By MacNicol & Associates In Morning Notes
November 21st, 2017
Daily Market Commentary
- Canada’s equity benchmark eked out a small gain as increases in pipeline shares offset declines in other commodity stocks. The S&P/TSX Composite Index added 6 points, or less than 0.1 percent, to 16,004.40, the highest in a week. Energy shares fell 0.4 percent even as pipeline stocks rose after Nebraska approved an alternate route for TransCanada Corp.’s Keystone XL pipeline.
- The quest to renew Nafta is slowing to a crawl as Canada and Mexico tiptoe around America’s most controversial proposals, throwing into doubt the ability of the three nations to reach a quick deal. The U.S. is frustrated with the reluctance of Canada and Mexico to present counter-proposals on key issues such as regional content rules for cars, which could make or break a deal. Mexico and Canada continue to portray key U.S. demands as unworkable, and are holding out hope the Trump administration will bow to pressure from U.S. lawmakers and corporations to keep core elements of the deal alive.
- European stocks pushed higher, while bonds across the region followed a rise in Treasuries after the European Central Bank was said to be likely to make only small adjustments to its guidance on monetary policy next year. Automakers and insurance companies led the advance in the Stoxx Europe 600 Index.
- In the U.S., confirmation that Federal Reserve Chair Janet Yellen will leave the board in February creates a fourth vacancy for President Trump to fill, making it trickier for investors to bet on the central bank’s interest rate trajectory next year. While the Thanksgiving holiday gives traders an excuse to pause, equities are heading into the end of the year near their peaks, with investors optimistic about global growth and company earnings.
- Asian equities gained, with the regional benchmark closing in on record levels, fueled by a rally in technology shares as investors sought out growth sectors. The MSCI Asia Pacific Index gained 0.7 percent to 171.16 as of 11:04 a.m. in Hong Kong, rebounding from a decline Monday.
- Oil rose near $57 a barrel in New York before U.S. government data forecast to show stockpiles dropped for the first time in three weeks. Futures added 0.6 percent after losing 0.5 percent on Monday. Inventories probably fell by 2.25 million barrels last week, a Bloomberg survey showed before data from the Energy Information Administration on Wednesday. In the United Arab Emirates, Energy Minister Suhail Al Mazrouei echoed the view of some fellow OPEC members as he urged an extension of output cuts.
- Gold gains after posting biggest drop in almost two months, tracking dollar moves. Investors await minutes Wednesday from latest Federal Reserve meeting and weigh Fed Chair Janet Yellen’s announcement that she’ll step down from board of governors after Jerome Powell’s sworn in.
- German Chancellor Angela Merkel said she’s ready to face voters again to break the country’s political stalemate, betting they won’t blame her for failed talks on forming a coalition. Regaining her footing after the sudden breakdown, Merkel made it clear in television interviews that she intends to serve her fourth term and prefers new elections to governing Europe’s biggest economy without a majority. Germany’s president, Frank-Walter Steinmeier, will start sounding out political parties on Tuesday to see if he can cajole them into an alliance with Merkel.
- Tencent Holdings Ltd. has surpassed Facebook Inc. in market value, becoming the first Chinese technology company to join the ranks of the world’s five largest corporations. Investors piled into the Chinese social networking giant, extending this year’s rally to 127 percent and boosting its market value by some $292 billion as of Tuesday’s close. That year-long surge has made founder Ma Huateng the mainland’s second-richest man and lifted the entire Hong Kongbourse. The operator of the ubiquitous WeChat messaging service is nowvalued at $523 billion, a whisker above Facebook’s $522 billion on Monday.
- Russian President Vladimir Putin held a surprise meeting with his Syrian counterpart, Bashar al-Assad, kicking off a diplomatic drive this week to outline the terms of an end to the Middle Eastern country’s bloody civil war. Putin said he’ll speak by phone with U.S. President Donald Trump later Tuesday. Putin has taken a dominant role in efforts to resolve the conflict after a two-year Russian military campaign helped Assad to fight off opponents, including some backed by the U.S.
