By MacNicol & Associates In Morning Notes
October 5th, 2017
Daily Market Commentary
- Canadian stocks fell for the first time in six trading days as a short-seller’s report targeting Shopify Inc. pressured technology shares. The S&P/TSX Composite Index lost 8 points or 0.1 percent to 15,721.00. Shopify was the biggest obstacle, losing 12 percent after Citron Research called it a “get-rich-quick scheme.” The technology sector lost 1.3 percent.
- The riskier waters of Canada’s market for bonds backed by credit-card debt are drawing yield-hungry investors — even as household borrowing is at record levels. In one asset-backed security deal this week sold by Eagle Credit Card Trust, the lower-rated portions received about double the number of typical buyers, according to people with knowledge of the transaction that totaled C$250 million ($200.4 million).
- European stocks drop, heading for first back-to-back losses in a month, as investors watch for fresh catalysts amid a political crisis in Spain. The Stoxx Europe 600 Index falls 0.2%, dragged lower by losses in health care and banks. Spain’s benchmark IBEX 35 Index gains, rebounding from Wednesday’s drop that was its largest since the Brexit vote.
- Asian stocks were mixed after a four-day rally, with markets in Hong Kong, China and South Korea all closed for holidays. The MSCI Asia Pacific Index was little changed at 162.93 as of 4:30 p.m. in Hong Kong. On Wednesday, the S&P 500 Index posted a slight gain, still ending at a fresh record, after data showed American services industries climbed at the fastest pace in 12 years, while private jobs numbers met expectations.
- Oil traded near $50 a barrel in New York as traders weighed a flood of U.S. crude exports against the possibility of extended production cuts by OPEC and Russia. Futures added 0.4 percent after settling at a two-week low on Wednesday. Overseas shipments from the U.S. jumped to a record last week as production rose, government data showed.
- Gold holds gain as investors await U.S. payrolls data due Friday for clues on strength of economy, likelihood of rise in interest rates by year-end.
- Amazon.com Inc. is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses, according to two people familiar with the plan, which will push the online retailer deeper into functions handled by longtime partners United Parcel Service Inc. and FedEx Corp.
- Sempra Energy said it won’t add new debt to the parent of Texas power-line utility Oncor Electric Delivery Co. under revised deal terms aimed at winning over regulators. Sempra will acquire all of Energy Future Holdings Corp., which owns an 80 percent stake in Oncor, instead of relying on third-party investors for its $9.45 billion takeover, according to a statement Wednesday.
- House and Senate Republicans will take their first concrete steps Thursday toward enacting a major U.S. tax cut by advancing budget resolutions for fiscal 2018 — and it only gets harder from here. Republicans are arguing over the size of proposed tax cuts, whether those cuts should add to the federal deficit, and which tax breaks to eliminate — in particular the deduction for state and local taxes.
- Dialog Semiconductor Plc agreed to buy integrated circuit provider Silego Technology Inc. for $276 million in cash to strengthen its position in automotive and mobile device markets. The acquisition would be one of Dialog’s largest since a failed bid for Atmel Corp.
- Siemens AG’s complete withdrawal from the lighting industry further scales back the once sprawling German conglomerate, as Chief Executive Officer Joe Kaeser offloads assets from trains to medical scanners to household equipment in rapid succession. The Munich-based company completed the sale of its remaining 17 stake in light manufacturer Osram Licht AG, raising about 1.2 billion euros ($1.4 billion) and exiting a business in which it was involved for the better part of a century.
- U.S. crude exports climbed to a record last week thanks to Hurricane Harvey, but the bonanza may be short lived. Lower demand from Gulf Coast refiners that are still recovering from the August storm has caused crude sellers to seek markets abroad, triggering shipments of 1.98 million barrels a day, the highest level in weekly government data compiled since 1993.
- As U.S. President Donald Trump threatens to destroy North Korea, even some of his closest aides have warned of the potentially disastrous effects of a war. New research published on the 38 North website points to just how catastrophic the impact might be on the regime’s neighbors. If Kim Jong Un were to launch a nuclear attack on Seoul and Tokyo — both within striking distance of his weapons — as many as 2.1 million people could die and another 7.7 million could be injured, according to the 38 North report.
- Nippon Life Insurance Co. is in final talks to acquire a majority stake in Massachusetts Mutual Life Insurance Co.’s Japan business, a person with knowledge of the matter said. The Japanese insurer will spend between 100 billion yen and 200 billion yen ($890 million to $1.8 billion) on the acquisition, the person said, asking not to be identified because the discussions are private.
- As automakers race to put battery-powered cars on the road, a Boeing Co.-backed startup plans to put a hybrid-electric aircraft into commercial service within five years. Zunum Aero’s 12-seat plane will carry battery packs and a small fuel reserve for a back-up engine. The first model will fly about 700 miles, far enough to ferry travelers from Boston to Washington or Silicon Valley to Los Angeles, the company said Thursday.
- Cooperation between Saudi Arabia and Russia has “breathed life back into OPEC” and made the country more optimistic about the outlook for oil than it has been for several years, said the kingdom’s energy minister. The success of the collaboration between the world’s two largest oil exporters is clear, said Saudi Minister of Energy and Industry Khalid Al-Falih.
- Saudi Aramco isn’t talking with any Russian companies about possible participation in its initial public offering, the head of the state oil producer said as Saudi Arabia’s king led a delegation on a historic visit to Russia. Aramco plans to sell about 5 percent of its shares by the end of 2018 in what could be the world’s largest IPO. Saudi Arabia and Russia share common energy interests and are continuing discussions on energy cooperation, Chief Executive Officer Amin Nasser told reporters Thursday in Moscow.
- Spanish Economy Minister Luis de Guindos ruled out any sort of mediated talks with separatist leaders and said Catalan banks have signaled they may move out of the region if the push for independence continues. Speaking on Thursday in a Bloomberg Television interview, de Guindos slammed the Catalan administration for its illegal actions and said independence is out of the question.
- U.K. Prime Minister Theresa May is losing the confidence of her colleagues and should consider stepping down, a former minister suggested, after a key speech aimed at revitalizing her leadership descended into chaos. Conservative lawmaker Ed Vaizey said he had concerns about May continuing as leader of the party and believed that many of his colleagues feel the same.
- Malaysia’s two biggest pension funds, which manage a combined $203 billion, plan to pursue talks to buy stakes in foreign-owned insurers in the country as the government enforces caps on overseas ownership, people with knowledge of the matter said.
- Bain Capital confirmed that it plans to take Toshiba Corp.’s flash-memory unit public in a few years, a week after the U.S. private equity firm’s consortium inked a final agreement to acquire the business for about 2 trillion yen ($18 billion).
- A trade dispute over solar imports has stalled clean-energy projects across the U.S. With the looming prospect of tariffs driving up the price of panels, utilities and businesses are holding off on signing deals to buy solar power. It may be months before they get more clarity.
*All sources from Bloomberg unless otherwise specified