By MacNicol & Associates In Morning Notes
November 6th, 2017
Daily Market Commentary
- Canadian tax authorities are reviewing reports linking a key fundraiser for Prime Minister Justin Trudeau to offshore trusts in the Caribbean. Montreal-based businessman Stephen Bronfman, son of billionaire Charles Bronfman, was among the individuals cited by news organizations including the Canadian Broadcasting Corp., Radio-Canada and the Toronto Star Sunday in the latest leak of bank documents suggesting some global business leaders and politicians may be using offshore tax havens to shelter money.
- Valeant selling Sprout Pharmaceuticals subsidiary to a buyer affiliated with former shareholders of Sprout in exchange for a 6% royalty on global sales of ADDYI.
- A Canadian penny stock that soared almost 1,000 percent after announcing a deal to sell a magnesium deposit for $750 million may be about to return to earth. West High Yield (W.H.Y.) Resources Ltd., a Calgary-based miner that goes by the acronym WHY, said last month it sold the deposit in British Columbia for 46 times its market value in what would have been one of the biggest mining deals of the year.
- European stocks hold steady after their seventh weekly advance in eight, with miners heading for their highest level since January 2013. The Stoxx Europe 600 Index falls less than 0.1%, with a gauge of miners leading gains as they track metal prices higher. SBM Offshore slides after making a provision of $238m in relation to a reopened investigation into legacy issues and Unaoil, based on discussions with the U.S. Department of Justice.
- Stocks fluctuated and bonds advanced amid a cautious start to the week for markets, with the euro and dollar slipping as President Donald Trump tackled trade on his Asia tour. A crackdown on corruption in Saudi Arabia spurred oil. Ahead of a light week for economic data releases investor focus has turned to Asia and the U.S. president’s visit to the region. Trump has already brought up trade grievances about both China and Japan and has warned nations against challenging the U.S.
- Asian stocks edged lower for a second consecutive session after China’s central bank Governor Zhou Xiaochuan warned that the mainland’s financial system is becoming significantly more vulnerable due to high leverage. The MSCI Asia Pacific Index was down 0.1 percent to 169.72 as of 4 p.m. in Hong Kong. Financial stocks led the decline, with AIA Group Ltd. being one of the biggest drags.
- Oil traded near the highest level in two years after Saudi Arabia’s Crown Prince, Mohammed bin Salman, ousted officials during an anti-graft probe in the world’s biggest crude exporter. Futures rose as much as 1.2 percent in New York, gaining for a third session.
- Gold holds decline as odds of December U.S. interest-rate hike grow even after payrolls data provide mixed picture of strength of labor market. Stronger dollar and U.S. equities at record also weigh on prices.
- Iron ore surged on Monday as steel prices climbed, with mills in China cutting back on production amid government-ordered curbs to combat pollution. That’s spurring investors to focus on better consumption of higher-quality grades, while sustained economic growth is also providing support.
- Broadcom Ltd. offered $130 billion for Qualcomm Inc., kicking off an ambitious attempt at the largest technology takeover ever in a deal that would rock the electronics industry. Broadcom made an offer of $70 a share in cash and stock for Qualcomm, a 28 percent premium for the world’s largest maker of mobile phone chips as of the stock’s closing price on Nov. 2.
- Citigroup Inc. may face new obstacles to rebuilding its Saudi Arabia business after the bank’s longstanding shareholder and promoter was arrested in an anti-corruption drive. Prince Alwaleed bin Talal, the 62-year-old Saudi billionaire, was detained by authorities on Saturday without disclosure of the allegations. The government also named former HSBC Holdings Plc Middle East and North Africa headMohammad Al Tuwaijri as economy and planning minister as part of the crackdown.
- The House tax-writing committee begins debate Monday on the GOP’s proposed overhaul, kicking off four frantic days for lobbyists and lawmakers to revise a bill that represents President Donald Trump’s final hope for a signature legislative achievement this year. It could prove to be a make-or-break week. The head of the tax-writing panel,Kevin Brady, has signaled that he intends to allow revisions during his committee’s meetings this week — but not when the bill is on the full House floor.
