September 22nd, 2017
Daily Market Commentary
- Canadian stocks rose for a sixth day, their longest streak of gains in six months, boosted by a global rally in financial stocks following Wednesday’s hawkish shift from the U.S. Federal Reserve. The S&P/TSX Composite Index added 65 points or 0.4 percent to 15,454.92, its highest level since June and its longest consecutive string of gains since March.
- New guidance for issuing digital currencies in Canada may make them safer for investors but they’ve also prompted one company to shun its home country as it kicks off one of the largest initial coin offerings to date. The experience of Impak Finance Inc., which launched Canada’s first ICO with regulatory blessing this year, and Kik Interactive Inc., which decided to exclude the country’s investors from its planned $125 million offering, underscores the difficulty for countries grappling with a $2 billion market that’s been a magnet for fraud while trying to nurture financial innovation.
- TransCanada Wins Regulatory Approval for Canadian Mainline Toll. National Energy Board approves long-term, fixed-price service on natural gas pipeline from Empress, Alberta, to Dawn, Ontario. Board will require company to separately track and report actual costs and revenues for the Dawn service
- Asian equities declined after a report that North Korea suggested it could test a hydrogen bomb in the Pacific Ocean. Stocks in Greater China fell after S&P Global Ratings downgraded the mainland for the first time since 1999 and followed with a cut for Hong Kong. The MSCI Asia Pacific Index slipped 0.2 percent to 162.96 as of 4:40 p.m. in Hong Kong.
- European stocks hold steady amid renewed tensions over North Korea. The Stoxx Europe 600 Index falls 0.1%, edging lower from a two-month high reached on Thursday. The DAX is down 0.2% ahead of Germany’s general election on Sunday, while the FTSE 100 drops 0.3% before Prime Minister Theresa May’s Brexit strategy speech in Florence, due around 2 p.m. London Time.
- Oil is heading for a third weekly gain before an OPEC-led committee meets in Vienna to discuss ongoing production curbs. Front-month futures were little changed in New York, leaving them 1.2 percent higher this week.
- Gold rises as tensions over North Korea boost demand for havens, with investors weighing fresh sanctions from President Donald Trump, threat from Pyongyang official flagging possible hydrogen bomb test. Bullion for immediate delivery as much as +0.6% to $1,298.79/oz, and trades at $1,296.48 at 2:31pm in Singapore.
- The dollar weakened versus the yen and the euro as escalating tensions between North Korea and the U.S. spurred demand for haven assets. The U.S. currency, which fell against all of its Group-of-10 peers bar the pound, erased its gains made versus the euro since the Federal Reserve’s hawkish rhetoric on Sept. 20. The euro approached $1.20, boosted by data which showed Europe’s economy was on track for the best quarterly growth since 2015, while a gauge of private-sector output in Germany hit the highest level in more than six years. Three-month implied volatility in euro-dollar reached its highest since April.
- Uber Technologies Inc.’s license to operate in London was revoked, a surprise decision that will affect the 3.5 million people and 40,000 drivers who use the app in the city. The city’s transportation regulator, Transport for London, said the license will expire on Sept. 30. Regulators said it denied the license because Uber’s “approach and conduct demonstrate a lack of corporate responsibility.”
- North Korea struck back at U.S. President Donald Trump’s threats to destroy it, with Kim Jong Un warning of the “highest level of hard-line countermeasure in history” and his foreign minister suggesting that could include testing a hydrogen bomb in the Pacific Ocean.
- Senate Republican leaders are struggling to win support from holdouts in their party for what may be their last chance for a long time to pass a GOP-only repeal of Obamacare. The Senate needs to act by Sept. 30 to use a fast-track procedure to keep Democrats from blocking the proposal by Republicans Lindsey Graham of South Carolina and Bill Cassidy of Louisiana.
- General Electric Co. is nearing an agreement to sell its industrial-solutions business to ABB Ltd. in a deal valued at $2.5 billion to $3 billion, people with knowledge of the matter said. The American and Swiss companies are likely to announce an agreement by next week, said the people, who asked not to be identified because talks are private.
- U.K. factory order books showed signs of a moderate slowdown this month in the longest stretch of growth in more than two decades. A Confederation of British Industry index of total orders fell to 7 from 13 in August, partly reflecting weaker volumes among mechanical engineering firms. It nonetheless marks the ninth consecutive month of “above normal” demand, the longest streak since 1995, and export orders remained buoyant, the business lobby said Friday.
- Turkish Airlines said it intends to purchase 40 of Boeing Co.’s 787-9 Dreamliners, a long-awaited deal that signals the carrier’s rebound following a terrorist attack on its Istanbul hub last year. When finalized, the order would be valued at almost $11 billion before the customary discounts for large aircraft purchases.