- The U.S. lawsuit to stop AT&T Inc.’s takeover of Time Warner Inc. has sparked accusations that the Justice Department, driven by political meddling from the Trump White House, is pursuing a risky case that it’s bound to lose. Yet the move actually follows a mainstream approach to antitrust policy that sees risks to competition even from mergers that don’t combine direct competitors. The difference this time is the hard line drawn by the government on how to fix the resulting harm.
- EasyJet Plc said its fares are set to gain this winter, buoyed by the collapse of carriers including U.K.-based Monarch Airlines Ltd. and capacity cuts at main European rival Ryanair Holdings Plc. The demise of Monarch and Germany’s Air Berlin Plc, a bankruptcy filing at Italy’s Alitalia SpA and Ryanair’s move to scrap part of its timetable because of a staffing crisis are “all very good news for EasyJet,” Chief Executive Officer Carolyn McCall said in an interview Tuesday.
- Uniper SE advised its shareholders not to accept an offer from Finnish utility Fortum Oyj and said the price doesn’t reflect the German utility’s true value. Finland’s biggest energy company has offered to buy all of Uniper for 22 euros ($25.84) a share after this month receiving approval from Germany’s financial watchdog. The 8.05 billion-euro takeover bid doesn’t provide a clear development path for the Dusseldorf-based power producer, Uniper said Tuesday in a statement.
- Japan’s first-ever solar auction resulted in nine project approvals totaling 141 megawatts, less than a third of the capacity the government had offered as it introduced competitive bidding to cut costs. The lowest bidder, Hina, came in at 17.2 yen (15 cents) per kilowatt-hour, while two companies won with bids of 21 yen, the maximum rate set by the Ministry of Economy, Trade and Industry, according to a statement by the Green Investment Promotion Organization, a group in charge of the bidding process.
- Bitcoin slipped from a record after the $31 million theft of a cryptocurrency peer renewed concern about the security of digital coins. The company behind tether, a cryptocurrency used by bitcoin exchanges to facilitate trades with fiat currencies, announced the theft on Tuesday. It said in a statement that a “malicious” attacker removed tokens from the Tether Treasury wallet on Nov. 19 and sent them to an unauthorized bitcoin address. The company said it’s trying to prevent the stolen coins from being used.
- Lowe’s Cos. had a better-than-expected third quarter and can thank Harvey and Irma. The hurricanes that struck Texas and Florida in August and September and damaged other parts of the southern U.S. triggered a raft of repair work and business for the second-largest home-improvement chain. Sales and profit topped analysts’ estimates, helping drive the shares up as much as 3.1 percent in early trading.
- A Dalian Wanda Group Co. unit said the company is looking at options for its property projects stretching from Sydney to Chicago, after a newspaper reported that the Chinese group had approached potential investors about unloading five overseas developments for about $5 billion.
- WPP Plc backed down on its attempt to block Bain Capital LP’s $1.3 billion buyout of Asatsu-DK Inc. after negotiating a chance at a minority interest in the Japanese ad agency, ending weeks of public disagreement over the bid.
- Qatari phone carrier Ooredoo QSC decided to bid for the insolvent owner of Turkey’s biggest telecommunications company to rival an offer from Saudi Telecom Co., three people with knowledge of the matter said. A purchase by Ooredoo would extend the Doha-based company’s record of expanding to serve about 150 million customers from Algeria to Myanmar, largely through acquisitions. The plan by Saudi Telecom, which owns 35 percent of Otas’s parent, Oger Telecom, involves buying the company via a $750 million cash injection and committing to restructure a further $4 billion of debt.
- Investors dumped Zimbabwean stocks every day since the military seized power on optimism that 93-year-old President Robert Mugabewill be forced to step down. The stocks, which are denominated in U.S. dollars and were used to hedge against rising inflation, fell another 10 percent on Tuesday, bringing theZimbabwe Stock Exchange Industrial Index’s retreat since the army’s takeover on the morning of Nov. 15 to 35 percent.
*All sources from Bloomberg unless otherwise specified