November 16th, 2017
Daily Market Commentary
- Canadian stocks closed at their lowest level in three weeks as falling commodity prices weighed on the benchmark amid a growing global risk-off mood. The S&P/TSX Composite Index lost 35 points or 0.2 percent to 15,878.48. The index has fallen six days in a row, the longest streak of declines since January 2016.
- Canada’s economy may be one of the strongest in the developed world this year, but Prime Minister Justin Trudeau’s government isn’t getting much credit. A Nanos Research poll conducted for Bloomberg News found just 25 percent of Canadians describe Trudeau’s performance as an economic manager as good or better — fewer than other surveys suggest would currently vote for the Liberal Party leader. Some 36 percent rate his performance as poor or very poor, and another 36 percent mark it as average.
- Canada is taking advantage of its flattening yield curve by offering ultra-long bonds for the second time in three months on Thursday. The country is auctioning C$500 million ($391 million) of 2.75 percent bonds due in December 2064, with the results due at around noon in Ottawa. The offering by the Bank of Canada, which sells bonds on behalf of the federal government, follows a sale of C$750 million of the same securities on Aug. 29 at a 2.22 percent yield.
- European stocks bounce back from a seven-day rout that had erased almost 400 billion euros ($471 billion) from the value of the region’s benchmark. The Stoxx Europe 600 Index adds 0.3%, following gains in Asia and climbing from a two-month low.
- Investors seem to be regaining their appetite for risk after several days of global declines in stocks and high-yield credit that had many questioning whether the selloff could become a rout. Volatility measures have been climbing since the record high reached last week in equities gave way to days of decline. Global growth remains resilient and earnings forecasts strong, despite uncertainty surrounding U.S. tax overhaul, the path for China’s economy, and the U.K.’s exit from the European Union.
- Asian equities climbed, snapping a four-day losing streak, as Tencent Holdings Ltd. led a rebound in technology shares. The MSCI Asia Pacific Index climbed 0.8 percent to 169.08 as of 4:25 p.m. in Hong Kong, with technology and healthcare stocks leading gains.
- Oil held near $55 a barrel as traders who were once certain OPEC and Russia would extend their output cuts beyond March aren’t so sure anymore. Futures were little changed in New York after falling 2.5 percent the previous two sessions. OPEC hasn’t yet convinced Russia that it’s necessary to reach an agreement to extend oil-output cuts at a meeting in Vienna this month, people with knowledge of the matter said this week. U.S. crude inventories expanded for a second week while output climbed for a fourth time to 9.65 million barrels a day, the highest in more than three decades.
- Gold was little changed after falling Wednesday ahead of an expected interest rate increase by the Federal Reserve next month. A recovery in global equities weighed on haven assets.
- China’s non-financial outbound investment slumped to $86.3 billion in January to October, plunging 41 percent from a year earlier, as projects in some industries dried up. There were no new real estate, sports or entertainment deals for the period, the Commerce Ministry said in a statement Thursday. Most outbound investment was in leasing and business services, manufacturing, wholesale and retail sales and information technology services.
- Treasury Secretary Steven Munchin is mounting a cross-country roadshow to persuade businesses and the Republican faithful to put their weight behind a proposed tax overhaul from the Trump administration that so far lacks broad public support. His tour has included stops in California, New Jersey and Ohio to speak to mostly friendly audiences of companies that stand to benefit from the tax bill.
- U.K. retail sales barely rose in October as food stores saw declines for a second month and clothing dropped the most this year. Once fuel is stripped out, overall sales increased just 0.1 percent from September, when they plunged 0.6 percent, the Office for National Statistics said on Thursday. From a year earlier, they fell 0.3 percent, the first decline in more than four years.
- German Chancellor Angela Merkel is facing the first big hurdle of her push to set up an unprecedented four-party government for Europe’s biggest economy. After a month of exploratory talks marked by bickering over policy, Merkel is up against a self-imposed end-of-week deadline to unlock actual coalition negotiations. She’s gathering heads of her Christian Democratic-led bloc, the Free Democrats and the Green party on Thursday to reach a verdict on whether to pursue the project.
