By MacNicol & Associates In Morning Notes
November 14th, 2017
Daily Market Commentary
- Canadian stocks fell for a fourth day, the longest streak of declines in two months, amid a global risk-off trade prompted by growing pessimism over the likelihood of successful U.S. tax reform. The S&P/TSX Composite Index lost 13 points or 0.1 percent to 16,026.26, the lowest in more than a week.
- Bombardier Inc sealed the second deal for its C Series jet since reaching a landmark agreement with Airbus SE a few weeks ago that will see the European planemaker take control of the program and help revive the fortunes of the narrow-body plane. EgyptAir Airlines Co. plans to buy 12 of Bombardier’s biggest variant of the jet the CS300, and has options for a further 12, the carrier said Tuesday at the Dubai Air Show. The deal is valued at $1.1 billion before discounts.
- Canadian dollar bulls, on their back foot for much of the past two months, may be about to catch a break from the surge in oil. With West Texas Intermediate rallying to the highest since 2015, there are signs that the link between crude prices and the Canadian dollar is reviving.
- European stocks halt a five-day selloff, with German shares rising after data showed faster-than-expected economic expansion in the country. The Stoxx Europe 600 Index adds 0.2%, after the rout through Monday sent it to a seven-week low.
- Markets have been under pressure in the past week after a global rally took U.S. stocks to records and Japan’s to the highest in a quarter century. Meanwhile, U.S. inflation and retail sales numbers that could influence Federal Reserve interest-rate hike odds are on the docket tomorrow, and U.S. tax discussions are ongoing.
- Asian equities dropped, heading for a third day of declines, as data showed China’s economy is moderating. The MSCI Asia Pacific Index retreated 0.1 percent to 169.97 as of 11:43 a.m. in Hong Kong, with real-estate companies and energy producers leading losses.
- Oil traded below $57 a barrel as the International Energy Agency trimmed estimates for demand this year and next. Futures dropped 0.4 percent in New York. This year’s price gains along with milder-than-normal winter weather are putting a brake on demand growth, the IEA said in a report Tuesday.
- Gold may be set on a perilous path as central banks withdraw the liquidity punch bowl that has driven stock markets to record highs. As a world recovery gathers pace, the Federal Reserve is shrinking its balance sheet and raising interest rates, while the European Central Bank is about to begin tapering bond purchases.
- China’s sovereign bond selloff reached a fresh milestone, with 10-year yields breaching 4 percent for the first time in more than three years and analysts warning that losses are set to accelerate. Yields on debt due in a decade rose as much as four basis points to 4.01 percent on Tuesday, extending their climb since the start of October to 39 basis points even after data this week signaled economic growth is moderating and borrowing has slowed.
- U.K. inflation held at a 5 1/2-year high in October, as cheaper auto fuel offset the rising cost of food. Consumer prices rose 3 percent from a year earlier, the Office for National Statistics said on Tuesday. Economists had expected inflation to accelerate to 3.1 percent.
- Woodside Petroleum Ltd. fell the most in 16 months after Europe’s biggest oil company, Royal Dutch Shell Plc, said it would offloaded its entire holding in the Australian liquefied natural gas producer for $2.7 billion.
- AT&T Inc. will try to dig into whether the White House influenced the Justice Department’s review of the company’s planned takeover of Time Warner Inc. if the government sues to block the deal, according to people familiar with the matter. In the event of a trial over the $85.4 billion deal, AT&T intends to seek court permission for access to communications between the White House and the Justice Department about the takeover.
- Amazon.com Inc. agreed to sell some of its Chinese cloud assets to its local partner but said it’s committed to a domestic market for internet-based computing that could be worth $30 billion. Beijing Sinnet Technology Co. will buy servers and other unspecified “operational assets” in the country’s capital from Amazon Web Services for as much as 2 billion yuan ($302 million), it said in a filing to the Shenzhen stock exchange. The sale is intended to comply with government regulations and improve service, it said.
- Citigroup Inc. and UBS Group AG are among international banks managing the largest share of assets for wealthy Saudis, some of whom are being investigated as part of a government probe into alleged corruption, according to people familiar with the matter. JPMorgan Chase & Co. and Credit Suisse Group AG also manage billions of dollars for some of the kingdom’s richest individuals, the people said, asking not to be identified because of the sensitivity of the matter.
- Bharti Airtel Ltd., India’s biggest wireless carrier, raised about $507 million selling a stake in its infrastructure arm after it increased the size of the offering. The Indian operator sold 83 million shares of Bharti Infratel Ltd., or a 4.5 percent stake, at 400 rupees apiece, according to terms for the deal obtained by Bloomberg. The final price, which was at the bottom end of a marketed range, represents a 3.7 percent discount to the stock’s last close.
- Analysts are more optimistic than the U.K. government that an agreement will be reached with the European Union next month to move Brexit talks on to trade even as Theresa May’s political troubles continue to weigh on the country’s beleaguered currency. A Bloomberg survey of seven banks pegged the odds of a Britain-EU accord in December at 68 percent. That’s more than Brexit Secretary David Davis, who put the chances of a breakthrough by December at 50-50
- Hurricanes are generally bad for businesses, but not for Home Depot Inc. The world’s largest home-improvement chain benefited from the cleanup and rebuilding efforts after a barrage of hurricanes in August and September. That helped third-quarter sales top analysts’ estimates and prompted the company to raise full-year forecasts, driving the shares up 2.2 percent in pre-market trading.
- CJ CGV Co. said it may add U.K.-based cinema chain Vue International to its list of possible takeover targets as South Korea’s largest movie-theater operator takes on bigger rivals such as China’s Dalian Wanda Group Co. by snapping up theaters in Europe and the U.S. The company is seeking to hire bankers to evaluate Vue, though it hasn’t decided whether to make a bid, a CJ spokesman said. The U.K.-based cinema operator may be valued at 2 billion pounds ($2.6 billion) or more, Sky News reported earlier Monday, citing insiders it didn’t identify.
- Silver Lake, the world’s largest private equity firm focused on technology, may try to raise as much as $1 billion to venture into credit investing, people with knowledge of the matter said. The firm would use the pool to invest in the debt of technology and other companies, said the people, who asked not to be identified because they weren’t authorized to speak publicly. No final decision has been made and Silver Lake could decide not to pursue the offering, the people said.
- Airbnb Inc., the home and apartment rental company, pulled in about $1 billion in net revenue for the quarter ended in September, according to people familiar with its financial results. The third quarter gross income continued Airbnb’s profitability streak. The nine-year old travel upstart has maintained a steady profit before interest, taxes and amortization, for at least 17 months.
- Pratt & Whitney is close to unveiling a design change for engines used in Airbus SE A320neo and Bombardier Inc. C-Series jets aimed at fixing issues with a carbon seal that has led customers to ground dozens of brand new planes, a person with knowledge of the matter said.
- U.K. antitrust regulators provisionally approved Tesco Plc’s 3.7 billion-pound ($4.9 billion) acquisition of wholesaler and convenience-store operator Booker Group Plc, confounding expectations that the U.K.’s largest retailer would need to offer concessions to secure the deal.
*All sources from Bloomberg unless otherwise specified