By MacNicol & Associates In Morning Notes
March 14th, 2018
Daily Market Commentary
- Canadian stocks gained for a fourth day while the loonie tumbled the most in five weeks after Bank of Canada Governor Stephen Poloz struck a dovish tone. The S&P/TSX Composite Index added 42 points or 0.3 percent to 15,647.14, breaking through its 200-day moving average to the highest close in two weeks. Materials and energy stocks were boosted by the falling Canadian dollar, adding 1.1 percent and 0.8 percent respectively.
- Cannex Capital Group Inc., owner of the largest marijuana company in the U.S., is looking to tap investor demand in Canada by listing its shares in Toronto. The Vancouver-based company that owns the assets of Northwest Cannabis Solutions in Washington state is poised to start trading Wednesday on the Canadian Securities Exchange, said Chief Executive Officer Anthony Dutton. Cannex is looking to expand its footprint in states such as California and Arizona, becoming the latest company with U.S. operations to list in Canada.
- First Cobalt Corp. says it will exchange 1.5 common shares for each US Cobalt share; represents a 61.8% premium to US Cobalt’s price as of March 13.
- Brookfield Asset Management Inc. sold a 50 percent stake in the Bay Adelaide Centre, an office complex in the heart of Toronto’s financial district, for C$850 million ($655 million), according to a person with knowledge of the matter. The buyer was a subsidiary of Dadco Group Ltd., VPMA Bay Adelaide Property Ltd., said the person, who asked not to be identified because the sale hasn’t been announced. Dadco is run by billionaire Canadian businessman Victor Dahdaleh.
- Stocks in Europe advanced as positive economic data from China lifted mining shares after a day of turmoil sparked by the latest shakeup in the Trump administration. U.S. Treasuries held gains while the dollar edged lower. The Stoxx Europe 600 Index reversed some of Tuesday’s 1 percent drop, with raw-material producers outperforming after factory output and investment growth in China unexpectedly accelerated.
- The dollar fell against most major peers as White House political drama intensified while muted U.S. inflation data signaled the Federal Reserve is unlikely to speed up rate hikes.
- Asia stocks dropped as most equity gauges in the region fell, tracking declines in the U.S. as fresh turmoil over a sudden shakeup in President Donald Trump’s administration dampened investor sentiment. The MSCI Asia Pacific Index declined 0.4 percent as of 4:58 p.m. in Hong Kong, halting a four-day winning streak. Japan’s Topix index closed 0.5 percent lower as Hitachi Ltd. lead declines in technology, machinery companies and retailers.
- Oil halted recent losses as investors weighed a potential increase in geopolitical tensions from the fallout of Rex Tillerson’s ouster as U.S. secretary of state. Futures rose 0.5 percent in New York. Prices seesawed on Tuesday after President Donald Trump fired Tillerson, whom he had disagreements with over key foreign policy issues. The move could have implications for U.S. sanctions on Iran, which could impact the latter’s oil industry and exports, Facts Global Energy and Royal Bank of Canada warned.
- Gold steady as investors assess turmoil in President Donald Trump’s administration, following firing of U.S. Secretary of State Rex Tillerson, and report showing U.S. inflation remains muted.
- Stable economic growth among the world’s biggest economies masked wide variation in performance across countries, the OECD said ahead of a meeting next week likely to be dominated by escalating trade tensions. Gross domestic product in the Group of 20 countries grew 1 percent in the three months through December, unchanged from the previous two quarters, the Paris-based Organization for Economic Cooperation and Development said on Wednesday. India grew the most, expanding 1.8 percent, while South Korea was the only nation to see its economy contract.
- Walmart Inc. plans to expand its grocery home-delivery service to more than 100 metro areas this year, a sign its food fight with Amazon.com Inc. is heating up. The service, currently in six cities, will roll out to more than 40 percent of U.S. households by the end of the year, the company said on Wednesday. Deliveries will be handled by Uber Technologies Inc. and other providers, and will carry a $9.95 service fee — with a $30 minimum purchase.
- Democrat Conor Lamb and Republican Rick Saccone were locked in a tight contest for a House seat in Pennsylvania that may be a bellwether for the fall elections that will decide control of Congress. The special election Tuesday in southwestern Pennsylvania remained too close to call with all precincts reporting results. Lamb clung to a lead of 579 votes out of about 227,000 cast.
- Egypt inaugurated the first solar power plant at a remote desert complex where the government plans to generate as much as 1.8 gigawatts from the sun, cutting the most populous Arab nation’s reliance on dirty and expensive fossil fuels. The plant, developed by Germany-based Ib Vogt GmbH and a local company called Infinity Solar S.A.E., began supplying the national grid in December, Ib Vogt Chief Executive Officer Anton Milner said Tuesday in an interview. The 64-megawatt facility is the first of 32 units that the government targets for construction at Benban Solar park in southeastern Aswan province. The project, with all the plants, is to be completed next year at a cost of $2.8 billion.
