September 8th, 2018
Daily Market Commentary
- Canadian commercial real estate investment reached new heights in the second quarter, boosted by a pair of big acquisitions and by the lure of attractive, income-producing property. Transactions reached C$16.5 billion ($12.5 billion). That’s 38 percent more than the previous record, set in the first quarter of last year, and more than twice the five-year quarterly average, CBRE Group Inc. said in a report Monday. Deal volume for the first six months was C$26.8 billion, a half-year record.
- European stocks were little changed in early trade, taking a breather following last week’s selloff, while Swedish stocks dipped as the country may face weeks, or months, of political gridlock after an inconclusive election. The Stoxx Europe 600 was flat, after dropping 2.2% last week, the index’s biggest weekly decline since March amid brewing worries over global trade and emerging markets. A gauge for Swedish stocks was down 0.3% on Monday.
- Stocks were mixed at the start of the week, with U.S. equity futures rising alongside European shares following losses in Asia as investors weighed the prospect of further escalation in an American trade war with China. The dollar and Treasuries drifted, while Italian bonds rallied. Worries from the trade ructions to emerging-market turmoil continue to mar the outlook for global equities, with the infection even spreading to U.S. stocks in last week’s holiday-shortened trading. Trump’s signal that he’s ready to target a sum of goods equal to virtually all imports from China came as data showed a healthy American labor market with signs of wage inflation that could clear the way for two more Federal Reserve interest rate hikes this year.
- Asian equities fell for an eighth day, its longest losing streak since December, after President Donald Trump said he’s ready to escalate the trade war with China. The MSCI Asia Pacific Index fell 0.5 percent to 159.32 as of 4:19 p.m. Hong Kong time, heading for a 4.3 percent loss in eight days. Trump said he’s ready to impose tariffs on an additional $267 billion worth of Chinese goods on short notice, on top of a proposed $200 billion his administration is planning. Separately, an August jobs report showed a healthy U.S. labor market indicating signs of wage inflation that could clear the way for two more rate hikes this year.
- Oil rebounded from the biggest weekly loss in two months as speculation of a crude supply shortage took precedence over escalating trade tensions between the world’s two biggest economies. Futures gained as much as 1.1 percent in New York after last week’s 2.9 percent slide. South Korea didn’t receive any oil from Iran last month as the U.S. pressed its allies to curb trade with the OPEC member before sanctions take effect in November. Trouble flared in another OPEC producer as the headquarters of Libya’s National Oil Corp. was attacked by gunmen, according to a report by Sky Arabia.
- Gold inches lower for a second day, after data showing rise in U.S. wages indicated growing momentum in economy, which could pave way for further interest-rate hikes and curb bullion’s appeal.
- Metals are back under pressure as President Donald Trump’s threat to place tariffs on all Chinese imports deepens concerns about the fallout from the trade war between the world’s two largest economies. Most metals dropped on the London Metal Exchange, sliding with China’s yuan, after Trump said he’s ready to tax all goods at short notice. The warning dealt a fresh blow to sentiment, even as data showing a 20 percent jump in Chinese imports in August suggested that the country’s domestic economy hasn’t yet been derailed by the burgeoning trade war.
- Alibaba is heralding the end of the Jack Ma era. A former English teacher who helped found Alibaba Group Holding Ltd. two decades ago, Ma outlined plans to hand the executive chairman role to Daniel Zhang, a finance veteran who’s presided over an ambitious expansion and won over investors in three years as chief executive officer. Ma will officially pass the baton in exactly 12 months’ time, on his 55th birthday, but remain on the board until 2020. He now intends to focus on philanthropy and education but also pursue unspecified “new dreams,” he said in a statement Monday.
- South Korea has become the first of Iran’s top-three oil customers to fulfill a hard-line U.S. demand that buyers cut imports to zero. The Asian nation didn’t import any crude from Iran last month, compared with 194,000 barrels a day in July, tanker-tracking and shipping data compiled by Bloomberg show. While bigger consumers China and India have curbed buying from the OPEC producer, South Korea’s gone one step further by halting purchases before the U.S. imposes sanctions on the Islamic republic on Nov. 4.
- Altaba Inc., the holding company formed from the overseas investments of the former Yahoo! Inc., is seeking to raise about $2.5 billion by cutting its stake in Yahoo Japan Corp. The company is offering shares of Yahoo Japan at 353 yen to 360 yen apiece, representing a discount of as much as 4.9 percent to the stock’s last close, according to terms for the deal obtained by Bloomberg. The sale translates into roughly 750 million shares of Yahoo Japan, the terms show.
- Mediaset SpA is considering buying the portion of its Spanish unit that it doesn’t already own as the company looks for ways to compete with bigger, international rivals, according to people familiar with the matter. Italy’s biggest commercial broadcaster is in the early stages of evaluating an offer for Mediaset Espana Comunicacion SA and hasn’t made a final decision about whether to proceed, the people said, asking not to be identified because the deliberations are private. The 48 percent stake that the parent company doesn’t already own has a market value of about 960 million euros ($1.1 billion).
