The Daily -November 24th, 2017

November 24th, 2017

 

Daily Market Commentary

 

Canadian Headlines

  • Canadian stocks were virtually unchanged with trading volume well below average because of the U.S. Thanksgiving holiday, as gains in commodity stocks offset declines in most other sectors. The S&P/TSX Composite Index rose less than 1 point to 16,074.30 on volume that was 73 percent below the 100-day average. The materials sector posted the biggest gain, adding 0.5 percent as copper prices rose. A strike at the world’s biggest copper mine pointed to potential supply risks in 2018.
  • Sobeys is cutting more than 800 jobs in an effort to cut costs and focus more on digitalization, Globe and Mail reports.
  • It seems Canada weathered the oil collapse better than previously thought. Numbers recently published on Statistics Canada’s online database show that between 2014 and 2016, the nation’s economy generated C$24 billion ($19 billion) more output in nominal terms than first estimated, according to Bloomberg calculations. The agency’s fully revised data will be officially released on Dec. 1, along with a report on third quarter 2017 gross domestic product.

 

 

World Headlines

  • European stocks hold steady, heading for their first weekly gain in three, while companies including Danone and Diageo rise on China’s new plan to cut import taxes on a range of consumer goods. The Stoxx Europe 600 Index adds 0.1%, with food-and-drink shares leading gains.
  • S&P 500 futures signaled a higher U.S. open. Earlier, a sudden selloff that sent Chinese equities plunging on Thursday fizzled. The dollar halted three days of losses in sluggish post-Thanksgiving trading.
  • Asian equities were set to cap the seventh weekly gain in eight weeks, driven by the global growth outlook, as Thursday’s abrupt selloffs in Hong Kong abated. The MSCI Asia Pacific Index retreated 0.1 percent to 172.73 as of 11:14 a.m. in Hong Kong as the Japanese market reopened after a holiday, after the benchmark closed at consecutive record highs on Wednesday and Thursday.
  • Oil headed for its best weekly advance in a month after an outage on the Keystone pipeline added to speculation crude supply could tighten and as investors await OPEC’s decision on extending output curbs. Futures gained as much as 1.2 percent in New York. News that TransCanada Corp. was said to have cut 85 percent of Keystone’s November shipments because of last week’s spill in South Dakota has helped West Texas Intermediate prices head toward a 3.5 percent gain this week.
  • Gold declines after release of minutes from latest Federal Reserve meeting and as Americans digest their turkey and pecan pie following Thursday’s Thanksgiving holiday. Minutes released Wednesday showed Federal officials meeting earlier this month saw an interest-rate increase in the near term even as tepid inflation drove divisions over the policy path.
  • Forget the winter chill, iron ore’s having a surprise day in the sun. The commodity has rebounded to a two-month high in what’s shaped up to be a strong week, with investors looking beyond China’s near-term clampdown on steelmakers to envisage a revival in demand next year.
  • OPEC and Russia have crafted the outline of a deal to extend their oil production cuts to the end of next year, although both sides are still hammering out crucial details, according to people involved in the conversations. The Organisation of Petroleum Exporting Countries and several non-OPEC nations led by Russia will meet next week in Vienna to discuss prolonging their output curbs. The Kremlin had been hesitating over the need for an extension when the current deal doesn’t expire until the end of March.
  • The $1.4 trillion item on President Donald Trump’s wish list — a package of tax cuts for businesses and individuals that he has said he wants to sign before year’s end — is headed into the legislative equivalent of a Black Friday scrum next week. Senate Republican leaders plan a make-or-break floor vote on their bill as soon as Thursday — a dramatic moment that will come only after a marathon debate that could go all night. Democrats are expected to try to delay or derail the measure, and the GOP must hold together at least 50 votes from its thin, 52-vote majority in order to prevail.
  • China’s new plan to slash import taxes on a wide range of consumer goods promises to boost the prospects of multinationals in the Chinese market, with everything from Procter & Gamble Co.’s diapers to Diageo Plc’s whiskey becoming more affordable to local consumers. Tariffs for 187 product categories will drop from an average 17.3 percent to 7.7 percent after the cut takes effect on Dec. 1, the Ministry of Finance said in a statement Friday, citing the need to help consumers access quality and specialty products that aren’t widely produced locally.
  • Japan denied Russian claims that its plan to buy a U.S.-developed ballistic missile-defense system posed any threat to the region. “It is a purely defensive system needed to protect the lives and property of our people,” Defense Minister Itsunori Onodera told reporters in Tokyo on Friday. “It does not present a threat to Russia or other neighboring countries. We have explained our thinking to Russia.”
