By MacNicol & Associates In Morning Notes
October 10th, 2017
Daily Market Commentary
- Paris-based private equity firm Ardian is close to acquiring a $1 billion portfolio of stakes in other firms’ funds from Canada Pension Plan Investment Board, people with knowledge of the matter said. Ardian submitted the highest bid for the holdings at a recent auction, said the people, who asked not to be identified because they weren’t authorized to speak publicly. The portfolio consists primarily of midsize to large funds managed by North American firms.
- Vancouver plans to block developers from making pre-sales of upcoming properties to non-residents, saying such arrangements have already helped push the cost of an average home beyond C$1 million ($798 million) and driven locals out of the Western Canadian city.
- European stocks hold steady as investors await an address by the president of Catalonia on the outcome of the region’s referendum ruled illegal by the Spanish courts and ahead of minutes from the most recent Federal Reserve meeting due Wednesday.
- Politics remained the dominant theme in the markets on Tuesday as Spanish stocks declined and the euro rose before a pivotal meeting of Catalan’s regional parliament. The dollar weakened on concerns over U.S. tax reform and sterling rose as U.K. Prime Minister Theresa May won support for her Brexit stance.
- Asia stocks advanced as traders in Japan and South Korea returned from holidays, propelling the regional benchmark to a three-week high amid a broad weakness in the dollar. The MSCI Asia Pacific Index gained 0.7 percent to 164.47 as of 4:34 p.m. in Hong Kong, heading for its highest close since Sept. 20.
- Oil traded near $50 a barrel in New York before data forecast to show a third weekly drop in U.S. crude inventories, while Saudi Arabia said it will sell customers considerably less crude than they’re asking for. Futures rose 0.8 percent after advancing 0.6 percent on Monday, rebounding from a weekly loss.
- Gold climbs for third day as second biggest market gears up for its busiest period during Hindu Festival of Lights. Indian government lifted anti-money-laundering legislation, making it easier to buy large quantities of gold.
- Iron ore futures have been dragged back into the $50s, raising the possibility that the commodity may slump below this year’s low on concern that steel-output cuts in China will hurt demand over winter just as seaborne supplies from the world’s top miners expand.
- President Vladimir Putin is holding his first meeting with his top finance officials on cryptocurrencies as a debate rages on regulation of the instruments, according to four people with knowledge of the plans. Bank of Russia Governor Elvira Nabiullina and Finance Minister Anton Siluanovare flying to Sochi to meet with the president and his economic aide, Andrey Belousov.
- The U.K.’s fiscal watchdog said it will probably cut its forecasts for productivity growth again and that years of disappointing figures mean it’s no longer enough to blame the financial crisis. In an evaluation of its own projections, the Office for Budget Responsibility said previous predictions for a productivity pickup were based on an expectation that the post-crisis period of weakness probably reflected temporary influences. But growth has averaged just 0.2 per cent over the past five years, compared with 2.1 percent before 2008.
- The industrial scandal engulfing Kobe Steel Ltd. began to reverberate overseas as Japan’s third-biggest steelmaker said its staff falsified data about the strength and durability of some aluminum and copper products used in planes, trains and potentially a space rocket. Shares plunged 22 percent and bond risk jumped to a 19-month high as customers including Toyota Motor Corp., Honda Motor Co. and Subaru Corp. said they had used materials from Kobe Steel that were subject to falsification while Hitachi Ltd. said trains exported to the U.K. were affected.
- Spanish police are ready to arrest Catalan President Carles Puigdemont immediately if he declares independence in the regional parliament, according to two people familiar with the government’s plans. While a final decision on whether to act has not yet been taken, Spain’s National Police force has elite officers deployed in Catalonia who are prepared to join a raid if Catalan police try to shield Puigdemont.
- Honeywell International Inc. plans to spin off its automotive-turbocharger and household heating and security businesses in the first major portfolio shakeup under Chief Executive Officer Darius Adamczyk. The divisions will be turned into two stand-alone, publicly traded companies, in deals expected to be completed by the end of 2018, the manufacturer said Tuesday in a statement.
- HelloFresh SE, the unprofitable meal-kit startup owned by Rocket Internet SE, plans to sell as much as 300 million euros ($353 million) of stock in an initial public offering to finance expansion even after U.S. rival Blue Apron Holdings Inc. flopped in its IPO.
- Key shareholders are using the 30 percent plunge in Lupin Ltd.’s stock — the worst-performer this year on the benchmark S&P BSE Sensex — to boost their holdings. Lupin Investment Co. and other insiders bought a net $3.1b of shares in the past six months, the most among Asian companies, data compiled by Bloomberg show.
- A decade on from the last financial crisis, global regulators are close to putting the finishing touches on bank capital rules intended to prevent the next one. Negotiators in the Basel Committee on Banking Supervision last week came up with a plan to break a year-long deadlock that has delayed completion of the Basel III capital standards, according to people with knowledge of the talks. A final deal must be approved by the central bank governors and supervisors on the Basel Committee’s oversight body.
- U.K. regulators said they would look at the treatment of21st Century Fox Inc. employees as part of their review of its takeover bid for Sky Plc, opening the door to further scrutiny of how sexual harassment allegations were handled at Fox News. Setting out the terms of its review on Tuesday, the Competition & Markets Authority said its probe of the 11.7 billion-pound ($15.4 billion) merger would include an assessment of the companies’ approach to corporate governance, including oversight of workers’ treatment in the U.K. and overseas.
- Firefighters struggled overnight to control multiple fires that roared through California wine country Monday, killing at least 10 people, injuring numerous others, and torching more than 2,000 homes and businesses.
- UBS Group AG suffered a setback in its fight against charges it helped clients cheat on taxes when a French court rejected its bid to stop a former executive from striking a plea deal in the case.
- BAE Systems Plc will eliminate almost 2,000 jobs as it struggles to secure new orders for the Eurofighter Typhoon warplane and slims down its naval ships and cyber-security businesses. Some 1,400 posts will go at the company’s military-aircraft unit, which employs about 12,500 people, with a further 375 positions to be eliminated in the maritime division and up to 150 at the Applied Intelligence cyber arm.
- Thailand’s long wait for a return to democracy is set to end after the leader of the country’s military government said elections will be held in November 2018. An exact date for the poll will be determined around June next year, Prime Minister Prayuth Chan-Ocha told reporters in Bangkok on Tuesday
- HNA Group Co.’s technology outsourcing arm has asked banks to pitch for a role arranging a fundraising of about $300 million before a planned initial public offering, people with knowledge of the matter said.
- In what’s becoming a familiar pattern in U.S. economic data, the widespread damage from hurricanes Harvey and Irma in Texas and Florida also took a toll on small-business optimism, which fell in September to the lowest level since late 2016. The net share of companies planning capital expenditures fell to 27 percent from a 10-year high of 32 percent, figures from the National Federation of Independent Business showed Tuesday.
*All sources from Bloomberg unless otherwise specified