October 13th, 2017

 

Daily Market Commentary

 

Canadian Headlines

• Canadian stocks fell the most in five weeks as energy shares tumbled following a bearish report on crude prices from the International Energy Agency. The S&P/TSX Composite Index lost 58 points or 0.4 percent to 15,742.20, the biggest drop since Sept. 5. The energy sector fell 1.1 percent, closely tracking the 1.4 percent decline in West Texas Intermediate crude prices. The IEA said progress in clearing the global oil glut may stall next year.
• The key to replacing aging nuclear plants in the U.S. Northeast may lie 1,000 miles away, along a remote river tumbling through the Canadian wilderness. In boreal forests above the Gulf of St. Lawrence, Hydro-Quebec is building a series of dams that will generate enough electricity for more than one million homes. The $5.2 billion project on the Romaine River is part of a sweeping expansion the government-owned utility began in 2007, with the intention of selling power to the U.S. where nuclear reactors are closing.
• Two of the biggest Canadian dollar bond sales this year were triggered by signals of interest from an investor, showing the growing importance of demand in stoking the local debt market. Apple ended up selling C$2.5 billion ($2 billion) of bonds in August, Canada’s largest non-financial bond sale on record, and Disney priced C$1.25 billion of debt this month. That drove this year’s issuance in the Maple market to almost C$14 billion, the most since 2007 and more than triple the average from 2008-2016.

 

 

World Headlines

• European stocks rise as investors mull a report ECB officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months. The Stoxx Europe 600 Index rises 0.2%. Provident Financial Plc leads gains after the firm reiterated its August guidance for the home credit business.
• In the U.S., the Trump administration’s tax plan clouded up as the president was said to voice frustration with certain aspects of the existing framework. Some Congressional Republicans have aired concerns, though Treasury Secretary Steven Mnuchin reiterated his confidence that a plan will get passed this year. Data Friday on prices and retail sales may give more clues about the Fed’s policy path amid a debate about whether low inflation is temporary or permanent.
• Chinese consumer and healthcare stocks extend their rally ahead of expected strong September retail sales data next week and as investors turn more defensive ahead of the Communist Party congress
• Oil is heading for the biggest weekly gain since mid-September as a drop in U.S. crude stockpiles and near-record Chinese imports added to signs the global market is rebalancing. Futures added 1.5 percent in New York. China’s crude imports last month jumped to the second-highest on record, customs data show, while U.S. government data on Thursday showed crude inventories fell by 2.75 million barrels last week.
• Gold’s heading for its first weekly increase since early September as the dollar falters after Federal Reserve minutes suggest several policy makers are cautious about another 2017 interest-rate hike.
• Iron ore imports by China surged above 100 million metric tons to a record, smashing the previous high set in 2015, as the country’s concerted push to clean up the environment stoked demand for higher-grade material from overseas while hurting local mine supply. Prices rallied.
• European Central Bank officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months, according to officials familiar with the debate. Reducing quantitative easing to 30 billion euros ($36 billion) a month from the current pace of 60 billion euros is a feasible option, said the officials, who asked not to be identified because the deliberations are private.
• The chief executive officer of Samsung Electronics Co. is stepping down in a surprise resignation after decades at the company, saying the business needed new leadership following a bribery scandal that led to the imprisonment of its de facto chief. Kwon Oh-hyun, who also serves as co-vice chairman, announced his retirement on Friday as the Suwon-based company reported record operating income of 14.5 trillion won ($12.8 billion) on booming demand for displays and memory chips.
• BASF SE agreed to buy part of Bayer AG’s agricultural products business for 5.9 billion euros ($7 billion), seizing the opportunity to enter the genetically-modified seeds market as Bayer sells assets to clear the way for its $66 billion acquisition of Monsanto Co.
• Singapore’s central bank left its neutral policy stance unchanged on Friday, without re-committing that it remains appropriate for an extended period, giving itself room to tighten next year if necessary. After easing three times between January 2015 and April last year, the Monetary Authority of Singapore stuck to its neutral stance of zero appreciation in the currency, in line with the forecasts of all but one of the 23 economists surveyed by Bloomberg.
• Shares in Tsingtao Brewery Co. climbed the most since May after Asahi Group Holdings Ltd. went public with its plans to put a minority stake worth $1.2 billion in the Chinese brewer on the selling block as Japan’s largest brewer focuses on growth in Europe.
• Ophelia strengthened into a Category 2 hurricane forecast to strike Ireland, where it could come ashore as a powerful Atlantic storm threatening more than $750 million in damages. Ophelia’s top winds had risen to 105 miles (165 kilometers) an hour by 11 p.m. New York time on Thursday, reaching the second level of the five-step Saffir-Simpson scale.
• Uber Technologies Inc., the world’s largest startup, appealed a London regulator’s decision to revoke the car service’s license as it seeks more settlement talks. Uber, which can continue to operate during its appeal, was banned by Transport for London on Sept. 22 over safety concerns and the company’s attempts to avoid regulation. The lawsuit was filed at Westminster Magistrate’s Court Friday, the company said.
• In the 21 months since a landmark nuclear agreement freed Iran’s economy from crippling economic sanctions, investors eager to tap the country’s energy reserves and its 80 million consumers have waited for signs it was safe to enter the market in full force. Donald Trump is about to signal that they should keep waiting. The U.S. president is expected to announce on Friday that the multinational deal that eased sanctions in exchange for curbs on Iran’s nuclear program isn’t sufficiently beneficial to the U.S.
• Bharti Airtel Ltd. surged the most since in five months after it announced that it had agreed to absorb Tata Group’s mobile-phone business in the latest among mergers shaking up one of the world’s most crowded wireless markets. The stock gained as much as 9.2 percent, the most intraday since May 10, after India’s largest mobile-phone operator said it will get Tata Teleservices Ltd.’s airwaves and 40 million customers in a “debt-free cash-free” merger.
• Mercedes-Benz widened its lead in global luxury-car sales as the revamped E-Class sedan and a range of fresh sport utility vehicles fueled growth that outpaced BMW and Audi. Deliveries at Daimler AG’s Mercedes jumped 12 percent to 1.72 million vehicles in the first nine months of 2017. The growth rate was triple the 3.9 percent increase posted by BMW AG’s namesake brand, which sold 1.54 million cars. Volkswagen AG’s Audi slipped further back, with a 2 percent decline to 1.38 million autos in the period.
• On a single day in mid-September, more than $130 billion in metals changed hands in London.  About 1.8 million contracts in copper, aluminum and other metals traded on the London Metal Exchange on Sept. 15, according to statistics released last week. It was a record in the exchange’s 140-year history and triple the normal level of daily activity.

 

 

*All sources from Bloomberg unless otherwise specified