September 7th, 2018
Daily Market Commentary
- Canadian crude prices are plunging once again as repairs were completed on Alberta’s second-biggest oil sands upgrader and production surged from a new mine. Synthetic crude, a light grade produced in upgraders, fell Thursday to the biggest discount to West Texas Intermediate futures since December 2013, data compiled by Bloomberg show.
- European equities were little changed at the open, set for the biggest weekly decline in more than five months, as tremors across emerging markets spurred concern about growth. The Europe Stoxx 600 Index was down less than 0.1 percent, poised for a 2.3 percent retreat this week, the worst since March 23. Banking is the only sector that’s up this week, led by Italian lender UBI Banca and Banco BPM as worries about Italian politics eased.
- S&P 500 Index futures fell along with European shares as investors awaited the latest move in the U.S.-China trade war, as well as key payroll data from the world’s biggest economy later Friday. Emerging-market equities snapped seven days of declines while a gauge of currencies also rose. The dollar dipped and Treasuries moved lower before the U.S. payroll report on Friday, which will offer clues on the labor market’s health and the state of wage inflation.
- Asian equities are poised for the worst weekly drop in almost six months as concerns over contagion risks on emerging markets wreaked havoc on investors confidence. Indonesian and Philippine shares slumped after their currencies slid, raising doubts about their growth outlooks. The MSCI Asia Pacific Index retreated 0.2 percent to 160.25 as of 4:39 p.m. in Hong Kong. The gauge has fallen 3.2 percent this week, set for its steepest weekly drop since March 23. Equities gauges in Japan, Philippine and Taiwan were among today’s biggest decliners, with technology stocks leading the slide.
- Oil is poised for the biggest weekly decline since mid-July as a rout in emerging markets raises contagion fears. Futures in New York, little changed on Friday, are down 2.9 percent this week. Developing-nation equities slipped into a bear market, increasing concerns that the tumult could sap energy demand. Meanwhile, U.S. government data on Thursday showed crude inventories at Cushing in Oklahoma rose for a fourth week, with total stockpiles of gasoline and distillates also expanding.
- Gold little changed on both daily and weekly basis as traders count down to news on U.S. tariffs and payroll data Friday. Bullion’s ratio to silver is the highest since 1995, potentially signaling that the white metal is due for a rebound.
- A hack of British Airways’ website was a sophisticated, malicious and criminal attack that compromised personal and financial details of customers booking flights, Chief Executive Officer Alex Cruz said. BA is getting in touch with clients to make sure they contact their credit card providers to manage the data breach, Cruz was quoted as saying by the BBC on Friday following the airline’s revelation that hackers made off with card information from 380,000 web transactions. Shares in parent IAG fell Friday by as much as 5.8 percent, the most in seven months.
- The price to access unexplored shale assets on the New Mexico side of the Permian Basin soared to $95,001 an acre in a federal government auction, a record high for North America’s biggest oil field. Federal Abstract Co., a firm in Santa Fe that bids for land on behalf of anonymous investors, acquired the right to drill two tracts in Eddy County, New Mexico, totaling 1,541 acres for about $146 million, according to the U.S. Bureau of Land Management. The state’s previous record was $40,001 an acre set in December, according to the U.S. Department of the Interior.
- Populist leaders in Rome need to strengthen their country’s finances or risk jeopardizing Italy’s position at the center of European affairs, Pierre Moscovici, European Union Economic Affairs Commissioner, said. Coalition leaders — and the academics appointed to referee their tussles — have been sending contradictory signals about how far they’ll push next year’s budget deficit as they try to square ambitious election promises with the reality of Italy’s mountainous public debt.
- Behind a field of ripe corn hemmed in by copses of apple and linden trees, Aneta Lipinska and her family built a trim modern home 45 kilometers west of Warsaw. Though the red-tiled roof house is almost complete, the Lipinskis may never move in. That’s because it sits on land that has been designated to be the location of Poland’s new central airport, an ambitious $10 billion facility that the government wants to plop down in the farming community of Baranow.