- U.K. Prime Minister Theresa May will reboot her Brexit strategy on Friday by proposing a period of transition after the split with the European Union even if that means continuing to send money to Brussels and observing its rules until 2021. In a much-anticipated speech in Florence, scheduled for 3.15 p.m. local time, May will suggest a time-limited implementation phase that officials have indicated will last two years and will be staggered, depending on the sector.
- The developer of a liquefied natural gas export terminal in Oregon that has already twice been denied permits by U.S. regulators is giving it another shot. Veresen Inc. said late Thursday that it filed another application with the Federal Energy Regulatory Commission for the $10 billion Jordan Cove LNG project that would ship gas to Asia.
- China bulls shrugged off the latest cut to the nation’s credit rating, helping a state-run lender sell the biggest dollar-denominated bond in Asia outside Japan since 2014. Postal Savings Bank of China Co. raised $7.25 billion Thursday in the largest such deal since Alibaba Group Holding Ltd. secured $8 billion in November 2014. The sale of the so-called additional Tier 1 securities priced just hours after S&P Global Ratings lowered China’s credit score, citing risks from soaring debt.
- President Donald Trump is on the verge of a fresh clash with business leaders and civil-rights advocates as he faces a critical deadline this weekend for continuing his travel ban on six predominantly Muslim countries. The president hinted he might broaden the initial ban, which is set to expire on Sunday, in his response to a terrorist attack in London last week. Even mere renewal of the prohibition on entry into the U.S. by most citizens of those nations would reopen controversy over an action that provoked sharp criticism from prominent corporate leaders, multiple court challenges and internal strife within the White House.
- India’s government is planning to allow foreign investors to increase purchases of the nation’s corporate debt, a person familiar with the matter said. The cap on foreign portfolio investments may be raised by $5 billion to $10 billion, the person said, asking not to be identified citing rules.
- China Southern Power Grid Co. and China Yangtze Power Co.are among companies weighing bids for Finnish power distributor Elenia Oy, which could fetch as much as 3 billion euros ($3.6 billion), people with knowledge of the matter said. Elenia’s owners have asked suitors to submit non-binding indicative offers by mid-October, according to the people, who asked not to be identified because the information is private.
- Indonesian equities jumped to a record high, led by a rally in banking stocks as some investors speculated there will be more interest-rate cuts to shore up economic growth. The Jakarta Composite Index rose as much as 0.4 percent as seven out of 27 economists surveyed by Bloomberg expected Bank Indonesia to lower its benchmark interest rate by an additional 25 basis points Friday after the first cut in 10 months in August.
- The Treasury Department still lacks permanent officials in half of its highest-ranking political jobs more than eight months into Donald Trump’s presidency, leaving Secretary Steven Mnuchin shorthanded as he tries to carry out the administration’s ambitious economic agenda. Only nine of the 18 positions in Treasury requiring Senate confirmation have been filled, and only three additional nominees have been named by the Trump administration.
- The widespread use of the euro as an unofficial legal tender in some Balkan countries may become a risk for their financial stability and limit room for maneuver in monetary policy, European Central Bank Executive Board member Benoit Coeure warned. Speaking in Bosnia and Herzegovina’s capital, Sarajevo, Coeure said the drawbacks “deserve policy makers’ attention” in the region, where on average 56 percent of all loans and 52 percent of bank deposits are denominated in or indexed to the euro. It encourages growth of foreign-currency loans and could expose companies and consumers to sudden currency swings.
- L’Oreal SA shares surged the most in seven years on speculation that the death of the founding family’s matriarch, Liliane Bettencourt, could clear up the cosmetics maker’s ownership through a takeover or a buyback. While Nestle could have sold its 23 percent stake in L’Oreal before Bettencourt’s death Wednesday, her passing may make a sale to the French company more likely, according to analysts. The stake is worth about 23.8 billion euros ($28.4 billion) at the current share price. Another possibility is that L’Oreal attracts a takeover bid.
- The euro-area economy may have grown at the fastest pace in more than two years in the third quarter after an unexpected upturn in September. IHS Markit’s index of private-sector activity jumped to a four-month high of 56.7 from 55.7 in August. Economists expected a reading of 55.6. Both services and manufacturing strengthened, with a gauge for the latter reaching a level not seen in more than six years.
- Under the MiFID II regulatory overhaul, trading venues run by high-speed trading firms and banks such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. will get more flexibility in how they price stocks, potentially allowing them to win a larger share of Europe’s $15 trillion equity market, saycritics. Bank trading venues will be allowed to quote prices in smaller increments, or “tick sizes,” than the exchanges can.
- ZhongAn Online P&C Insurance Co., China’s largest online insurer, raised $1.5 billion after pricing its Hong Kong initial public offering at the top end of a marketed range, according to people with knowledge of the matter. The company, backed by Chinese billionaire Jack Ma, sold 199.3 million shares at HK$59.70 apiece, the people said, asking not to be identified because the information is private.
*All sources from Bloomberg unless otherwise specified