrambles to repay its mounting debts. The sale could involve some or all of HNA’s 53.7 million shares, with any disposal being subject to market conditions, according to a regulatoryfiling in the U.S. HNA bought a quarter of Hilton Worldwide Holdings Inc.and two spinoffs — Park Hotels and Hilton Grand Vacations Inc. — fromBlackstone Group LP last year for about $6.5 billion. Those stakes are valued at more than $9 billion today.
- Linde AG and Praxair Inc., awaiting regulatory approval for their combination, have started the sale of European and U.S. industrial gas assets that may fetch about $8 billion, according to people with knowledge of the matter. The portfolio is attracting interest from rivals such as Air Liquide SA, Air Products & Chemicals Inc., Germany’s Messer Group GmbH and Taiyo Nippon Sanso Corp.’s Matheson Tri-Gas unit, said the people, who asked not to be identified because the talks are confidential. Private equity firms including KKR & Co. and Carlyle Group LP are also weighing bids, they said. Buyout firm CVC Capital Partners is working with Germany’s Messer, they said.
- SlimFast Foods Co.’s owner is considering a sale of the weight-loss business, almost four years after the private equity firm bought it from Unilever Plc, people with knowledge of the matter said. Dallas-based Kainos Capital is working with investment bank Harris Williams to run an auction process for SlimFast, said the people, who asked not to be identified because they weren’t authorized to speak publicly. A sale is expected to value the company at about $400 million and is attracting interest from other buyout firms, the people said.
- Global banks are pushing ahead with growth plans in Saudi Arabia four months after a crackdown on corruption threatened to derail ambitious plans to transform the economy. Lenders including UBS Group AG and Goldman Sachs Group Inc. have been hiring and Citigroup Inc. just won its first local advisory mandate since returning to Saudi Arabia after a 13-year absence. Deutsche Bank AG said it’s expanding in the kingdom as the outlook for bond and stock sales improves.
- Climate change is critical to future energy markets but its effect on Chevron Corp.’s oil and gas business will be minimal for decades to come, the company said in a report Thursday. With the prospect of tighter emission controls, carbon pricing and growth in renewable energy, some investors and activists are pushing companies to reveal the potential impact on their businesses. The risk for shareholders is that some projects become loss-making as the demand for oil and gas ebbs.
- Tianqi Lithium Corp., the Chinese miner pursuing a $4 billion stake in one of the world’s largest lithium producers, is weighing a Hong Kong share sale, according to people with knowledge of the matter. The company, which already trades in Shenzhen, is considering seeking as much as $500 million from a share sale in Hong Kong this year, the people said, asking not to be identified because the information is private.
- The Pentagon is preparing options for a possible new job for National Security Adviser H.R. McMaster, an army lieutenant general who has clashed with President Donald Trump, fueling speculation that McMaster will soon leave his current position. White House chief of staff John Kelly recently asked the Defense Department about potential military positions for McMaster, a White House aide said. Military leaders are looking for an opening for him, with an eye toward a command in which he would receive a fourth star, a promotion from his three-star rank, said a former military official with knowledge of the Pentagon’s efforts.
- Four Wells Fargo & Co. board members, including its three longest-serving directors, plan to retire next month as pressure mounts for new oversight in the 18-month-old scandal. Federico F. Pena, Lloyd H. Dean, Enrique Hernandez Jr. and John S. Chenwill leave at the company’s annual shareholder meeting on April 24, the San Francisco-based lender said Thursday in a statement. The move wasn’t enough to appease some of the bank’s most prominent critics, who’ve demanded the board push out all members who were on the panel when employees created as many as 3.5 million fake accounts.
*All sources from Bloomberg unless otherwise specified