May 3rd, 2016
Daily Market Commentary
- The Producer Price Index in the Eurozone was up 0.3% and down 4.2% in month-over-month and year-over-year terms, respectively. Both were above estimates.
- A manufacturing PMI figure for China was reported at 49.4, below estimates and below the key level of 50 which signals contraction.
- Front-month futures for WTI have risen 21% this year, but the recovery looks very different if you focus on the longer term. The five-year forward WTI contract fell 2.6% over the same period, reflecting the view that shale oil production could rebound as prices recover, capping any rally.
- Bullion has been on a tear, with futures last week posting the biggest advance in two months. Hedge funds missed the party, reducing their wages on a rally by the most since they turned bullish in January. The money managers were more fortunate when it came to silver, taking their holdings to the highest on record just before the metal had its best monthly advance since 2013.
- WestJet Airlines Ltd. reported a nearly 38% fall in quarterly profit at a time of economic weakness in oil-producing Alberta, where the airline mostly operates. (Globe)
- Canadian oil and gas producer Encana Corp. posted a bigger than expected quarterly loss due to lower production amid a steep fall in oil prices. (Globe)
- After almost two years of sinking oil prices and at least 40,000 job cuts, Canada’s petroleum industry still isn’t finished tackling its bloated operations. The next round of layoffs has already begun with Cenovus Energy Inc. and Murphy Oil Corp. announcing work force reductions last week. (Globe)
- Husky Energy Inc. has agreed to sell royalty interests in heavy oil properties in Western Canada for $163M, marking its second deal in two weeks. (Globe)
- U.S. stock futures are firmly in the Red, while European markets are all declining in early trading. (CNN)
- Major automakers including General Motors and Ford are set to report US auto sales data on Tuesday. Auto analysts at the Kelley Blue Book say sales last month may have hit record levels. (CNN)
- A range of big companies are reporting results this morning, including Sprint, Pfizer, New York Times, CVS Health, HSBC, Estee Lauder, Hyatt Hotels and Molson Coors Brewing. (CNN)
- European markets are all declining in early trading. Shares in European banks UBS and Commerzbank are taking a big hit after the firms reported worse-than-expected quarterly results. (CNN)
- Spaniards will be heading back to the polls six months after electing the most divided parliament in the country’s history. The ballot comes during a critical week in European politics with the UK voting on whether to leave the EU three days earlier and EU leaders gathering for a summit in Brussels on June 28.
- Most Asian stocks fell as Chinese manufacturing data that missed estimates dragged down mainland firms in Hong Kong, overshadowing an Australian interest-rate cut that drove shares higher in Sydney.
- Chinese firms are on a record-breaking shopping spree, snapping up foreign firms like never before. They have already announced a whopping $108.5B in foreign deals so far this year, topping the $106B total for the whole of last year, according to the research firm Dealogic.
- Puerto Rico was unable to make a $422M debt payment due Monday. It’s another alarm bell of how bad the situation is getting on the island. Governor Alejandro Garcia Padilla calls it a ‘humanitarian crisis’ which is a step above an economic emergency. He claims he is prioritizing paying police and teachers over Wall Street. This is the third time the island has defaulted on bond payments. They paid the interest due on Monday, but not the principal, resulting in a default of about $370M, its largest to date.
*All information is taken from Bloomberg, unless otherwise noted.