By MacNicol & Associates In Morning Notes
November 3rd, 2017
Daily Market Commentary
- Canada’s equity benchmark fell for the first time in six trading days as weak results from North America’s largest pipeline operator weighed on energy stocks. The S&P/TSX Composite Index lost 14 points or 0.1 percent to 16,014.99. Energy shares retreated 1.2 percent as Enbridge Inc. fell 4.8 percent to the lowest in 20 months. Third-quarter profit missed estimates amid weakness in its natural gas business.
- The U.S. confirmed punitive tariffs on imports of softwood lumber from Canada as the two nations remain at an impasse over a trade agreement, although the penalties will be lower than previously indicated. Final average countervailing duties of 14.25 percent and anti-dumping duties of 6.58 percent will be levied on Canadian producers, the U.S. Department of Commerce said Thursday in a statement.
- Stelco Holdings Inc. raised C$200 million ($156 million) in its initial public offering, helping the Canadian steelmaker to restart some of its operations and fund growth after emerging from creditor protection in June. The company priced its shares at C$17 apiece, at the midpoint of its disclosedrange of C$16 to C$18 each, it said in a statement Thursday. The shares will begin trading Friday in Toronto under the symbol STLC on a so-called “if-and-when-issued basis” until the sale closes Nov. 10.
- Suncor Energy Inc. agreed to buy a 41 percent stake in PetroNor, a fuel distributor controlled by the James Bay Crees of northern Quebec. The deal follows a pledge by Suncor last year to increase the participation of aboriginal peoples in energy development, the Calgary-based oil producer said in a statement Thursday.
- European stocks are little changed, heading for a second consecutive weekly gain, as investors weigh earnings results and the latest U.S. tax-cut plans. The Stoxx Europe 600 Index gains less than 0.1%. Shares of automakers are among the biggest sector gainers, led by a 4% advance in Renault after France cut its stake in the company.
- The dollar gained as investors assessed the latest news on U.S. tax-cut plans and looked ahead to Friday’s American jobs report. U.S. employment probably surged in October, according to economists, rebounding from a hurricane-depressed September. The shift in focus to data follows a drop in Treasury yields Thursday as President Donald Trump confirmed that Federal Reserve Governor Jerome Powell is his pick to chair the central bank.
- Asian stocks outside Japan, which was closed for a holiday, edged higher and were poised for a weekly gain on the back of technology stocks. MSCI Asia Pacific Index excluding Japan rose 0.1 percent to 556.9 as of 4:31 p.m. in Hong Kong. Semiconductor Manufacturing International Corp. led gains Friday as Apple Inc.’s forecast for holiday sales buoyed suppliers in Asia.
- Oil extended gains from the highest close in more than two years on signs OPEC will agree to extend supply cuts when ministers meet in Vienna at the end of the month. Futures rose as much as 0.9 percent in New York and are heading for a fourth weekly advance. Iraq, the second-biggest OPEC producer, backs extending the curbs for a further nine months, Oil Minister Jabbar al-Luaibi said in Baghdad.
- Gold holds increase to head for weekly advance as investors weigh latest news on U.S. tax-cut plans before October jobs report due Friday for clues on the economy.
- President Nicolas Maduro said Venezuela will seek to restructure its global debt after the state oil company makes one more payment, blaming U.S. sanctions for making it impossible to find new financing. The government will transfer funds for a $1.1 billion principal payment on Petroleos de Venezuela bonds that came due Thursday, Maduro said from Caracas.
- The pound traded near a four-week low versus the dollar as the currency was weighed down by a dovish outlook for the U.K.’s interest-rate trajectory. Sterling erased earlier losses to be little changed following purchasing managers index figures that showed the sector — the main component of the economy — grew the most in six months in October.
- The House Republican tax writers’ plan is estimated to add $1.49 trillion to the deficit over a decade — just fitting in under the amount allowed under the congressional budget adopted last week. Tax changes for individuals and pass-through businesses, including rate cuts, doubling the standard deduction, repealing the alternative minimum tax and phasing out the estate tax would result in a net cost of $930 billion.
- The tax overhaul proposed in the U.S. House is a better bet for oil and gas companies than solar developers or electric car buyers, keeping with President Donald Trump’s decidedly fossil-fuel friendly views. The proposal, unveiled Thursday, slashes tax rates almost in half for most corporations, and expands the ability of businesses — from shale drillers to solar panel makers — to write off equipment. It keeps most of the oil industry’s most cherished tax breaks intact, as well as investment and production tax credits for renewable energy.
- U.S. multinationals including Apple and General Electric are suddenly looking at as many as three new taxes — estimated to raise $454.1 billion over a decade — under the House tax bill released Thursday. First, companies would no longer be able to escape U.S. taxes on what a Goldman Sachs research note estimated to be $3.1 trillion in earnings that they have stockpiled offshore for years. Those earnings would be taxed at rates as high as 12 percent and would generate an estimated $223 billion. Companies would have eight years to pay.
