October 4th, 2019
Daily Market Commentary
- Canada’s political party leaders are making affordability the central talking point of their election campaigns, rolling out targeted measures to alleviate the financial strain besetting voters. Though broad economic data show the nation’s economy is humming along, Canadians are still feeling tight on cash. The worsening global outlook and unprecedented policy uncertainty are adding to the apprehension. Liberal Leader Justin Trudeau and his main rival, Conservative Leader Andrew Scheer, along with the leaders of smaller parties are seeking to parlay that stress into votes as the clock winds down on the Oct. 21 election, by promising a slew of tax cuts and other measures to make life more affordable for Canadians.
- A Wisconsin craft brewer can’t revive the dismissed part of its lawsuit claiming Anheuser-Busch InBev SA/NV and Molson Coors Brewing Co. cornered the U.S. beer market in Ontario, Canada, the Seventh Circuit ruled. The antitrust suit accuses the brewing giants of conspiring to get Ontario’s provincial government to adopt rules permitting only Brewers Retail Inc., a distribution consortium they control, to sell beer in packages larger than six-packs. It was filed by Mountain Crest SRL LLC, which owns Minhas Craft Brewery, the second-oldest U.S. brewer.
- European shares inched higher following several days of losses, after Wall Street bounced back. In a week in which disappointing economic data has impacted markets, investor focus now turns to U.S. jobs numbers out later on Friday. The Stoxx Europe 600 rose 0.3% as of 8:11 a.m. in London. Technology was the best-performing sector, up 0.9%, while utilities dropped 0.5%. Direct Line Insurance Group Plc was one of the biggest fallers on the regional benchmark, after a U.K. regulator found competition isn’t working well for all consumers in home and motor insurance.
- U.S. equity futures declined and European stocks drifted as investors awaited jobs numbers for clues on whether the Federal Reserve will cut rates this month to bolster the world’s largest economy. Government bonds including Treasuries edged higher. Contracts for the three main U.S. gauges all slipped ahead of Friday’s key monthly American employment report, which comes in the wake of a run of poor data this week that’s strengthened market expectations for a rate cut.
- Japanese and Australian shares finished higher, while Hong Kong stocks fell as the city invoked emergency powers for the first time in more than half a century to ban face masks for protesters. China remains closed for a holiday.
- Oil headed for its biggest weekly decline since the middle of July as a streak of disappointing economic data added to fears a global recession is coming. Futures in New York edged higher Friday, but are down 5.8% this week. A key measure of American service industry activity dropped to the lowest in three years last month, while an employment gauge registered its weakest print in more than five years. That came after U.S. payroll numbers fell short of estimates earlier in the week, there were signs of stagnation in the euro-area economy and there was a surprise increase in American crude stockpiles.
- Gold held above $1,500 an ounce as investors awaited a key monthly U.S. jobs report for further clues about the strength of the economy and whether the Federal Reserve will reduce interest rates again. Bullion is heading for a weekly gain after a slew of data pointed to widening economic weakness, bolstering haven demand, with gold-backed exchange-traded funds posting 14 straight days of inflows. America’s service industries joined manufacturing in taking a big step back last month, while in Europe, reports showed the economy stagnated at the end of the third quarter.
- Two top American diplomats tried to strike a deal on behalf of President Donald Trump for Ukraine’s leader to investigate discredited allegations of wrongdoing by Joe Biden and his son in return for improving relations with the U.S., according to documents released by House Democrats late Thursday. Text messages released by three congressional committees show Kurt Volker, the former envoy for Ukraine, coordinating with the U.S. ambassador to the European Union, Gordon Sondland, to help craft a statement for President Volodymyr Zelenskiy in early September. The statement they devised read, “We intend to initiate and complete a transparent and unbiased investigation of all available facts and episodes, including those involving Burisma and the 2016 elections, which in turn will prevent the recurrence of the problem in the future.” Volker sent that line to Sondland on Aug. 13. Hunter Biden sat on the board of Burisma, a natural gas company.
