April 13th, 2018
Daily Market Commentary
- Canadian stocks rose to the highest in a week but were unable to keep pace with bigger gains in U.S. markets, as losses in miners and telcos offset gains in tech and consumer shares. The S&P/TSX Composite Index rose 11 points or 0.1 percent to 15,269.27. Consumer discretionary shares rose 1 percent as index member Shaw Communications Inc. gained 9.8 percent, the most since 2004. Shaw’s new wireless subscribers were more than double analyst expectations.
- Crescent Point Energy Corp., a Canadian shale driller that expanded through acquisitions during the last oil boom, harshly attacked the credibility of an activist investor seeking to name board members. The oil producer urged shareholders to reject Cation Capital Inc.’s nomination of four candidates for the board, arguing the recently created firm has no plan, no track record, no prior engagement with the company and low investment. In a letter to shareholders, Crescent Point accused Sandy Edmonstone, a former Macquarie Capital Markets Canada Ltd. banker who is now president of Cation, of seeking to create “a quick win at your expense.”
- A proposed law that would increase ownership limits in Canadian railways and airlines has run into a delay as politicians wrangle over what new powers companies should have. Canada’s Senate has changed Bill C-49, a law originally proposed by Transport Minister Marc Garneau as a sweeping overhaul of the country’s transportation industry. The chairman of the Senate committee behind the changes said Garneau’s original version too heavily favored Canadian National Railway Co. and Canadian Pacific Railway Ltd. and airlines including Air Canada. The altered bill strengthens powers for farmers, shippers and airline passengers.
- Canada’s biggest city is looking to hop on the bandwagon of selling bonds to finance sustainability projects. Toronto may sell up to C$300 million of green securities in the third or fourth quarter of the year, Robert Hatton, Toronto’s acting executive director of corporate finance, told Bloomberg News in an interview.
- Trade-sensitive sectors climb in Europe after Trump expressed optimism on a deal with China and weighs rejoining the TPP pact. Builders and miners lead the Stoxx 600 Index to a third-straight weekly gain.
- A week after escalating tensions with his threat to impose tariffs on an additional $100 billion in Chinese products, Trump said Thursday the two countries ultimately may end up levying no new tariffs on each other. Traders’ focus is now turning to U.S. earnings season, with financial firms posting some of the biggest gains Thursday after BlackRock Inc.’s first-quarter results topped estimates. JPMorgan Chase & Co. and Citigroup Inc. are scheduled to release theirs on Friday.
- Asian shares rose, tracking equity gains abroad, after material and financial companies advanced as investors took a breather from trade war fears and refocused on prospects for corporate earnings growth. The MSCI Asia Pacific Index climbed 0.2 percent to 173.96 as of 4:29 p.m. in Hong Kong, with Japan’s Topix increasing 0.6 percent after the yen weakened against the dollar overnight.
- Oil headed for the biggest weekly advance since July as concern over possible disruption to supply lends weight to signs of a dwindling glut. Futures gained more than 8 percent this week in New York, buoyed by political tensions over Syria as U.S. President Donald Trump met with advisers to discuss punitive measures over an apparent chemicals weapons attack. OPEC and Russia can nearly declare “mission accomplished” as their production cuts have cleared almost all of a supply surplus, the International Energy Agency said.
- Gold futures had the biggest loss in two weeks as President Donald Trump signaled an attack on Syria may not be imminent, sending equities and the dollar higher and curbing haven demand for the precious metal.
- Aluminum prices are heading for the best week in at least three decades as U.S. sanctions on Russian producer United Co. Rusal send buyers scrambling to find supplies. Prices of the metal climbed to the highest since 2012 Thursday, helping push this week’s gain to almost 14 percent, the most in Bloomberg records going back to June 1987. The U.S. premium, or the amount added to the London Metal Exchange price of aluminum to ship metal to the Midwest, jumped by the most on record.
- For JPMorgan Chase & Co., last quarter’s volatility appears to have been just right. Revenue and profit for the first three months of 2018 rose to all-time highs, the bank said Friday, spurred by record results from stock trading. Revenue jumped at nine of the bank’s 11 largest business lines, according to a statement Friday.
- Rolls-Royce Holdings Plc’s mushrooming problems with engines that power a quarter of the Boeing Co. 787 jet fleet will force some carriers to modify flightpaths or switch to different aircraft as safety regulators limit operations, a person with knowledge of the matter said. The distance affected 787s can fly from the nearest diversionary airport will be slashed, curbing their ability to make oceanic flights, while engine checks will need to be carried out more frequently, regularly grounding planes, according to the person, who asked not be named as the measures aren’t yet public.
- President Donald Trump ordered the creation of a task force to review business practices at the United States Postal Service, a move that could affect one of the president’s favorite corporate targets:Amazon.com Inc. The Postal Service has lost more than $65 billion over the past decade as Americans increasingly transmit messages online, according to the executive order. The task force will be led by Treasury Secretary Steven Mnuchin or his designee, according to the order.
- Sage Group Plc fell by the most in over 24 years Friday, after the U.K.’s largest software company posted a surprise warning that sales had failed to hit expectations. Shares fell by 20 percent in London, the biggest drop since July 1993, after the company said growth will be hit by a decline in recurring revenue and poor performance in its enterprise software business. Sage is currently transitioning to a subscription model, attempting to get new customers to purchase new cloud-based products. However sales in Northern Europe and Africa, Middle East, failed to hit targets.
