May 1st, 2019
Daily Market Commentary
- Canadian Headlines
- Canadian stocks pared most of their earlier losses and ended Tuesday’s trading session mostly negative-to-flat. The record rally from Shopify helped the index rise and pushed the technology sector up, while health care and energy stocks underperformed. The S&P/TSX Composite Index fell 0.12 percent to 16,580.73. Technology gained the most, as Shopify extended its market-leading rally with another strong quarter. Health care sector was the worst performing sector, mostly led by pot stocks.
- World Headlines
- European stocks eased as Danske Bank’s woes weighed on banking stocks and commodities-related sectors also declined, while investors readied themselves for economic growth figures on a jam-packed earnings day. Europe’s Stoxx 600 index was down 0.1 percent at 8:15 a.m. in London. Danske Bank dropped 6.6 percent after cutting its outlook, and miner Glencore dropped 3 percent after lowering its 2019 production forecasts for copper. On the positive side, Standard Chartered jumped 4.2 percent after announcing a $1 billion buyback with its first-quarter results, while BP advanced 0.9 percent after hitting targets for first-quarter profit estimates.
- U.S. equity futures advanced on Wednesday following an upbeat forecast from Apple Inc. and as holidays in much of Asia and Europe weighed on trading. Treasuries and the dollar were in a holding pattern ahead of the Federal Reserve’s policy decision. Contracts on the S&P 500, Nasdaq 100 and Dow Jones Industrial Average all rallied after Apple’s sales forecast topped analyst projections. That points to a rebound for American technology shares, which had slumped in the wake of Alphabet Inc.’s revenue miss.
- Oil retreated amid signs of a sharp increase in U.S. crude inventories and concerns over the strength of economic growth in China. Futures in New York fell as much as 1.3 percent after rising 0.7 percent Tuesday. The American Petroleum Institute was said to report U.S. stockpiles jumped 6.81 million barrels last week, much more than government data due Wednesday is forecast to show. A gauge of manufacturing in top crude importer China fell in April, highlighting the toll a trade war between Beijing and Washington is taking on the world’s No. 2 economy.
- Gold steadied as U.S. equity futures advanced and investors awaited the Federal Reserve’s rate decision. Trading volumes were thin due to holiday closures in much of Asia and Europe. The main focus will be on Fed Chairman Jerome Powell’s press conference later Wednesday, with officials expected to keep interest rates on hold and express concern over muted inflation. The S&P 500 Index closed Tuesday at a record and corporate earnings and developments in the trade conflict between U.S. and China remain front and center for global markets.
- Uber Technologies Inc. has demand for all of the shares offered in its initial public offering days after it began marketing the sale, people familiar with the matter said. The initial investor feedback comes after Uber kicked off its IPO roadshowwith meetings in London on Monday, the people said, asking not to be identified because the discussions were private. Uber met potential buyers in New York Tuesday and will head to cities including Boston and San Francisco as it seeks to raise as much as $9 billion in its IPO next week in what will be the biggest listing of the year so far.
- Federal Reserve policy makers may decide Wednesday that falling inflation reinforces a message of caution on interest-rate moves, rather than bowing to President Donald Trump’s demands for drastic action to boost the U.S. economy. The Federal Open Market Committee is all but certain to hold interest rates steady at the close of a two-day meeting in Washington and repeat in its policy statement at 2 p.m. that the central bank will be patient in making future moves.
- China took another step in opening its $44 trillion financial sector to the world, announcing plans to remove limits on ownership in local banks and scrap size requirements for foreign firms that operate onshore. Among the changes, overseas insurance groups will be allowed to set up units in the world’s second-biggest economy, the China Banking and Insurance Regulator said on Wednesday as high-level trade talks between China and the U.S. got underway in Beijing.
- U.K. manufacturing growth slowed in April as firms dialed back Brexit-related stockpiling and new export business fell. IHS Markit’s Purchasing Managers Index for the sector dropped from a 13-month high as production growth also slowed and job losses in the industry mounted. While companies continued to build up stockpiles to guard against Brexit risk, the delay to U.K.’s departure meant they did so to lesser extent than in previous months, according to the survey.
