By MacNicol & Associates In Morning Notes
March 8th, 2018
Daily Market Commentary
- Canadian stocks retreated slightly as the Bank of Canada kept borrowing costs on hold and indicated there’s no rush to pursue rate hikes amid rising global trade tensions. The S&P/TSX Composite Index fell almost 3 points, or less than 0.1 percent, to 15,542.22. Materials, industrials and energy fell as the resignation of Gary Cohn, economic adviser to President Trump, removes a free-trade advocate from the White House.
- President Donald Trump could exempt some nations when he formalizes tariffs on imported steel and aluminum amid threats of retaliation from U.S. trading partners and warnings from his own party that the move will hurt American businesses and consumers. The administration will initially exclude Canada and Mexico from the tariffs, an exemption they would lose if they can’t agree to an updated North American Free Trade Agreement with the U.S., White House trade adviser Peter Navarrosaid on Wednesday. Other American allies could use a similar system to ask for an exemption, he said.
- WestJet names Ed Sims President and CEO effective immediately. CEO Gregg Saretsky to retire.
- Osisko Gold Royalties has also agreed to purchase on a private placement basis, 100M common shares of Victoria at C$0.50 per share, for total financing by Osisko of C$148M including the Royalty Purchase.
- European stocks are little changed after three days of gains amid mixed earnings reports. The Stoxx 600 adds 0.1%. Engie rises after saying it will boost its 2018 dividend, while Hugo Boss and JCDecaux fall after giving guidance that disappointed analysts. ACS jumps the most in almost five years after Atlantia confirms it’s in talks with the company over a bid for Abertis.
- U.S. index futures are mixed, while European stocks climb with Asian peers amid easing concerns about a potential global trade war and before Canadian and European central bankers speak. President Donald Trump’s economic advisers are leaving the door open for exempting some countries from the tariffs and downplaying the fallout of a possible trade war. Canada and Mexico will initially be excluded, provided they reach an updated Nafta deal with the U.S., White House trade adviser Peter Navarro said.
- Japanese shares rose as the yen stabilized amid easing concern over protectionist trade policies from the Trump administration. Electronics makers provided the biggest boost to the Topix gauge after White House Council of Economic Advisers Chairman Kevin Hassett indicated a tariff plan is not yet finalized.
- Hong Kong stocks rose, with volatility remaining near the highest in two years amid uncertainty over U.S. plans to impose tariffs on imports.
- Oil halted losses near $61 a barrel as bullish demand outlooks from Exxon Mobil Corp. to Goldman Sachs Group Inc. countered fears that a U.S. shale boom will exacerbate a glut. Futures in New York were little changed, after losing 2.3 percent Wednesday. On one side, Exxon said soaring consumption is the reason for rebounding prices and Goldman reaffirmed robust prospects for growth. Meanwhile, U.S. government data showed crude inventories grew last week as production swelled to a fresh record.
- Gold handed back earlier gains as haven demand eased while investors assessed rhetoric around the specter of a global trade war. Bullion for immediate delivery traded little changed at $1,325.59/oz.
- Cigna Corp. agreed to buy Express Scripts Holding Co. for $54 billion in cash and stock, another move toward consolidation between U.S. health insurers and the companies that oversee patients’ drug benefits. The price includes $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share, the companies said in a statement Thursday. The terms represent a roughly 31 percent premium to Express Scripts’ closing price on Wednesday, according to the statement.
- The European Union’s top financial-services official has told member states and lawmakers to get on with plans to hand the bloc’s mainmarkets regulator new powers over investment funds and derivatives clearinghouses. National governments have been pushing back on the proposal, saying it goes too far in shifting oversight away from local authorities. European Commission Vice President Valdis Dombrovskis said progress is needed on the supervisory revamp as well as other plans that are meant to promote EU-wide capital markets and help prepare the bloc for life after Brexit.
- The U.K. government says it’s “confident” it can deliver a domestic system to replace Euratom Treaty by March 2019, in response to Beis committee report.
- The euroskeptic League of Matteo Salvini is reaching out to lawmakers from Italy’s center-left Democratic Party to seek support for a broad governing alliance, according to senior League officials. Envoys of the anti-migrant League, the main party in the center-right coalition which will form the biggest bloc in the next parliament, are holding informal talks with PD dissidents, according to two League officials who declined to be named discussing strategy. Spokesmen for Salvini and the PD didn’t respond to requests for comment.
- After a run of smooth sailing, Japan faces choppier economic waters, including a stronger currency and the risk of a global trade war. Japan’s economy grew a better than expected 1.6 percent in the fourth quarter, but is now likely entering a soft patch, economists say, with a chance that the longest run of expansion in nearly three decades could end in the first quarter. This would hurt the Bank of Japan, which has been making some progress toward 2 percent inflation.
- India’s benchmark equity index rose, snapping its longest losing streak in a month, as easing concerns over trade tensions drove stocks across Asia higher. The S&P BSE Sensex rose 1 percent to 33,351.57 in Mumbai, led by gains in State Bank of India and ICICI Bank Ltd. The last six sessions of declines had pushed the gauge within a whisker of its 200-day average, a key technical level that hasn’t been breached in almost 15 months. Fourteen of 19 sub-indexes compiled by BSE Ltd. gained, led by a gauge of real estate companies.
- China’s exports surged and its trade surplus unexpectedly widened in February, illustrating the lopsided nature of global commerce thatDonald Trump is preparing to introduce protectionist measures against. Overall exports rose 44.5 percent in February from a year earlier and those to the U.S. surged 46.1 percent, customs data showed Thursday. Import growth slowed to 6.3 percent to leave a trade surplus of $33.7 billion. China’s aluminum exports ballooned to a three-year high while those of steel dropped 27 percent for the first two months.
- Secretary of State Rex Tillerson said the U.S. is “a long way” from entering negotiations with North Korea about its nuclear program. There are “potentially positive signals” coming from North Korea, Tillerson told reporters Thursday in the Ethiopian capital, Addis Ababa, at the start of a five-nation tour of Africa.
- Wall Street’s hopes to squeeze $37 billion out of Lehman Brothers Holdings Inc. for its role in the mortgage crisis have long been dashed. Now firms are about to find out what fraction of that amount they can recover. U.S. Bankruptcy Judge Shelley Chapman will rule from the bench in Manhattan court Thursday on a long-running dispute over Lehman’s residential mortgage-backed securities, known as RMBS. The decision will put a final tally on what RMBS buyers can recover for alleged breaches Lehman made when it pooled together individual home loans made during the housing bubble.
*All sources from Bloomberg unless otherwise specified