  • The U.K. Labour Party is consulting a hedge fund that is betting against Britain’s currency and says the economy may need an International Monetary Fund bailout. BlueBay Asset Management LLP, which manages $57 billion of assets and is among investors that are speaking to the opposition party, is planning to meet its self-styled radical finance chief, John McDonnell, next week, according to people familiar with the matter.
  • BASF SE is in talks to combine its oil and gas unit with the energy company controlled by Russian billionaire Mikhail Fridman, setting the stage for one of the largest deals in the sector in some time, according to people familiar with the matter. Discussions between BASF’s Wintershall AG unit and rival Fridman’s Dea Deutsche Erdoel AG are advanced and the combined entity could be valued at more than 10 billion euros ($12 billion), said the people, asking not to be identified as the information is private. BASF may end up holding more than two-thirds of the merged business, the people said.
  • OPEC and Russia have crafted the outline of a deal to extend their oil production cuts to the end of next year, although both sides are still hammering out crucial details, according to people involved in the conversations. The Organisation of Petroleum Exporting Countries and several non-OPEC nations led by Russia will meet next week in Vienna to discuss prolonging their output curbs. The Kremlin had been hesitating over the need for an extension when the current deal doesn’t expire until the end of March.
  • African telecommunications group Econet is considering selling shares on the London Stock Exchange at a valuation of about $8 billion next year after combining new and existing assets, according to people familiar with the matter. That valuation would be based on an enlarged company, partly forged through the acquisition of additional African phone businesses, said the people, who asked not to be named because the details are private. The plans have not been finalized and the final valuation may change depending on market conditions.
  • U.K. officials tried to accelerate Brexit negotiations by suggesting that rather than wielding its veto next month, Ireland could hold fire and block a final accord if it wished, three people familiar with the talks said.
  • Noble Group Ltd.’s stock sell-off deepened as the trader pressed on with an effort to restructure its debt and transferred a block of shares to employees who are leaving the company. The shares sank as much as 9.7 percent to 16.7 Singapore cents, the lowest level since 1999, before ending at 16.8 cents. The stock has lost 18 percent since Friday’s close, dropping for a seventh week. The market capitalization, which once topped $10 billion, has collapsed to just $166 million.
  • Roiled by India’s high-profile corporate defaults, the nation’s lenders are tightening the screws on borrowers with stricter debt covenants and greater enforcement as the battle to curb delinquent loans intensifies. Banks are asking for collateral that may amount to one-and-a-half times the value of the debt on new loans extended and are insisting on contracts that allow loans to be turned to equity if the account becomes stressed, said Prabal Banerjee, chief financial officer at Bajaj Group. Borrowers in telecom, thermal power and steel businesses are among those facing strict terms, said S&P Global Ratings analyst Abhishek Dangra.
  • Stocks of Chinese property developers are a better buy than their bonds even after a huge rally, according to JPMorgan Chase & Co. That’s because the gap between developers’ dividend yields and credit spreads are narrowing after years of expansion — signaling stock prices have more room to advance in 2018.
  • Elon Musk knows how to make promises. Even by his own standards, the promises made last week while introducing two new Tesla vehicles—the heavy-duty Semi Truck and the speedy Roadster—are monuments of envelope pushing. To deliver, according to close observers of battery technology, Tesla would have to far exceed what is currently thought possible. The diminutive Tesla Roadster is promised to be the quickest production car ever built. But that achievement would mean squeezing into its tiny frame a battery twice as powerful as the largest battery currently available in an electric car.
  • Yandex NV, Russia’s largest technology company, received local antitrust approval to merge its ride-hailing business with Uber’s in the country, the Russian Federal Antimonopoly Service said Friday. Ordering rides from smartphone apps is driving growth in the Russian taxi market but the Yandex-Uber joint venture is required not to prevent its passengers, drivers and partners from working with other ride-hailing services, the FAS said in a statement.

 

 

 

*All sources from Bloomberg unless otherwise specified

 

 

 



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