- Mario Draghi said the European Central Bank will avoid surprising investors with sudden changes to its stimulus plans, stressing that inflation is still too low and U.S. trade policies and a stronger euro are concerns. The euro weakened after Draghi said recent gains can’t be solely explained by the region’s economic expansion. The single currency, which has climbed almost 17 percent in the past year, was down 0.2 percent at $1.2367 at 10:44 a.m. Frankfurt time.
- Broadcom Ltd. will formally abandon its attempt to acquire rival chipmaker Qualcomm Inc. after U.S. President Donald Trump blocked the deal citing national security risks, according to people familiar with its plans. An announcement, which would bring to an end a months-long battle to land the technology industry’s biggest ever deal, is planned for early Wednesday morning, according to the people, who asked not to be identified ahead of the official statement.
- Prudential Plc plans to spin off its M&G Prudential unit and sold 12 billion pounds ($16.7 billion) of U.K. annuities to Rothesay Life and as the company focuses on growth outside Europe. The shares soared. Prudential’s increasing business in Asia in particular had led to talk that the firm would look to spin off or sell its U.K. operations. That speculation increased last year when Britain’s largest insurer combined its U.K. asset-management unit with its insurance business. The spun-off firm is likely to be included in the FTSE 100.
- Google will ban online advertisements promoting cryptocurrencies and initial coin offerings starting in June, part of a broader crackdown on the marketing of a new breed of high-risk financial products. Alphabet Inc.’s Google announced the decision Wednesday in an update to its policy, which says it will begin to block ads for “cryptocurrencies and related content.” Facebook Inc. took a similar step in January, leaving the two largest web-ad sellers out of reach of the nascent digital-currency sector.
- China’s crackdown on financial risks and trade tensions with the U.S. threaten to undermine a stronger-than-expected start to the year for the world’s second-largest economy. Factory output and investment in fixed assets exceeded economists’ expectations in the first two months of this year, climbing 7.2 percent and 7.9 percent respectively from a year earlier as Chinese exports surged. Retail sales also remained robust, statistics bureau data — combined for January and February to smooth effects from the Lunar New Year holiday — showed on Wednesday.
- Cathay Pacific Airways Ltd. is finally seeing some respite from its earnings woes. Asia’s biggest international carrier reported a surprise profit in the second half of 2017, with a pick-up in cargo and premium-travel demand helping narrow the full-year net loss to HK$1.26 billion ($161 million). That’s well below analysts’ expectations for a loss of HK$2.26 billion, based on estimates compiled by Bloomberg.
- Wall Street’s main regulator has a new worry in its race to keep tabs on the cryptocurrency craze: hedge funds. The U.S. Securities and Exchange Commission is examining the business practices of a cadre of funds set up to invest in cryptocurrencies and initial coin offerings — digital-token sales that give buyers stakes in companies, said three people with knowledge of the matter. Since hedge funds manage money for outside investors, the SEC wants to make sure firms are appropriately valuing holdings and keeping clients’ assets safe.
- China slapped a logistics company with fines totaling 5.5 billion yuan ($870 million) for manipulating the stock market, the biggest ever punishment for such an infringement. Xiamen Beibadao Group was charged with manipulating the share prices of three Shenzhen-listed companies, Jiangsu Zhangjiagang Rural Commercial Bank Co., Jiangsu Jiangyin Rural Commercial Bank Co. and Guangdong Hoshion Aluminium Co., China’s securities regulator said in a briefing in Beijing on Wednesday. It later clarified that the unit’s parent, Shanghai-based Beibadao Group, was the manipulator.
- China Investment Corp. has sold its stake in Blackstone Group LP, ending an investment stretching back to before the U.S. firm’s 2007 initial public offering. The sale, disclosed in Blackstone’s annual report released earlier this month, marks the end of CIC’s more than decade-long ownership of the firm’s shares, a partnership that was noted as an early example of China’s growing investment ambitions in the U.S. It comes at a time of increasing trade tensions between the world’s two biggest economies, as President Donald Trump signed orders for stiff tariffs on steel and aluminum and indicated more actions are potentially on the way.
- Adidas sent a message to investors who had feared a hard landing for the company’s growth story: There’s plenty of life left in those old sneakers. Revenue at the German company jumped 12 percent in the fourth quarter, led by China and North America. The rebound comes after a slowdown in the third quarter, which sparked concerns and weighed on the shares. Revenue will also grow at a double-digit rate this year, at a forecast 10 percent when adjusted for currency swings, Adidas said Wednesday. The shares rose as much as 6.3 percent to 183 euros in early Frankfurt trading. They were further bolstered by a buyback of as much as 3 billion euros ($3.7 billion) worth of stock through 2021 that the company announced late Tuesday.
- UniCredit SpA Chief Executive Officer Jean Pierre Mustier, who has made cleaning up the lender’s balance sheet a hallmark of his tenure, is close to reaping the benefits of the biggest disposal of bad loans in Italian history. Earlier this year, Italy’s top lender wrapped up 14 months of negotiations to close the sale of 17.7 billion euros ($22 billion) in non-performing loans to investors, and it’s now set for a capital boost from the trade. Dubbed Project FINO, the transaction bolstered confidence in efforts by the sector to tackle its legacy of soured debt, boosting stock prices and prompting more disposals across the industry.
*All sources from Bloomberg unless otherwise specified