November 15th, 2017
Daily Market Commentary
- It’s back to the table time for Nafta negotiators after a month long breather in the talks, which broke up last time amid stark differences between the countries. The fifth round of talks begins in Mexico City on Wednesday before chief negotiators from the U.S., Canada and Mexico arrive Friday for work that will continue through Nov. 21. At last month’s round, the parties extended talks through March, abandoning a December deadline, after the U.S. introduced its toughest proposals that were essentially rejected by Canada and Mexico.
- BYD Co., the Chinese electric-vehicle maker backed by Warren Buffett, plans to open its first assembly plant in Canada, anticipating a surge in demand for electric trucks from municipalities and businesses. BYD, often described as China’s Tesla, will open the plant next year in Ontario and hire about 40 people to start.
- European stocks fall in brisk volumes, with basic resources and energy stocks falling the most on the back of weaker commodity prices, as investors assess the global equity pull-back. The Stoxx Europe 600 Index retreats 0.6% to a near two-month low, breaking below its 200-day moving average for the first time since early September.
- S&P 500 futures fell 0.5 percent. A cautious tone settled into markets in recent days as new obstacles emerged to the U.S. overhauling taxes and after many stock gauges approached record highs. Attention now turns to data coming Wednesday on U.S. consumer prices and retail sales for clues on the strength of the world’s largest economy after the flattest American yield curve in a decade raised concern that growth will slow.
- Asian equities fell, with the regional benchmark poised for its steepest four-day decline this year, as a slump in commodity prices weighed on materials and energy producers shares. The MSCI Asia Pacific Index dropped 1 percent to 167.97 as of 4:36 p.m. in Hong Kong, with material and energy sub-gauges each down at least 1.7 percent.
- Oil fell for a second day to trade near $55 a barrel as U.S. industry data showed an unexpected jump in crude stockpiles. Futures lost as much as 1.3 percent in New York after falling 1.9 percent on Tuesday. U.S. inventories rose by 6.51 million barrels last week, the American Petroleum Institute was said to report. That would be the biggest gain since March if confirmed in government data on Wednesday.
- Gold advances for third day as stocks drop, with investors weighing uncertainty over U.S. tax reforms and awaiting release of inflation data due Wednesday.
- AT&T Inc.’s $85.4 billion bid for entertainment titan Time Warner Inc. is where few imagined it would end up — hurtling toward a make-or-break moment in Washington with a pro-business Republican administration that shows signs it may reject the deal. Dallas-based AT&T is fighting an increasingly public battle with Justice Department antitrust officials, who have questioned whether the combined company would wield too much power.
- Airbus SE announced the biggest commercial-plane transaction in its history, securing an order for single-aisle aircraft valued at nearly $50 billion at the Dubai Air Show, outdoing Boeing Co.’s own $20 billion mega-deal. Wednesday’s pact for 430 A320neo planes with U.S. investor Indigo Partners marked a turnaround for Airbus at the Gulf expo, where it had been trailing its rival.
- Tencent Holdings Ltd. posted its strongest growth in more than seven years, riding the success of games like Honour of Kings and a rapidly expanding internet advertising business. China’s largest social network operator reported a 61 percent rise in revenue to 65.2 billion yuan ($9.8 billion) in the September quarter, outpacing the 61 billion yuan projected. That also marked the biggest gain in sales since 2010, when revenue was a mere one-fourteenth of its current level. Profit also beat estimates.
- China is planning to allow foreign borrowers to adopt U.S. generally accepted accounting principles in financial reports when selling yuan-denominated bonds in the country, to promote further opening of the financial market, people familiar with the matter said. The central bank and the finance ministry have reached agreement on the issue, according to the people, who asked not to be identified. Issuers may also use International Financial Reporting Standards, they said. Panda bond issuers currently can only use mainland, Hong Kong and European Union IFRS reporting rules.
- Fifteen days from now, nations that pump more than half the world’s oil gather in Vienna to discuss extending the production cuts that helped lift prices to two-year highs. The outcome is far from certain. Russia, which alongside Saudi Arabia was the architect of the historic cooperation between crude producers, is said to be unconvinced that a decision is needed so soon before the deal expires at the end of March.