- Buyout firm CVC Capital Partners is exploring ways to acquire part or all of Clariant AG with a strategic partner, according to people familiar with the matter, after the Swiss chemicals company and U.S. rival Huntsman Corp. called off their planned merger. The London-based private equity firm is interested in buying the plastics and coatings unit by itself as well as partnering up with a company in a full takeover and then break-up that would leave it with that division.
- Arqiva Group Ltd., which owns U.K. wireless towers, and fresh-food producer Bakkavor Group Plc scrapped their planned initial public offerings in London, deterred by falling prices for some recent IPOs. Arqiva had planned a 1.5 billion-pound ($2 billion) offering that would have been the biggest in the U.K. this year, while Bakkavor sought to raise about 100 million pounds.
- U.K. services activity grew the most in six months in October as rising new orders bucked uncertainty from Brexit, according to a report by IHS Markit. Markit’s survey of purchasing managers rose in October to 55.6 from 53.6. Economists had forecast a decline to 53.3. Input cost inflation slowed to the weakest in more than a year, while new orders rose.
- France gave up some of its control over Renault SA with the sale of a 4.7 percent stake in the carmaker that was acquired in a contentious power struggle two years ago. The government sold 14 million Renault shares for 1.21 billion euros ($1.4 billion), reducing its stake back to its historical level of 15 percent, the state’s investment agency APE said. Renault acquired 1.4 million shares as part of the transaction and plans to offer them to employees, the Boulogne-Billancourt-based company said in a statement Friday.
- En+ Group Plc, the power and commodities company controlled by Russian billionaire Oleg Deripaska, went public by raising $1.5 billion in the country’s biggest initial public offering in four years. The deal values En+ at $8 billion after the IPO, making it one of Russia’s 30 largest public companies. It priced the global depositary receipts and shares at $14, the lowest end of an expected price range.
- The owner of Godiva chocolates is planning to sell shares in its Turkish discount grocery unit through a London initial public offering that may value the company at $3 billion or more, according to three people with knowledge of the plans. Yildiz Holding AS, which holds a controlling stake at the Istanbul-based retailer Sok Marketler Ticaret AS, is holding talks with international banks and may choose three or four to manage the sale, said the people, who asked not to be named because the plan isn’t public.
- Airbus SE is working with Emirates, the biggest buyer of its A380 double-decker airliner, on a follow-up deal, which would bring much-needed relief to a program that’s running out of orders as carriers pick smaller aircraft. The two sides hope to come to terms of an accord by the time of the Dubai Air Show, which takes place later this month, Airbus and Emirates representatives said on Friday in Hamburg, where Emirates took delivery of its 100th A380.
- Reliance Communications Ltd., the Indian mobile phone operator controlled by billionaire Anil Ambani, faces a bond coupon deadline Monday after temporarily halting payments to lenders. The interest payment of about $9.75 million is the latest test for the debt-laden company, which has faced a series of setbacks amid a shakeout in the world’s second-largest telecom market. It announced last month the collapse of its merger plans with rival Aircel Ltd., a deal which could have helped it pare debt and better compete with rivals.
- China plans to examine whether domestic firms are circumventing restrictions on overseas investments, a move that may further hinder Chinese companies’ ability to pursue global assets as the government steps up its year-long campaign against capital outflows. The National Development and Reform Commission is drafting rules for local companies to report investments exceeding $300 million through their offshore units, the regulator said on its website on Friday. It will also require approvals for what the government deems to be “sensitive” projects, according to the NDRC, which is seeking feedback from the public until Dec. 3.
- Waymo’s bid to recover $1.86 billion in a trade secrets case against Uber Technologies Inc. may have hit a speed bump as a federal judge cut the company’s damages expert from the case, one month before a trial over driverless technology. The decision leaves the Alphabet Inc. unit without an outside source to explain why it deserves the startling amount in an industry that hasn’t been commercialized or generated revenue for either company.
- Volkswagen AG, BMW and Daimler AG will start building fast-charging stations along European highways this year, making progress with the joint project even as allegations of a technology cartel have put a cloud over cooperative efforts. The year-old partnership, which includes Ford Motor Co., will establish 20 stations along major roads in Germany, Norway and Austria this year, rising to about 400 by the end of the decade, the companies said Friday in a statement. Through 2018, they will expand the network to more than 100 sites to ease concern among drivers of electric cars over ending up stranded on long trips.
- Bain Capital LP is in the final stages of bidding for Blackstone Group LP’s seaplane operator in the Maldives, the tropical island chain known for its white sand and turquoise waters, according to people familiar with the matter. The buyout firm is partnering with Chinese conglomerate Tempus Group Co. in its bid for control of Trans Maldivian Airways Pvt, the people said, asking not to be identified because the matter is private. The consortium has been discussing a valuation of about $500 million, though precise terms are still under negotiation, according to one of the people. Blackstone remains in talks with other potential acquirers.
*All sources from Bloomberg unless otherwise specified