- Masayoshi Son is asking Wall Street banks to open their pocketbooks if they want in on what could be the biggest-ever initial public offering, according to people familiar with the matter. SoftBank Group Corp. has told potential underwriters seeking a large role in the blockbuster IPO of its Japanese wireless unit that they should offer to lend to other parts of the parent company’s empire, said the people, who asked to not be identified because the matter isn’t public.
- Cisco Systems Inc. and Hewlett-Packard Enterprise Co. as well as other prominent technology companies and retailers made a last-minute push to convince President Donald Trump to reverse course on a plan to impose tariffs on $200 billion in Chinese imports. Members of the public had until Thursday to comment on the administration’s plan to slap tariffs on everything from bicycles and baseball gloves to digital cameras, paving the way for Trump to announce the tariffs as early as Friday. As of midnight U.S. time, Friday midday in Beijing, the White House had made no announcement on its intentions.
- Meituan Dianping, the Chinese restaurant review and delivery giant, has attracted Hong Kong tycoon Li Ka-shing to an initial public offering that could raise as much as $4.4 billion, people with knowledge of the matter said. Li, who is Hong Kong’s richest man, is planning to buy stock in the offering in his personal capacity, according to the people, who asked not to be identified because the information is private. Thomas Lau, the chairman of department store operator Lifestyle International Holdings Ltd., is also preparing an investment, the people said, without specifying the amounts.
- I Squared Capital, the private equity firm led by former Morgan Stanley executives, is considering a sale of Irish power producer Viridian Group Holdings Ltd., people with knowledge of the matter said. The infrastructure-focused investment firm is sounding out potential buyers to gauge their interest in Viridian, said the people, who asked not to be identified as the information is private. I Squared acquired Viridian for about 1 billion euros ($1.2 billion) in 2016, the people said.
- Dell Technologies Inc., one of the world’s largest closely held technology companies, will likely face an up uphill battle convincing at least one vocal investor that its $21.7 billion plan to go public is fair for shareholders. Dell’s earnings release Thursday marks one of investors’ last opportunities to see whether Dell is on track to meet its robust sales expectations before a vote on the company’s cash-and-stock offer for its tracking stock, DVMT, in October.
- Deutsche Bank AG’s top investor, China’s HNA Group Co., plans to exit its entire stake in Germany’s largest lender as it reverses a debt-fueled acquisition spree, according to people briefed on the matter. The cash-strapped conglomerate, which most recently still held almost 8 percent of the voting rights, is selling the investment after China demanded that it focus on its airline business, said the people, asking not to be identified in discussing non-public information. It’s not clear how HNA would sell the stake, which it controls through a series of complex derivatives.
- British Airways may become the first high-profile company to face Europe’s far-reaching data privacy rules that come with potential fines after a computer hack compromised credit card data from some 380,000 customers. The European Union’s General Data Protection Regulation, or GDPR, which took effect on May 25, mandates that companies have to take technical precautions such as encryption to ensure customer data is protected. It also states that firms must notify authorities about breaches within 72 hours after learning about them.
- Europe’s credit market is racking up strong sales and seeing a pickup in high-yield issuance, even as an emerging-market rout roils other global assets. Primary issuance this week topped 20 billion euros ($23 billion) for only the second time since July, following deals from AT&T Inc., Orange SA and Lloyds Bank Plc. Non-investment grade Dometic Group AB also priced euro notes three months after being said to have postponed plans for a sale, while a slew of cross-border transactions from borrowers including a Thomson Reuters Corp. unit are set to come to market.
- Saudi Arabia has markedly increased oil exports to America, a sign OPEC’s leading producer is responding to pressure from U.S. President Donald Trump to cool down the energy market. While the export boost started earlier this year, it accelerated over the past three months after Trump repeatedly — both through private diplomacy and public Twitter harangues — asked the Saudis to lift production to keep energy prices in check.
*All sources from Bloomberg unless otherwise specified