September 15th, 2017
Daily Market Commentary
- Nine months into the year and Canadian stocks still can’t get their act together. With an oil recovery still elusive, the S&P/TSX Composite Index is down about 1 percent, the worst-performing developed market after Israel. But investors appear to be growing more bullish: inflows into the iShares S&P/TSX 60 Index ETF hit C$1.4 billion in August, the highest since March 2016 and a significant reversal from July’s C$1.5 billion outflow.
- A small Canadian stock exchange that’s home to roughly 50 publicly traded marijuana companies may step in and clear trades for pot producers if the owner of the Toronto Stock Exchange decides to stop doing so. A small Canadian stock exchange that’s home to roughly 50 publicly traded marijuana companies may step in and clear trades for pot producers if the owner of the Toronto Stock Exchange decides to stop doing so.
- Asian stocks headed for their longest stretch of weekly gains since February as investors largely shrugged off North Korea’s latest missile launch. The MSCI Asia Pacific Index erased early losses and gained 0.2 percent as of 4:59 p.m. in Hong Kong, with the weekly advance holding at 0.7 percent. South Korea’s benchmark gauge showed resilience and reversed losses as investors digested the missile launch impact.
- Rediscovering their love for U.S. stock funds, investors added the most money since June during the past week, as the Trump administration plotted strategy for pushing a tax overhaul and the S&P 500 rose to a record. They poured $1.9 billion into the securities in the week to Sept. 14, Bank of America Merrill Lynch said in a research report. U.S. Treasury funds saw inflows of $2.2 billion, the biggest in 62 weeks, in keeping with the quest for yield, the bank said. Investment-grade bond funds received $4.8 billion of new money, the 38th consecutive week of inflows.
- The number of bullish options changing hands on the biggest exchange-traded fund tracking U.S. stocks surged to its highest level in more than a year relative to bearish contracts. More than 2.25 million SPDR S&P 500 ETF Trust calls traded on Thursday, almost double put volume, before the fund goes ex-dividend as some options expire.
- Oil headed for a second weekly advance on forecasts for accelerating crude demand and as U.S. Gulf Coast refineries continued to recover from Hurricane Harvey. Futures were little changed in New York, up 5 percent this week, after trading above $50 a barrel on Thursday for the first time in five weeks.
- Gold heads for first weekly decline in a month as market shrugs off North Korea’s latest missile launch. Bullion for immediate delivery -0.2% to $1,327.80/oz by 10:14am in London. Prices -1.4% this week, most since early July
- President Donald Trump’s quest to open more factories and corporate headquarters in the U.S. scored a major win Thursday as Wisconsin lawmakers approved the biggest corporate subsidy package ever awarded to a foreign company. But if Trump’s policies — including his call to slash the corporate income-tax rate to 15 percent — succeed in spurring more U.S. plant openings, the $3 billion in state aid that Wisconsin ponied up for Foxconn Technology Group may be only the beginning.
- North Korea’s second missile launch over Japan in as many months flew far enough to put the U.S. territory of Guam in range, a provocation that comes days after the United Nations approved harsher sanctions against Kim Jong Un’s regime. The intermediate-range missile fired from Pyongyang at 6:57 a.m. on Friday flew over the northern island of Hokkaido, reaching an altitude of 770 kilometers (478 miles) before landing in the Pacific Ocean.
- At least 18 people were injured when a suspected terrorist set off an improvised explosive device on a London subway train at rush-hour. It is the fifth attack in the capital this year.
- The pound climbed to the highest level against the dollar since just after the Brexit vote and gilts slid as Bank of England policy maker Gertjan Vlieghe stoked speculation of an interest-rate increase within months.
- Russia’s central bank resumed monetary easing with this year’s second rate cut of a half a percentage point after price growth decelerated below its target and inflation expectations fell to a record. The one-week auction rate was lowered to 8.5 percent from 9 percent, according to a statement on Friday.
- BT Group Plc’s mobile carrier EE plans to formally appeal the design of a U.K. airwaves auction as soon as Friday, according to people familiar with the matter, adding complexity to a judicial review first sought by wireless rival Three. EE has agreed to a timetable meant to expedite the U.K. High Court review of the appeals with CK Hutchison Holdings Ltd.’s Three and the communications regulator, Ofcom, said the people, who asked not to be identified as the discussions are private. The schedule could mean a hearing as soon as next month and a decision from a judge in December, they said.
- Moody’s Investors Service forecast that Philippine economic growth will exceed 6 percent until next year, and said the conflict in the south and a deadly drug war pose a rising risk but is unlikely to derail the economy. Gross domestic product will expand 6.5 percent this year and 6.8 percent in 2018, the rating company said in a statement on Friday. It cited the government’s focus on infrastructure, buoyant private sector investment and the recovery in external demand.