- Theodor Weimer, the head of UniCredit SpA’s German unit, is the lead candidate to succeed Carsten Kengeter as Deutsche Boerse AG’s chief executive officer, according to people familiar with the plans.
- German prosecutors raided Volkswagen AG’s headquarters in an investigation of whether the carmaker’s leadership agreed to excessive payments to its top labor representative. The search is part of a probe into remuneration of works council chief Bernd Osterloh, a Volkswagen spokesman said late Tuesday by phone, declining to provide further details.
- European wheat exports are buckling under the weight of Russia’s record harvest. The world’s top shipper is proving a fierce competitor as this year’s bumper crop drives even more exports. As it makes inroads into the European Union’s traditional markets, Russia’s selling point is simple: good quality wheat at prices that many rivals just can’t beat. The numbers speak for themselves, with Russian wheat exports up by a fifth so far this season, while the EU’s shipments have dropped 25 percent.
- Egypt will stop importing liquefied natural gas in 2018 and may eventually export gas after it starts producing this year at the giant Eni SpA-operated Zohr field off the country’s Mediterranean coast, Oil Minister Tarek El-Molla said. Zohr’s output will mostly supply the domestic market, and the nation’s two existing gas-liquefaction facilities are large enough to process any available surplus into LNG for international sale in 2019.
- Chinese President Xi Jinping is dispatching a special envoy to visit North Korea this week, shortly after he hosted U.S. counterpart Donald Trump in Beijing. Song Tao, head of the Chinese Communist Party’s International Liaison Department, will visit Pyongyang on Friday to brief North Korean officials about last month’s once-in-five-year leadership reshuffle, according to the official Xinhua News Agency. While the party traditionally briefs Communist allies after the party congress, the timing suggests Song may be carrying a message from the Xi-Trump talks.
- Fortis Healthcare Ltd., India’s second-largest private hospital chain by market value, offered to buy all assets of its Singapore-listed trust RHT Health Trust for 46.5 billion rupees ($711 million). Shares of the health trust climbed the most on record. Fortis will acquire all of RHT’s Indian subsidiaries, a 49 percent interest in Fortis Hospotel Ltd., and the entire asset portfolio of RHT, which includes clinics and hospitals in India, according to a filing to the Singapore Exchange Wednesday.
- Deutsche Bank AG, the German lender struggling to stage a turnaround, has attracted a new top investor whose identity will be probably be revealed within days, according to a person briefed on the matter. The investor’s stake is currently held through Morgan Stanley, which yesterday reported owning 6.86 percent in Deutsche Bank, mostly through options and securities lending agreements, said the person, asking not to be identified in discussing non-public information. The U.S. investment bank previously reported owning 0.47 percent of the voting rights, according to a filing.
- Target Corp. posted strong sales of new exclusive brands last quarter yet investors showed signs they are wary about its ability to compete with Wal-Mart Stores Inc. and Amazon.com Inc. during the holidays. Sales growth last quarter topped analysts’ estimates, the company said Wednesday. While the retailer raised its full-year profit forecast, it wasn’t enough to satisfy Wall Street. The shares slipped in early trading.
- Apax Partners and Carlyle Group LP are among suitors weighing bids for a stake in Indian insurer Royal Sundaram General Insurance Co., people with knowledge of the matter said. The unit of Mumbai-listed Sundaram Finance Ltd. has started a process to sell a 49 percent stake, according to the people. Royal Sundaram has also drawn interest from other foreign private equity firms, the people said, asking not to be identified because the information is private. Any deal could fetch about $500 million, the people said.
- State-owned Shanghai Pharmaceuticals Holding Co. beat out global private equity firms to buy Cardinal Health Inc.’s Chinese business, in a deal expected to cost $557 million that will help it gain share in the world’s second-biggest market for medicines.
- Oil trader Vitol Group and private equity firm Carlyle Group mandated banks to prepare an initial public offering for Varo Energy BV that could value the European refiner and service station operator at about 2 billion euros ($2.37 billion), according to people familiar with the matter.
*All sources from Bloomberg unless otherwise specified