- A bid for Santos Ltd. may trigger counter offers for the Australian oil and gas producer that has stakes in some of the world’s cheapest liquefied natural gas. The Adelaide-based company surged the most in a year after saying it received and rejected a A$9.5 billion ($7.2 billion) takeover approach from Harbour Energy Ltd. led by former Royal Dutch Shell Plc executive Linda Cook. Harbour is preparing to make another cash offer of about A$5.30 a share within weeks.
- Emaar Properties PJSC raised 4.82 billion dirhams ($1.31 billion) from the sale of a 20 percent stake in its United Arab Emirates development business, pricing the initial public offering at the bottom of a revised range. The Dubai-based developer of the world’s tallest skyscraper sold 800 million shares of Emaar Development PJSC at 6.03 dirhams a share.
- Zimbabwe President Robert Mugabe’s refusal to publicly resign is stalling plans by the military to swiftly install a transitional government after seizing power on Wednesday, two people familiar with the situation said. The military wants Mugabe, who’s under house arrest, to agree to step aside so it can claim its action isn’t a coup and head off tension with the Southern African Development Community, which includes Zimbabwe and South Africa, the people said. The group previously intervened when the army took over in Lesotho.
- Charles and David Koch, the billionaire U.S. industrialist brothers, are backing publisher and broadcaster Meredith Corp.’s revived bid to purchase Time Inc., according to a person familiar with the matter. The Kochs have tentatively agreed to support Meredith’s offer with an equity injection of more than $500 million, the person said, confirming an earlier New York Times report. The person asked not to be identified because the matter is private.
- The Republican tax plans are suddenly looking a lot more like health-care bills, with provisions that may affect coverage and increase medical expenses for millions of families. The House version of the tax bill, which President Donald Trump endorsed on Tuesday, would end a deduction that allows families of disabled children and elderly people to write off large medical expenses. The Senate plan would repeal the Obamacare requirement that most Americans carry insurance, a move that insurers promise would raise premiums in the nationwide individual insurance market.
- Tencent Holdings Ltd. rose to a record high after posting accelerated sales growth and topping the most optimistic of analyst estimates. The shares climbed 2.3 percent to a lifetime closing peak of HK$391.80 in Hong Kong, valuing the company at more than $477 billion. The owner of WeChat, the social network that is nearly ubiquitous in China, reported a 61 percent rise in third-quarter sales on Wednesday.
- Goldman Sachs Group Inc. is doubling down on the business of financing highly leveraged companies. The bank is trying to capture a bigger share in the booming market for collateralized loan obligations by arranging more of the deals and financing investors’ purchases of the securities, according to people familiar with the matter.
- Emerson proposes to buy Rockwell Automation for $225 per share in cash and stock in deal valued at $29b. Offer consists of $135/share in cash, $90/share in EMR shares.
- Credit Suisse Group AG is considering spreading trading, investment-banking and wealth management activities across several European locations after Brexit, three people with knowledge of the matter said.
- Wal-Mart Stores Inc. delivered its strongest U.S. sales gain in more than eight years, helping it keep pace with rival Amazon.com Inc.as the crucial holiday season begins. Same-store sales grew 2.7 percent in the third quarter, the Bentonville, Arkansas-based company said on Thursday, beating the increase projected by analysts. The retailer also boosted its earnings forecast for the full year.
- Sinar Mas Group has received Singapore exchange approval for an initial public offering of electricity assets that could raise more than S$400 million ($295 million), people with knowledge of the matter said. The Jakarta-based conglomerate is preparing to sell units of a business trust backed by Indonesian power generation operations, according to the people, who asked not to be identified because the information is private.
- Israel’s technology industry got off to a roaring start this year when Mobileye NV was sold for $15 billion, smashing all precedents. That momentum has since petered out as entrepreneurs break the habit of cashing in and opt instead to grow their businesses.
- Goldman Sachs Group Inc. is creating a Frankfurt-based holding company to prepare for Brexit, according to people with knowledge of the plan. Goldman Sachs Europe SE will house the Wall Street firm’s German advisory business, which will be merged with several Spanish operations
- It’s taken longer than expected, but total bank lending in Brazil is primed to bounce back from its recession-induced slump. Even as the country heads into an uncertain election, the banking industry’s credit prospects in 2018 are bright, according to Banco Bradesco SA Chairman and Chief Executive Officer Luiz Carlos Trabuco Cappi. That is, as long as the economy keeps chugging along and Brazil’s president is the only major personnel change.
*All sources from Bloomberg unless otherwise specified