September 7th, 2017
Daily Market Commentary
- The cost of carrying consumer loans is going up after Canadian lenders including Royal Bank of Canada and Toronto-Dominion Bank raised their prime rates following Bank of Canada’s decision.
- Heavy Western Canadian Select’s discount to WTI futures strengthens most since Aug. 2015 as TransCanada’s Marketlink pipeline, the southern section of the Keystone line, resumes operations after being shut by Hurricane Harvey.
- Most sectors in the Stoxx Europe 600 Index advanced, though miners declined as the rally in industrial metals stalled. The euro extended its run to a fourth day even as traders expect European Central Bank policy makers to express their concern about the currency’s strength.
- S&P 500 Index futures were flat and Treasuries rose after the resignation of Federal Reserve Vice Chairman Stanley Fischer and a Canadian interest-rate increase surprised U.S. markets late Wednesday. Investors are also watching Hurricane Irma, which is headed for Florida.
- Asian stocks climbed, led by South Korea’s benchmark gauge, as investors turned their focus away from Pyongyang. The MSCI Asia Pacific Index advanced 0.3 percent to 160.61 as of 5:01 p.m. in Hong Kong, with most regional benchmarks up.
- Oil traded near a four-week high as U.S. refiners returned from shut downs caused by Hurricane Harvey, boosting demand for crude. Futures rose 0.2 percent in New York, extending the almost 4 percent increase in the previous two sessions. While Motiva Enterprises LLC works to return its Port Arthur refinery, the largest in the U.S., to 40 percent production by the end of the weekend, another Atlantic hurricane is approaching.
- Gold advances for 5th time in 6 days as dollar weakens and tensions over North Korea outweigh positive sentiment arising from Donald Trump’s debt-limit deal.
- Amazon.com Inc. is searching for a site for a major corporate office in the U.S., a development expected to house as many as 50,000 people and to be equal in size to its current Seattle headquarters. The cost of what Amazon is billing as its “second company headquarters in North America” is expected to top $5 billion, the company said.
- Sterling is becoming immune to bad news. The currency has rallied more than 2 percent against the dollar in the past two weeks, despite several pieces of disappointing economic data. That included gains on days when reports showed a weak pace of U.K. services growth and falling property prices.
- Irma barreled toward Florida after battering Puerto Rico and devastating a chain of small Caribbean islands, as the Category 5 hurricane threatens to turn into the most expensive storm in U.S. history. A mandatory evacuation order has been issued for some areas including downtown Miami and Miami Beach.Barclays Plc has estimated insured losses in a worst-case scenario from the storm at $130 billion.
- Russian President Vladimir Putin said the Trump administration was willing to solve the North Korean crisis through diplomacy, while reiterating that more sanctions wouldn’t prompt Kim Jong Un to give up his nuclear weapons.
- Hong Kong’s currency strengthens as much as 0.18%, the biggest intraday gain since Feb. 4 last year, to 7.8111 against the greenback, according to prices compiled by Bloomberg.
- Mario Draghi is finally having the talk he has long sought to avoid. The European Central Bank president opened a debate about the future path of stimulus on Wednesday after the Governing Council was presented with various scenarios for winding down asset purchases, according to people familiar with the matter.
- Taiwan’s Foxconn Technology Group is pressing its case to acquire Toshiba Corp.’s memory chips unit, as the Japanese conglomerate struggles to complete the sale and avoid having its shares delisted from the Tokyo Stock Exchange.
- President Donald Trump’s unexpected decision to spurn his Republican allies in Congress by striking a short-term debt-limit deal with Democrats leaves the GOP reeling and lawmakers bracing for a bruising battle in December. Trump’s move undercut GOP leaders in the House and Senate, as well as his own Treasury secretary, who had been arguing for a longer-term extension. It also left Republicans, who were blindsided by the deal, angry and disappointed with their own leaders and, to a lesser degree, Trump.
- Governor Elvira Nabiullina said Russia’s central bank is set to discuss reductions in its key interest rate at a meeting next week after a pause in July but stressed that risks for inflation linger even after it fell below the 4 percent target.
- The world’s biggest consumer-products maker is being pressured by one of its largest shareholders to set aside “suffocating bureaucracy” and pursue new brands and online sales. Procter & Gamble Co. needs to reorganize its business units, invest in smaller, high-growth brands and prioritize its digital strategy, billionaire Nelson Peltz said in a 93-page plan for modernizing the company.
- Hurricane Irma is threatening to wreak havoc on Florida farmlands, menacing $1.2 billion worth of production in the top U.S. grower of fresh tomatoes, oranges, green beans, cucumbers, squash and sugarcane.
- Seadrill Ltd. Chairman John Fredriksen and Centerbridge Partners are in talks with the offshore driller’s bondholders about a debt-restructuring plan, days before a potential bankruptcy-court filing, according to people familiar with the situation. Under the proposal, the billionaire and hedge fund will get sizable stakes in a restructured Seadrill in return for helping to fund a new loan totaling about $1 billion.
- Asset managers are slowly showing their hand on whether they’ll absorb the costs of research after new European regulations come into force in January. So far, most of them are taking the hit rather than passing them onto clients. The European Union’s revision of the Markets in Financial Instruments Directive, designed to make markets fairer and more transparent, forces money managers to pay separately for research and trading services that they get from banks. That, the regulators hope, will ensure they act in the best interests of their clients, rather than being induced by the offer of free analysis.
- Norwegian Air Shuttle ASA said it has the flexibility to raise cash through the disposal of its leasing unit and additional sales of its Boeing Co. and Airbus SE aircraft, pushing back on suggestions from Ryanair Holdings Plc Chief Executive Officer Michael O’Leary that the company could face a financial crunch.
- Imperial Brands Plc sold a stake in Spanish logistics company Logista for 230.8 million pounds ($300 million), raising funds that it plans to use to buy back shares and reduce debt. The tobacco company divested a 10 percent stake via a private placement at 19 euros ($22.64) a share, Bristol-based Imperial Brands said in a statement Thursday.
- Goldman Sachs Group Inc. has halted work on a planned U.S. initial public offering for a technology outsourcing unit of HNA Group Co., because the deal didn’t meet internal compliance requirements, according to a person with knowledge of the matter.
*All sources from Bloomberg unless otherwise specified