- Nervous Russian tycoons may be driving a selloff in the Swiss franc. The currency’s slide this week has been out of character with its status as a safe asset during times of market turmoil. The franc has fallen to its weakest level versus the euro since January 2015 while the yen, also a haven, has gained as the U.S. threatened military action in Syria, escalated a trade spat with China and slapped sanctions on Russian oligarchs.
- A Moscow court ordered telecommunications companies to block Telegram in Russia after the chat app refused to grant intelligence authorities access to users’ encrypted messages, in a blow to the company just weeks after it raised $1.7 billion from investors. Telegram Group Inc., run by its Russian founder Pavel Durov, failed to comply with local legislation, according to the ruling Friday by Tagansky court judge Yuliya Smolina that granted a request by Russian communications regulator Roskomnadzor to restrict user access with immediate effect. The decision can be appealed within 30 days.
- Members of an 11-nation Asia-Pacific trade pact said Friday they opposed any renegotiation of the deal to accommodate the U.S. should it decide to rejoin at a later date. Ministers from Japan, Australia and Malaysia welcomed President Donald Trump directing officials to explore returning to the Trans-Pacific Partnership, a pact he withdrew from shortly after coming to office. But they also cautioned against making any significant changes. “We welcome the U.S. coming back to the table but I don’t see any wholesale appetite for any material re-negotiation of the TPP-11,” Australia Trade Minister Steven Ciobo said Friday.
- Norwegian Air Shuttle ASA Chief Executive Officer Bjorn Kjos said the discount carrier being pursued by rival IAG SA isn’t for sale, reiterating a long-held stance. There have been many companies interested in acquiring Norwegian Air, which has “no interest in selling at all,” Kjos, a co-founder, told reporters in Oslo Friday. He said he has not spoken with IAG since the British Airways owner revealed it had acquired a 4.6 percent stake and is considering making a full offer.
- London Stock Exchange Group Plc hired Goldman Sachs Group Inc.’s David Schwimmer to run the 217-year-old bourse, ending a months-long search for a CEO by appointing another investment banker. He will join the group on Aug. 1 following a 20-year career at Goldman Sachs, the exchange said in a statement on Friday. Schwimmer, 49, takes up one of the most high-profile jobs in the City of London and is currently based in New York. He replaces interim CEO David Warren, who will retain his role as chief financial officer, the LSE said.
- Deutsche Bank AG may be downgraded by S&P Global Ratings, which said the German bank’s leadership change may signal a “prolonged, deepened or more costly restructuring” that could weigh on the bank’s credit rating. The lender’s A- long-term rating is under review, S&P said in a statement late Thursday, while affirming its BBB- rating on the bank’s senior subordinated debt.
- One of India’s biggest cryptocurrency trading platforms has lost about 438 Bitcoins worth some 190 million rupees ($3 million), allegedly due to a rogue employee. An official at Delhi-based Coinsecure was extracting Bitcoin to distribute to customers and he claims the funds were lost in the process, parent company Secure Bitcoin Traders Pvt. said in a statement posted on Coinsecure’s website late Thursday. The system wasn’t hacked or compromised, it said.
- Starbucks was downgraded to market perform from outperform at Cowen on increasing craft coffee competition and uncertain success with customer loyalty efforts, analyst Andrew Charles wrote in a note. Shares fall 1.3% in pre-market trade.
- Paul Jacobs, the ousted chairman of Qualcomm Inc., is making progress in lining up enough funding to offer to take the chipmaker private, and could make the bid within a few months, according to a person familiar with his plans. Jacobs, son of the company’s founder and a former chief executive officer, has received commitments giving the process momentum, the person said. He is talking with strategic investors, sovereign wealth funds and wealthy individuals to try to raise the funds and rates his chances of completing the deal at better than 50 percent, said the person, who asked not to be identified because the discussions are private.
- Hammerson Plc dropped as much as 14 percent in London trading after Klepierre SA abandoned its pursuit of the U.K. company, a deal that would have created one of the largest retail-property owners in Europe. Klepierre’s decision paves the way for Hammerson to proceed with its own acquisition of rival Intu Properties Plc which it put on hold last week while awaiting clarity. The French landlord had made two verbal bids for Hammerson, both of which were rejected by the U.K. mall owner. The second offer valued the company at about 5 billion pounds ($7.1 billion).
- Techcombank attracted cornerstone investors including Singapore sovereign fund GIC Pte and Fidelity Investments to its Vietnam initial public offering, which is seeking to raise as much as 21 trillion dong ($922 million). The Vietnamese lender, which is backed by Warburg Pincus, and existing investors are offering 164.1 million shares at 120,000 dong to 128,000 dong apiece, according to terms for the deal obtained by Bloomberg on Friday. The share sale could value Techcombank at as much as $6.5 billion, the terms show.
- Enel SpA is in preliminary talks to sell two biomass power plants, as Europe’s biggest utility seeks to focus on other renewables businesses, people familiar with the matter said. Rome-based Enel is in discussions with potential buyers interested in its biomass operations in Sardinia’s Macchiareddu area and in Finale Emilia in central Italy, said the people, who asked not to be named as the talks aren’t public.
*All sources from Bloomberg unless otherwise specified