- Qatar Airways Ltd.’s surprise purchase of a 9.6 percent stake in Cathay Pacific Airways Ltd. to gain a foothold in East Asia has damped a long-held speculation among investors that the Hong Kong flag carrier would soon merge with another major shareholder: Air China Ltd. Qatar Air on Sunday agreed to buy the stake for HK$5.16 billion ($662 million) from Hong Kong-based Kingboard Chemical Holdings Ltd. and related companies.
- Euro-area companies struggling to keep up with booming orders are expanding their ranks at the fastest pace in more than ten years. With a Purchasing Managers’ Index indicating strong momentum at the start of the fourth quarter, the 19-nation economy is on course for growth of as much as 0.7 percent, IHS Markit said on Monday. A gauge for manufacturing and services slipped to 56 in October from 56.7 the previous month, less than initially reported.
- China Evergrande Group, once the country’s most-indebted developer, raised 60 billion yuan ($9 billion) from selling a stake in a property unit to further reduce its leverage. The sale will cut Evergrande’s stake in Hengda Real Estate to 63.5 percent from 73.9 percent, the company said in a filing to Hong Kong’s stock exchange on Monday. This is the third time Evergrande has reduced holdings in the unit, having previously sold 70 billion yuan of its shares.
- Federal Reserve Bank of New York President William Dudley is close to announcing his retirement, according to CNBC, potentially widening the overhaul of leadership at the U.S. central bank and raising questions about what it means for monetary policy. Citing several people familiar with his plans, CNBC reported on Sunday that Dudley could soon announce his intention to step down during the spring or summer, well before his term ends in January 2019.
- U.S. Securities and Exchange Commission Chairman Jay Claytonis working to streamline the agency’s ad hoc approach to approving new exchange-traded funds, putting a spotlight on an issue that has vexed the regulator for a decade. Clayton, who joined the SEC in May, has asked staff to build upon a proposal that was nearly adopted before the 2008 financial crisis doomed its chances, three people familiar with the matter said.
- India’s benchmark sovereign bond yields climbed to a six-month high, as rising Brent crude prices added to concern that inflation will accelerate, dampening bets of more interest-rate cuts. Oil has climbed for four straight weeks, raising worries for bond investors in India, which relies on imports for most of its energy needs. Ten-year notes fell for a third straight month in October, the longest stretch since April 2015.
- DBS Group Holdings Ltd. Chief Executive Officer Piyush Gupta was determined to put the pain of soured energy-industry loans behind him — even if it meant profit missing the lowest analyst estimate by a wide margin. Southeast Asia’s largest bank on Monday said it boosted bad-loan allowances more than sixfold in the third quarter, resulting in a 23 percent drop in net income to S$822 million ($602 million).
- A group headed by some of the world’s biggest oil producers, trading houses and trade finance banks will develop a blockchain-based digital platform to manage physical commodity transactions. The group’s members, including producers BP Plc, Royal Dutch Shell Plc andStatoil ASA; trading houses Gunvor Group Ltd., Mercuria Energy Group Ltd. and Koch Supply & Trading; and banks ABN Amro Group NV, Societe Generale SA andING Groep NV, will form an independent venture to develop and operate the platform, they said Monday.
- Altice USA struck a deal with Sprint Corp. that will allow the cable operator to sell wireless service using Sprint’s network. As part of the agreement, Sprint will use Altice’s broadband infrastructure to strengthen its nationwide wireless network, according to a statement from both companies that didn’t disclose financial terms. Talks between Sprint’s majority owner, SoftBank Group Corp., to combine the carrier with T-Mobile US Inc.collapsed over the weekend after months of negotiations.
- Pakistan has picked arrangers for a potential $2 billion debt sale planned for later this year, according to two people familiar with the deal, in a bid to bolster falling reserves as the economy faces increased signs of stress ahead of elections next year.
- Indonesia’s economy expanded at a slower pace in the third quarter than economists expected, a disappointing outcome for the government as it struggles to boost growth in Southeast Asia’s largest economy.
- For Masayoshi Son, it all came down to keeping a tight grip on Sprint Corp. In his first public comments since ending talks to merge with T-Mobile US Inc., the billionaire chief executive officer of SoftBank Group Corp. defended his decision to walk away from a deal that had the potential to transform his two telecommunications companies.
*All sources from Bloomberg unless otherwise specified