- Saudi Basic Industries Corp. has hired Citigroup Inc. to advise on Saudi Aramco’s potential acquisition of a majority stake in the petrochemical giant in a deal that may be valued at $70 billion, according to people with knowledge of the matter. Aramco plans to acquire the stake from the Public Investment Fund, the kingdom’s sovereign wealth fund, which owns 70 percent of Sabic. Goldman Sachs Group Inc. has also been hired to advise on the deal, the people said on condition of anonymity because the talks are private. The U.S. bank is working with the PIF, one person said.
- The cryptocurrency bear market plumbed a fresh 10-month low after Bitcoin’s biggest rival tumbled and U.S. regulators suspended trading in two securities linked to digital assets. Ether, the second-largest virtual currency, slumped 8.9 percent from its level at 5 p.m. New York time on Friday, according to Bloomberg composite pricing. Bitcoin lost 2.1 percent, while the market capitalization of digital assets tracked by CoinMarketCap.com shrank to $197 billion — down about $640 billion from its January peak.
- Apple Inc. will kick off a blitz of new products this week, ending a year of minor updates and setting the technology giant up for a potentially strong holiday quarter. Through the rest of 2018, the world’s most valuable public company will launch three new iPhones, revamped iPad Pros, Apple Watches with larger screens, a new entry-level laptop with a sharper screen, a pro-focused Mac mini desktop computer and new accessories like the AirPower wireless charger.
- Japanese investors bought the most U.S. sovereign bonds in almost a year in July, lured by an advance in yields. Fund managers from the Asian nation took in a net 327.3 billion yen ($3 billion) of the debt, after pulling out 677.7 billion yen in June, according to balance-of-payments data released by Japan’s Ministry of Finance Monday. The buying in July marked only the second purchase in 10 months.
- Aston Martin, maker of luxury sports cars for James Bond, is moving ahead with a plan to list shares in London, naming Penny Hughes as chairman to end all-male board representation. The manufacturer will trade on the London Stock Exchange in October, with a free float of at least 25 percent of the issued share capital and Daimler AG converting its holding of about 4.9 percent to ordinary shares, the company said Monday in a statement. Bloomberg was the first to report that the maker of cars made famous through the spy movie franchise is said to target a valuation of 5 billion pounds ($6.5 billion), which would approach Ferrari NV’s multiples.
- The Indian government has asked the central bank to bolster efforts to support the rupee, Asia’s worst-performing currency of the past month, people familiar with the matter said. Government officials communicated last week with the Reserve Bank of India on the need to intervene more aggressively in the market to support the rupee, the people said, asking not to be identified as the information is not public. They also discussed the need for other measures including deposit schemes for non-resident Indians, the people said.
- Snap Inc. Chief Strategy Officer Imran Khan has resigned, three years after joining the social-networking company from Credit Suisse Group AG. In a filing made with the U.S. Securities and Exchange Commission on Sept. 10, the company said Khan was leaving “to pursue other opportunities,” but would continue to hold the role for an interim period to assist the transition to a successor, who was not named.
- India became the latest epicenter of the nervousness sweeping risky assets as stocks, bonds and the rupee fell. Goldman Sachs Group Inc. said emerging-market currencies, which dropped every day but one this month, were undervalued, while Nomura Holdings Inc. warned investors not to lump all developing nations together. The rupee sank as much as 1.3 percent, while stocks dropped the most since March and bonds fell to the lowest level since 2014. Turkey’s lira also weakened, pushing the benchmark MSCI index of currencies close to dropping below its 200-week moving average for the first time since early 2017. South Africa’s rand bucked the retreat, extending its advance to a third day.
- HNA Group Co. is seeking a buyer for its container-leasing business Seaco, people familiar with the matter said, marking the latest attempt by the Chinese conglomerate to reduce its debt pile. HNA is working with an adviser on the potential sale, which could fetch about $1 billion, according to the people. The conglomerate decided to sell Seaco as part of its strategy to divest assets unrelated to its core aviation business, one of the people said, asking not to be identified because the information is private.
- Walmart Inc., pinched by the worsening shortage of truckers, plans to double its spending on attracting and retaining drivers by year-end. The retailer, whose private fleet of 6,500 trucks is one of the largest in the nation, will offer referral bonuses of up to $1,500, shorten the on-boarding process for new hires by more than a month and broadcast its first national TV ad focused on its 7,500 truckers. The program, which coincides with National Truck Driver Appreciation Week beginning Monday, aims to fill vacancies and improve the image of long-haul driving as a career amid a tight labor market.
*All sources from Bloomberg unless otherwise specified