- Protesters called for a mass show of defiance against Hong Kong’s newly imposed mask ban — including a cheeky march in Halloween masks — as the government invoked rarely used powers to quell the unrest. Hong Kong’s leader, Carrie Lam, announced the prohibition on masks during public assemblies after the former British colony suffered some of its worst violence yet on Tuesday, with a police shooting and wounding an 18-year-old protester. Activists have repeatedly used the government’s actions to rally supporters for more protests during a three-day holiday weekend, including the masked march on Saturday and a rally against police tactics Sunday.
- Prime Minister Boris Johnson has pledged to send a letter to European leaders, as required under the so-called Benn Act, a lawyer told a Scottish court.
- HP Inc. will slash as much as 16% of its workforce as part of a broad restructuring meant to cut costs and boost sales growth amid the company’s first change in top leadership in four years. The personal computer giant said it will cut 7,000 to 9,000 positions through firings and voluntary early retirement. The job reductions will help save about $1 billion by the end of fiscal 2022, the Palo Alto, California-based company said Thursday in a statement. HP had 55,000 employees as of a year ago, the last time it disclosed the figure.
- U.K. home and car insurers could be stopped from jacking up prices when customers’ policies come up for renewal as the country’s financial-markets watchdog clamps down on an industry that’s not giving a “good deal” to about 6 million customers. Companies such as Aviva Plc, Admiral Group Plc and Hastings Group Holdings Plc could also face curbs on automatic policy renewals and stricter rules on how they communicate with customers, the Financial Conduct Authority said on Friday. If policyholders who currently pay high premiums instead paid the average amount for their insurance, they would save 1.2 billion pounds ($1.5 billion) a year, according to an FCA statement.
- The European Union’s push to set a date for eliminating greenhouse-gas emissions is gathering pace, making the bloc’s climate chief confident that a deal can be reached by the end of this year. The campaign moved forward on Thursday when Estonian Prime Minister Juri Ratas said he’s joining 24 other EU leaders in supporting a 2050 target for reaching zero net emissions, leaving a four-nations group that opposed stepping up green efforts. EU Climate and Energy Commissioner Miguel Arias Canete welcomed the decision on Friday during a meeting of the bloc’s environment ministers in Luxembourg.
- Ride-hailing companies Uber Technologies Inc. and Lyft Inc. have collectively shed $28 billion in market value since their trading debuts earlier this year. Wall Street analysts, however, aren’t ready to quit. An overwhelming majority — many of whom work for banks that underwrote the initial public offerings — have buy ratings on both Uber and Lyft and their price targets have changed little over the past few months. Shares of the companies, meanwhile, have continued to plumb new lows. Lyft has fallen more than 45% since its March IPO, while Uber, which debuted in May, has dropped 34%. Both stocks touched a record low on Wednesday in another sign that investors aren’t buying the hype that has surrounded the private values placed on unprofitable so-called unicorns. The parent of office-sharing company WeWork pulled its planned IPO on Monday after potential investors balked at the high valuation.
- Michael Pompeo has emerged as one of President Donald Trump’s most prominent defenders even as the Ukraine controversy in Washington threatens to engulf the secretary of state — and his political future. Pompeo, the last remaining member of Trump’s original national security team, has made clear he will fight what he calls congressional overreach by Democrats leading the impeachment inquiry who are demanding documents and testimony from the diplomats who work for him. And he’s said that the president did nothing wrong when he asked Ukraine’s president to investigate Democrat Joe Biden and his son Hunter on a July 25 phone call.
- Apple Inc. has told suppliers to increase production of its latest iPhone 11 range by as much as 10% to meet stronger-than-expected sales of the new handsets, the Nikkei Asian Review reported, affirming resilient demand for the company’s most important gadget. The boost would add 7 million to 8 million units to what the Cupertino, Calif.-based company had initially planned on, the Nikkei cited anonymous sources as saying. Shares in Apple suppliers from Murata Manufacturing Co. and Alps Alpine Co. in Tokyo to AAC Technologies Holdings Inc. in Hong Kong climbed after the report. An Apple spokesperson in Japan declined to comment.
*All sources from Bloomberg unless otherwise specified