August 29th, 2017

 

Daily Market Commentary

 

Canadian Headlines

• Canadian stocks were little changed Monday as the fallout from Hurricane Harvey weighed on oil prices, offsetting the best day for materials shares in seven weeks. The S&P/TSX Composite Index slipped 4 points or less than 0.1 percent to 15,052.03. Materials stocks jumped 2.5 percent, the most since July 10, as gold futures closed above $1,300 an ounce for the first time this year. Copper also continued its rally, closing at its highest price since 2014.
• Bank of Nova Scotia hiked its dividend by nearly 4 per cent as third-quarter profit climbed faster than expected. Canada’s third-largest lender by assets reported profit of $2.1-billion for the quarter ended July 31, up 7 per cent from $1.96-billion a year ago. The bank earned $1.66 per share, up from $1.54 a share in the same quarter last year. (Globe and Mail)
• Bank of Montreal, Canada’s fourth-biggest lender, on Tuesday reported third-quarter earnings which were ahead of expectations, driven by strong growth from its Canadian retail and wealth management business. The bank reported earnings per share of $2.05, up from $1.86 a year ago. Analysts had on average expected earnings of $2.00 per share. (Globe and Mail)
• Home Capital Group Inc., the Canadian mortgage lender that’s rebuilding itself with the help of Warren Buffett, named Brad Kotushas chief financial officer. Kotush, who was recently CFO at Canaccord Genuity Group Inc., takes over Sept. 1, the Toronto-based firm said Tuesday in a statement.

 

 

