November 30th, 2017
Daily Market Commentary
- Canadian stocks fell to a two-week low as weaker commodity prices and a rotation out of the year’s best-performing sectors weighed on most indexes. The S&P/TSX Composite Index fell 62 points or 0.4 percent to 15,967.72. Technology shares tumbled 2.7 percent amid a broader global decline in tech stocks.
- Toronto-Dominion Bank is getting a U.S. earnings boost, thanks to efficiency gains. Fiscal fourth-quarter earnings from its U.S. retail division rose 11 percent to C$776 million ($602 million) from a year earlier, helping propel the division to record annual profit, Canada’s largest lender said in a statement Thursday. Toronto-Dominion has been benefiting from its best productivity levels in the U.S. since before the financial crisis.
- Canadian Imperial Bank of Commerce reported fourth-quarter earnings which were in line with market expectations, helped by strong growth in its Canadian commercial banking and wealth management business. Canada’s fifth-biggest lender said earnings per share, excluding one-off items, increased to C$2.81 from C$2.60 a year ago. Analysts had, on average, forecast earnings of C$2.59. (Globe and Mail)
- India is now home to the world’s eighth-biggest stock market, overtaking Canada for the first time in almost a decade. The score: India $2.29 trillion, Canada $2.28 trillion. Mumbai’s total stock market capitalization hasn’t exceeded Toronto’s since Jan. 21, 2008, when the S&P BSE Sensex plunged as concern grew that a global financial crisis was taking hold. Since then, India’s market swelled by $800 billion as investors flocked to a nation where the government boosted consumption through a job-guarantee plan, streamlined the indirect-tax system and opened more industries to foreigners.
- Canadian grocer Metro Inc. priced C$1.2 billion ($934 million) of bonds in a three-tranche sale to partly finance the C$4.5 billion purchase of pharmacy chain Jean Coutu Group Inc. Montreal-based Metro sold C$300 million of five-year, C$450 million of 10-year and C$450 million of 30-year senior unsecured notes. The bond offering followed a fixed income roadshow the company held on Nov. 27-28 and a meeting of Jean Coutu shareholders that approved the acquisition on Wednesday.
- Canada’s relentless consumer may finally be wavering. Statistics Canada releases third quarter output data Friday that’s likely to show the economy’s strong run of growth is over. The increase in gross domestic product probably slowed to less than a 2 percent annualized pace between July and September, economists predict, less than half the rate in the first six months of this year.
- European stocks hold steady, with gains in utilities and auto sectors, while a rally in the pound on signs of progress on Brexit talks weighs on U.K. stocks again. Tech shares remain under pressure amid a global selloff in the sector.
- Equity markets keep going higher, but not with the help of the usual suspects. This year’s winners are taking a breather and 2017’s biggest lemons are suddenly ripening. Year-to-date, the S&P 500’s top 10 winners are up an average of 100.3 percent — but fell 3.6 percent today. At the other end, the index’s top 10 losers are down on average of 43.1 percent but advanced 3.2 percent today. The overall gauge dropped less than 0.1 percent in the session.
- Tencent Holdings Ltd. and Samsung Electronics Co. led Asian stocks lower as a selloff in technology shares spread from the U.S. The MSCI Asia Pacific Index fell 0.9 percent to 170.26 as of 4:44 p.m. in Hong Kong, poised for a fourth consecutive day of losses. Samsung lost 3.4 percent in Seoul, where the Bank of Korea raised rates for the first time since 2011 and signaled confidence in the local economy. The regional stock measure has added 1.3% this month and is set to complete a record 11th straight month of gain.
- Brent climbed above $64 as investors closely watch for signals from OPEC on the future of its production curbs. Futures rose 1.6 percent in London after falling 1.1 percent in the previous two sessions. Saudi Arabia’s Energy Minister Khalid Al-Falih said OPEC and its allies will not discuss a strategy to exit the deal before the middle of next year and Iraq’s Minister Jabbar Al-Luaibi said the group will monitor output every three months.
- Gold falls for third day as U.S. GDP climbs to 3-year high and Federal Reserve Chair Janet Yellen describes steadily brightening picture for economy.
- The U.K. and the European Union are working against the clock to reach a compromise on what the Irish border should look like after Brexit as intractable sticking points remain just four days before a crunch meeting. Talks between Ireland, the U.K. government and the Northern Irish party that props up May’s government in London are at a critical point, Irish Agriculture Minister Michael Creed said. He called for more detail from the U.K. on its proposal to avoid a hard border after Brexit.
- The U.S. is rejecting China’s claim of market-economy status, saying the country doesn’t deserve to be treated as such in anti-dumping investigations because the state continues to play a pervasive role in the economy. The U.S. stance will be made clear in a document that will be published on Thursday, Chris Wilson, the U.S. Trade Representative’s top trade official in Geneva.
- OPEC’s largest producers signaled they would extend their oil production cuts until the end of next year to finish the job of rebalancing an oversupplied market. Saudi Arabia, Iraq and Iran — the group’s top three by crude output — all said they wanted another nine months of supply reductions beyond the end-March expiry of their current deal, in which 10 non-members including Russia also participate. Even after an extension, the group would review the deal at its next scheduled meeting in June.