- A metals manufacturer faked test results and provided faulty materials to NASA, causing more than $700 million in losses and two failed satellite launch missions, according to an investigation by the U.S. space agency. The fraud involved an Oregon company called Sapa Profiles Inc., which falsified thousands of certifications for aluminum parts over 19 years for hundreds of customers, including NASA. The bad parts were used in the making of Taurus XL, a rocket that was supposed to deliver satellites studying the Earth’s climate during missions carried out in 2009 and 2011. The launch vehicle’s fairing, a clamshell structure that carries the satellite as it travels through the atmosphere, didn’t fully open, causing the unsuccessful launch, according to a statement from NASA.
- London Heathrow, Europe’s busiest airport, overcame an attempt by environmental groups to block construction of a third runway that it says is needed to boost flights and compete with rival hubs trying to steal its traffic. Construction can go ahead after judges on Wednesday threw out lawsuits from Friends of the Earth, London Mayor Sadiq Khan and other groups seeking to challenge the U.K. Government’s approval of the plan.
- WeWork Cos. gets a lot of headlines for its breakneck expansion into new markets, and that’s only likely to increase now that it plans to go public. Yet the nine-year-old company faces stiff competition in Europe from established work-space providers like IWG Plc and local startups. The number of serviced and co-working offices across Europe has ballooned by more than 200 percent in the last five years, according to a report by real estate broker Colliers International Group Inc. WeWork has helped to drive this growth: it has nearly 50 locations in London and has added sites from Manchester to Moscow.
- Apple Inc. executives had a clear message for investors on Tuesday: Demand for iPhones has begun to recover from a bruising holiday period. The Cupertino, California-based company reported iPhone sales of $31 billion in the fiscal second quarter, slightly better than analysts expected. Apple’s projection for revenue in the current period also topped Wall Street estimates, and could result in the first sales increase in three quarters. Shares jumped 5.5 percent in pre-market trading in New York. Apple has rallied by 27 percent year to date, after dropping from a peak over the last quarter of 2018 as iPhone sales lagged.
- CVS Health Corp. boosted its profit outlook after posting stronger-than-expected first-quarter results, an encouraging sign for the health giant after it earlier signaled that 2019 could be a tough year. The company now expects adjusted earnings per share this year of $6.75 to $6.90, higher than the $6.68 to $6.88 that it had earlier forecast.
- Attorney General William Barr will face new scrutiny from lawmakers on Wednesday after a revelation surfaced that he misrepresented Special Counsel Robert Mueller’s findings about whether President Donald Trump obstructed justice. Mueller contacted Barr to express his displeasure after Barr issued a four-page letter in March characterizing the main findings of Mueller’s investigation into Russian interference in the 2016 election, the Justice Department confirmed late Tuesday, less than a day before the attorney general’s scheduled appearance before the Senate Judiciary Committee.
- Democrats and Republicans are quick to talk up a bipartisan infrastructure deal. Yet neither party wants to take the political risk of paying for it when all options are toxic — including the obvious choice of raising the national gas tax. Increasing the gas tax is so politically fraught that it hasn’t been touched in 26 years and it didn’t even come up at a meeting at the White House Tuesday between President Donald Trump, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer to discuss an infrastructure plan.
- Facebook Inc. Chief Executive Officer Mark Zuckerberg stood on stage Tuesday at the company’s annual F8 conference in San Jose, California, in front of a giant screen sharing a simple message: “The future is private.” Zuckerberg spent most of his speech talking about Facebook’s commitment to a privacy-focused future, which will include more ephemeral posts, small-group activity rather than public sharing, and encryption for Facebook’s messaging apps. But there was an easy way Facebook could have shown its commitment to privacy that would have saved Zuckerberg some time: by rolling out “Clear History,” a feature Facebook promised a year ago that will let people disassociate their internet-browsing histories from their Facebook profiles.
*All sources from Bloomberg unless otherwise specified