- Carl Icahn’s Federal-Mogul Holdings LLC is considering a sale of its Fel-Pro engine parts business, seeking about $1.5 billion if it pursues a deal, people familiar with the matter said. Icahn is working with XMS Capital Partners as an adviser on the sale process, one of the people said.
- Italy, saddled with the euro area’s second-biggest debt load after Greece, may be close to coming to grips with its problem. It’s partly being helped by the economy, which has grown for 10 straight quarters and maintained its pace of momentum in the most recent quarter. In addition, the nation can thank a pickup in inflation and a drop in bond yields, a combination that gets the government nearer to reducing the load than it’s been in a decade.
- Hong Kong watered down a proposal to give the securities regulator a bigger oversight role for initial public offerings after opposition from brokerages and business leaders. The city will leave the structure of its Listing Committee unchanged, dropping plans to revamp oversight of the group to give the Securities and Futures Commission more explicit responsibilities for approving IPOs, according to the results of a public consultation announced by the SFC and Hong Kong Exchanges & Clearing Ltd. on Friday.
- Alphabet Inc. has held conversations with Lyft Inc. about a potential investment in recent weeks, signalling strong support for Uber Technologies Inc.’s main U.S. competitor, according to people familiar with the matter. An investment of about $1 billion in Lyft may come from Google or CapitalG, Alphabet’s private-equity arm, said some of the people, who asked not to be identified because the discussions are private.
- Peru’s cabinet will be forced to be resign after cabinet chief Fernando Zavala lost a vote of confidence he’d called to prevent opposition lawmakers from ousting the second education minister in less than a year. The opposition-controlled Congress voted 77-22 against the confidence motion Friday with 16 abstentions, meaning President Pedro Pablo Kuczynski will have to find a new head for his ministerial team.
- Steinhoff Africa Retail Ltd. raised 15.4 billion rand ($1.2 billion) in the largest share sale by a South African company in almost two years, with the pricing falling in the middle of the retailer’s target range. The owner of clothing chains including Pep and Ackermans placed 750 million shares at 20.50 rand each in Johannesburg for a market value of about 70.7 billion rand, the company said in a statement.
- Iron ore is facing renewed pressure and risks sliding back into the $60s, as China’s economy shows signs of cooling and global mine supply increases, while planned steel capacity cuts in the world’s biggest consumer this winter could further cut demand. Ore with 62 percent content in Qingdao fell 3.4 percent to $73.99 a dry ton on Thursday, posting its biggest loss since May and sending prices to the lowest in a month, according to Metal Bulletin Ltd. The commodity, which almost hit $80 in August, is set for its first back-to-back weekly decline since June.
- The biggest overhaul in a decade to the way fund managers are regulated in Europe could hasten mergers and acquisitions among companies already trying to fend off competition from cheaper products. The asset management industry has seen some of the biggest deals for years as traditional “active” firms unite against the popularity of “passive” funds that track indexes. The European Union’s revision of the Markets in Financial Instruments Directive, or MiFID II, now threatens to increase costs and shrink profit margins as companies have to pay banks for the analyst research used to select investments.
- UniCredit SpA, Italy’s largest bank by assets, has shortlisted bidders in the sale of about 1 billion euros ($1.2 billion) of bad loans, people familiar with the matter said. An Algebris Investments-Mediobanca SpA partnership, Cerberus Capital Management, Fortress Investment Group LLC and Lindorff AB have been selected to make final bids by late next month, said the people, who asked not to be identified because the sale is private. The bidders will have access to UniCredit data to assess the portfolio, the people said.
- China’s yuan succumbed to its own success this week, with an Asia-beating rally testing the limits of central bank tolerance and resulting in a series of signals that sent the exchange rate toward its biggest loss since November. The currency traded onshore fell 0.9 percent this week, after a 4 percent jump in the three months through Sept. 8 that was the most among 10 Asian currencies tracked by Bloomberg.
- Iceland is again facing a crisis as coalition partners abandoned the Independence Party-led government over a scandal involving the prime minister’s father. The four-lawmaker Bright Future party announced late on Thursday in Reykjavik that it was leaving the three-party coalition less than a year after it was formed. Hours later, the Reform Party, which has eight legislators, called for new elections as soon as possible.
- The Dutch government sold a third stake in ABN Amro Group NV, taking advantage of a rally in the shares of the nationalized lender. The sale of a 7 percent stake raised about 1.53 billion euros ($1.8 billion) for the state, cutting the country’s holding to about 56 percent. The government fetched the best price yet — 23.50 euros a share. The state is trying to recoup some of the 22 billion euros spent propping up the bank during the financial crisis.
*All sources from Bloomberg unless otherwise specified