- It was meant to be the year of the trade war. Instead, it was the year of the trade boom. As 2017 draws to a close, the International Monetary Fund is projecting the volume of trade in goods and services will have climbed 4.2 percent over the year, up from 2.4 percent in 2016. That would be the first time trade has outpaced output growth since 2014 and harks back to the pre-crisis days when such outperformance was a regular occurrence
- The U.K. government is pressing ahead with plans to sell about 6 billion pounds ($8.1 billion) of mortgages, even as the country’s central bank warns demand for British assets may cool as the country prepares to leave the European Union. UK Asset Resolution Ltd., the government agency overseeing nationalized lenders, intends to offload home loans it acquired as part of a bank rescue during the financial crisis in the first half of 2018.
- Chinese investors have driven Hong Kong’s stock surge in November, buying a record amount of equities in the city even as concern grows that the rally is starting to lose momentum. Net flows into Hong Kong’s stock market swelled to 70.2 billion yuan ($10.6 billion) this month, the most since the first equity investment channel between the mainland and the city was opened in 2014. That’s seen the Hang Seng Index jump 3.3 percent in November as heavyweights Tencent Holdings Ltd. and Ping An Insurance (Group) Co. helped it touch a decade-high.
- A forced repatriation of London’s lucrative clearing industry after Brexit would cost about $3.2 billion, a German study found, which is much lower than the $100 billion estimated by the London Stock Exchange Group Plc. That figure, spread over a five-year transition period, doesn’t take account of savings that asset management companies could make as a result of the relocation, according to calculations from Goethe University Frankfurt, released on Thursday.
- The Bank of Korea raised its benchmark interest rate for the first time since 2011, marking a likely turning point for Asian central banks. The region faces rising pressure to increase borrowing costs after the Federal Reserve began tightening at the end of 2015 and today’s move in Seoul is the first hike of a benchmark rate by a major central bank in Asia since 2014.
- Six months ago, Tidjane Thiam was still asking Credit Suisse Group AG shareholders to pitch in billions of francs to strengthen the bank’s capital buffers. Now he’s talking about returning cash. The lender on Thursday outlined plans to return half of its profit, mainly through buybacks or special dividends, once it strengthens capital generation in 2019 and 2020. In a reminder that the path there may continue to be bumpy, Credit Suisse abandoned a profit target for its Asia-Pacific business and warned that market conditions for its trading business remain difficult in the final months of this year.
- European startups are on pace to collect a record $19 billion from investors this year, despite concerns the U.K.’s departure from the European Union will weigh on the region’s technology industry, according to an annual report by the London-based venture capital firm Atomico. The U.K. remains the largest destination for capital invested in Europe, with $5.4 billion year to date, according to the report. Germany follows with $2.5 billion and then France at $2.1 billion. The U.K. also held on to its spot as No. 1 destination for skilled tech workers to migrate to within Europe, but ceded some of its share to France and Germany compared with previous years.
- Bitcoin rallied as much as 20 percent from its Wednesday low, easing concern that an abrupt selloff in the cryptocurrency might spiral into something deeper. The digital currency climbed as high as $10,787.99 in Asian trading hours Thursday, after touching a nadir of $9,009.15, according to prices compiled by Bloomberg. The 21 percent slump on Wednesday, triggered in part by intermittent outages at cryptocurrency exchanges, came just hours after bitcoin had soared to a record.
- Global Logistic Properties Ltd. shareholders approved a S$16 billion ($11.9 billion) offer by a Chinese consortium to take the Singapore warehouse operator private in Asia’s biggest buyout, a person with knowledge of the matter said. GLP investors representing 3.35 billion shares, or 99.96 percent of shares voted at the investor meeting, were in favor of the buyout, according to the person. About 96 percent of voting shareholders approved the deal, the person said, asking not to be identified because the information is private.
- Alibaba Group Holding Ltd. is in discussions to invest about 1.5 billion yuan ($227 million) and become the largest backer of Chinese facial recognition startup SenseTime, according to a person familiar with the matter. The Chinese e-commerce giant is keen on owning a sizeable stake but has no interest in exerting control over the artificial intelligence startup, the person said, asking not to be identified discussing a private deal. SenseTime, which says it’s valued at more than $2 billion, is backed by Qualcomm Inc. and considered one of the more advanced players in machine vision technology.
- France’s Altran Technologies SA agreed to buy U.S. counterpart Aricent Inc. for $2 billion in cash in a deal that will create the world’s largest provider of engineering, research and development services. Altran will acquire Aricent from KKR & Co. to create a company with close to 3 billion euros ($3.6 billion) in sales, the Neuilly-sur-Seine-based firm said in statement Thursday. The transaction is expected to close in the first quarter of next year.
- Nokia Oyj denied that it’s in acquisition talks with Juniper Networks Inc., after a CNBC report said the Finnish company was preparing a $16 billion offer for the network-equipment maker.
*All sources from Bloomberg unless otherwise specified