World Headlines

• Europe’s technology stocks have ceased tracking U.S. economic-data surprises. While a Citigroup gauge that drops on macroeconomic misses hasn’t recovered from tumbling into negative territory since a March high, the Stoxx 600 Technology Index has risen about 2 percent in the period.
• Futures on the S&P 500 Index fell as North Korea’s firing of a missile over Japan rekindled geopolitical angst two weeks after U.S. PresidentDonald Trump warned aggression would be answered harshly.
• Asian equities fell, setting the region’s benchmark index for its first decline in three trading days after North Korea fired a ballistic missile that flew over Japan, ratcheting up geopolitical tension. The MSCI Asia Pacific Index decreased 0.2 percent to 160.15 as of 3:05 p.m. in Hong Kong, shaving an earlier loss of as much as 0.6 percent, with about two stocks falling for each one that advanced.
• Gasoline extended gains for a sixth session and crude oil traded near $47 a barrel after flooding from Tropical Storm Harvey shut refineries in Texas, with energy companies bracing for a second hit. Motor fuel prices rose as much as 1.6 percent in New York, while crude futures added 0.7 percent after slumping to the lowest level in five weeks on Monday.
• Gold rallied to the highest level this year after North Korea fired a ballistic missile over Japan, boosting haven demand. Palladium extended a rally and platinum rose above $1,000 an ounce.
• U.K. house-price gains cooled in August after the economy slowed in the first half, Nationwide Building Society said. The 2.1 percent annual increase matched May’s reading, which was the smallest since June 2013. On the month, prices fell 0.1 percent to an average of 210,495 pounds ($270,000).
• Base metals surged, with copper rallying to an almost three-year high, as investors ignored risk-off sentiment triggered by a North Korean missile test to focus on a weaker dollar and outlook for improved Chinese demand. Copper advanced as much as 2.2 percent as trading resumed on the London Metal Exchange after a holiday on Monday. All other five main metals on the bourse climbed, with nickel rising as much as 3.1 percent to the highest since November, as the dollar extended a slump to make commodities cheaper for buyers using other currencies.
• Google faces a Tuesday deadline to tell the European Union how it plans to comply with an order to stop discriminating against rival shopping search services under threat of new fines that would add to a record 2.4 billion-euro ($2.9 billion) penalty. The EU gave the Alphabet Inc. unit 60 days to propose how it would “stop its illegal content” and 90 days to make changes to how the company displays shopping search results when users start seeking a product.
• The euro has advanced more than 14 percent against the dollar this year on speculation that the European Central Bank will outline its intent to scale back its extraordinary package of quantitative-easing measures in the autumn. The currency has defied analyst predictions for weakness at the start of the year, where some even predicted parity with the greenback.
• China’s move to create the world’s biggest power company is expected to be the first such government-managed mega-merger by the largest energy consumer. The newly created China Energy Investment Corp. — a combination of Shenhua Group Corp., the nation’s largest coal miner, and China Guodian Corp., one of its top-five power generators — may be the first of multiple consolidations, which Wood Mackenzie Ltd. estimates would include almost $1 trillion in assets.
• Tuesday’s four-week Treasury bill auction may prove to be the final moment of tranquility for short-end traders before lawmakers return to work Sept. 5 to tackle the dual threats of a U.S. government shutdown and default. The $25 billion sale matures Sept. 28, the day before the deadline that Treasury Secretary Steven Mnuchin has laid out for Congress to raise the debt limit.
• North Korea fired an unidentified ballistic missile over Japan on Tuesday, rattling Asian markets as the U.S. and its allies weighed a response to Kim Jong Un’s latest provocation. The missile landed in the Pacific Ocean about 1,200 kilometers (745 miles) east of Japan’s northern island of Hokkaido, Chief Cabinet Secretary Yoshihide Suga told reporters.
• Rio Tinto Group, the world’s second-largest mining company, favors exploration over deals to replace its dwindling diamond production — even if it takes three decades. De Beers, the top producer, sees increasing demand from China and India supporting the $80 diamond jewelry market, according to a June report. An improved outlook in key emerging markets prompted India’s cutting and polishing sector to increase manufacturing capacity in the first half, Rio said this month.
• Indonesia moved a step closer to wresting majority control of the world’s No. 2 copper mine from Freeport McMoRan Inc.under a deal that’s likely to burnish President Joko Widodo’s credentials as a champion of national interests. After months of wrangling, Freeport agreed to reduce its stake in the Grasberg copper and gold mine to 49 percent in exchange for licenses to operate the massive pit until 2041.
• Axiata Group Bhd., the biggest Malaysian mobile operator, is nearing a deal to acquire Veon Ltd.’s Pakistan wireless towers for around $1 billion, people familiar with the matter said. Edotco Group Sdn., Axiata’s infrastructure arm, plans to announce an agreement as soon as this week, according to the people.
• Best Buy Co. brushed aside increased competition fromAmazon.com Inc. to post its best sales growth in at least two years. Comparable-store sales rose 5.4 percent last quarter, the company said Tuesday. Analysts had predicted a 2.1 percent increase. Best Buy’s earnings also topped analysts’ projections, and the company raised its forecast for full-year profit and sales, sending the shares up as much as 8.8 percent in early trading.
• India has hired four banks including Citigroup Inc. and Jefferies Group LLC to manage a $1.1 billion share sale in its biggest power utility NTPC Ltd. Shares fell. The federal government will sell 412.3 million shares, or a 5 percent stake, at a floor price of 168 rupees a unit, NTPC said in a stock exchange filing Monday. At that price, the stake is valued at 69.3 billion rupees ($1.1 billion).
• It keeps getting deeper for Houston, the epicenter of the U.S. oil industry. As floods inundated the nation’s fourth-largest city Monday, with more than a foot of rain likely still to come through Friday, predictions of damage ranged as high as $100 billion. Wall Street and Washington braced for the repercussions of the costliest U.S. natural disaster since Hurricane Sandy in 2012.
• Statoil ASA’s Korpfjell well in the Arctic Barents Sea was described as Norway’s most exciting exploration well in years, but the result was a major disappointment for the company, its partners and the country’s oil industry. Statoil had hoped for a major oil discovery in a previously unexplored area close to Russia’s maritime border, but instead made a small natural-gas find of 6 billion to 12 billion cubic meters. That’s not big enough for a commercial development, Stavanger, Norway-based Statoil said in a statement on Tuesday, and well short of the billion-barrel potential previously touted by its partner Lundin Petroleum AB.
• Hyundai Motor Co. suspended its production in China because a supplier stopped providing fuel tanks after not getting paid, the most serious crisis the South Korean carmaker has faced in its biggest market. A local supplier halted deliveries starting last week after Hyundai’s China joint venture didn’t make the payment, causing the company to halt production at four of its five factories.
• Billionaire Carl Icahn says an oil industry push for structural change to the U.S. biofuels mandate will persist, raising the prospect of legal action, even if the Environmental Protection Agency denies refiner requests. Independent oil refiners have no plans to abandon their view that the current structure of the Renewable Fuel Standard is flawed, Icahn said Monday in an interview, his first public comments since an Aug. 18 letter to President Donald Trump.

 

 

*All sources from Bloomberg unless otherwise specified