July 13th, 2017

 

Daily Market Commentary

 

 

Canadian Headlines

• Bank of Canada Governor Stephen Poloz’s decision Wednesday to raise interest rates was a major vote of confidence in the country’s indefatigable households, with policy makers expecting the remarkable run of spending to continue, despite bloated debt levels and record real estate prices. Households will account for about two-thirds of growth over the next three years, the central bank projected Wednesday. That would extend a pattern over the past 15 years that has seen consumers carry the bulk of the economic load. The difference: Canadian households have never owed so much.
• The Canadian dollar jumped to a one-year high after the central bank raised interest rates for the first time since 2010. Canada on Wednesday became the first Group-of-Seven member to join the U.S. in tightening amid growth that’s forecast to be the fastest in the developed world.

 

 

World Headlines

• European shares were swept up in a rally that took global stocks to a record after Janet Yellen spurred expectations the Fed won’t rush to end the era of cheap money. European bonds gained while the dollar fell against most major peers.
• Futures on the S&P 500 Index and Nasdaq 100 Index signaled further gains after Janet Yellen indicated the Federal Reserve won’t rush to tighten monetary policy, a scenario that fund managers continue to digest a day afterward.
• Asian equities extended gains, making it the longest winning streak since April after Federal Reserve Chair Janet Yellen signaled there’ll be no rush to tighten monetary policy in the world’s largest economy.
• Oil slid in New York as the International Energy Agency signaled it was less confident that global markets are rebalancing as anticipated. Futures slipped 0.6 percent. The agency boosted estimates for global demand growth but said that stockpiles don’t appear to be declining as quickly as expected and that rising OPEC production threatens the rebalancing process.
• Gold gains for fourth day after Federal Reserve Chair Janet Yellen signals the central bank won’t rush to tighten policy, hurting the dollar.
• Iron ore imports by China this year are on course to exceed 1 billion metric tons by a comfortable margin, breaking 2016’s record, after first-half figures showed another jump in cargoes and highlighted the ability of the top steelmaker to absorb rising supplies. Miners’ shares advanced.
• The U.K. market regulator may change listing rules for companies controlled by a sovereign country as London woos Saudi Arabian Oil Co., which is planning what could be the world’s largest initial public offering. The Financial Conduct Authority Thursday announced a consultation paper on a new category in its premium listing segment for state-owned businesses, proposing two key exceptions. The moves could inch London ahead in the competition to lure a listing of the company — better known as Saudi Aramco — which aims to raise as much $100 billion.
• Global Logistic Properties Ltd., the Singapore warehouse operator pursuing a sale, has picked a Chinese bidder consortium for final talks on a deal valuing the company at about $10 billion, people with knowledge of the matter said.
• Target Corp. said second-quarter sales and earnings will be higher than it previously indicated because of improving customer numbers and revenue. The retailer expects to report “a modest increase” in comparable sales for the period, it said in a statement Thursday, revising its prior opinion of a low single-digit decline. Earnings per share should be above the top end of a previously stated range of 95 cents to $1.15, the company also said.
• Investing in the South Korean equity market has taken an interesting turn: look past the Samsung trade. Foreigners were net sellers of Samsung Electronics Co. even as they bought more than $15 billion of stocks in the past 12 months, helping push the MSCI Korea and Kospi indexes to record highs. Instead of piling into the tech giant, they now favor steelmaker Posco and KB Financial Group Inc. the most.
• Uber Technologies Inc. is handing over the keys to its business in Russia. The San Francisco-based company and Yandex NV are merging their ride-hailing businesses in Russia. Uber will invest $225 million and take a 36.6 percent stake in a new, yet-to-be named venture that will be valued at $3.73 billion, the companies said in a statement Thursday.
• BlackRock Inc., the world’s largest asset manager, is cutting the price by two-thirds on a $10 billion exchange-traded fund that offers exposure to the mortgage-backed bond market. The expense ratio on the iShares MBS ETF will be reduced to .09 percent from .27 percent, New York-based BlackRock said Thursday in a statement. The ETF tracks an index made up of investment-grade mortgage-backed securities issued or guaranteed by U.S. government agencies.
• Even as Royal Bank of Scotland Group Plc said Wednesday it would pay $5.5 billion to settle a U.S. lawsuit over its crisis-era mortgage-bond business, it told investors that another big bill may be on the way. It was referring to an unresolved investigation by the U.S. Justice Department into whether the bank misrepresented the quality of residential mortgage-backed securities it sold a decade ago.
• An investor group led by Yanlord Land Group Ltd. is preparing a bid for United Engineers Ltd. valuing the century-old Singapore property company at about $1.2 billion, according to people with knowledge of the matter.
• A probe by German prosecutors of Daimler AG diesel-engine emissions controls may involve more than 1 million vehicles, Sueddeutsche Zeitung reported, potentially widening the effects of a scandal that’s bogged down the European auto industry for almost two years.
• The rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that bloated stockpiles are shrinking as expected, the International Energy Agency said. While world demand is climbing faster than initially estimated, OPEC’s implementation of the supply cutbacks needed to clear the inventory surplus has faltered to its lowest level since they began in January.
• Senate Majority Leader Mitch McConnell will take another run at an Obamacare repeal plan Thursday, and this time he’s got leverage: more than $230 billion he can spend over 10 years to sweeten the bill for Republican holdouts. A new proposal crafted in secret by McConnell and top aides discards earlier plans to repeal a series of Obamacare taxes on the wealthy, a move that effectively frees up that cash. He could spend the money on more care to win support from moderates.
• Credit Agricole SA’s Indosuez wealth-management unit agreed to buy Credit Industriel et Commercial’s private banking operations in Singapore and Hong Kong, boosting its assets under management in the region to $14 billion.
• The chairman of the world’s largest contract chipmaker has become a billionaire thanks to expected demand for Apple Inc.’s new iPhone. Taiwan Semiconductor Manufacturing Co. (TSMC) shares have surged 27 percent in the past year, lifting founder and Chairman Morris Chang’s personal fortune to $1 billion.
• Singapore’s biggest IPO in six years priced at the low half of its target range, the seventh of eight top deals to suffer that fate in 2017. Of 170 announced deals, only 75 are trading above their offer price and eight were pulled before any debut.
• Permira and Nordic Capital are among buyout firms considering bids for Nets A/S, the Danish payment-services provider that has attracted takeover interest, according to people with knowledge of the matter. The company, which is currently valued at $4.6 billion, could also draw interest from other private-equity firms and payments companies.
• U.S. private equity firm Lone Star Funds bought Spanish ceramics-products maker Esmalglass-Itaca Grupo from Bahrain’sInvestcorp Bank BSC for an enterprise value 605 million euros ($693 million).

 

*All sources from Bloomberg unless otherwise specified