April 16th, 2019

Daily Market Commentary


  • Canadian Headlines

    • Voters in the Canadian province of Alberta, home to the world’s third-largest oil reserves, head to the voting booth today in a divisive election that could have wide-ranging implications for the country’s environmental policy and global energy markets. Polls have consistently shown that United Conservative Party Leader Jason Kenney is on track to unseat center-left New Democratic Party Premier Rachel Notley. Recent surveys show his lead narrowing, with the UCP at 47 percent support, to 38 percent for the NDP, according to poll tracking by the Canadian Broadcasting Corp. The CBC projects 63 seats for the Conservatives, to 23 for the NDP. Polls close at 8 p.m. Calgary time.
    • Vancouver’s housing market is buckling under a slew of taxes and regulations introduced since 2016 to tame years of relentless growth that made the city the most unaffordable on the continent. The high end felt the impact first and has been the hardest hit: prices in West Vancouver, Canada’s richest neighborhood, are down 17 percent from their 2016 peak. The slowdown is now broadening: home sales in March were the weakest since the financial crisis and benchmark prices fell 8.5 percent from their record last June.


  • World Headlines

    • European stocks rose for a fourth straight session, with 16 of 19 industry groups posting gains. A surge in Zalando’s shares following a surprise profitable quarter boosted retail stocks, while bank stocks also rose. Oil shares were the worst-performing group. The Stoxx 600 index was up 0.2 percent, holding close to this year’s highest levels. Gains at the index level were muted, however, as investors awaited further results from U.S. banks to gauge how the earnings season might shape up, as well as Netflix’s update.
    • Oil’s march back toward a four-year high is now facing some roadblocks in the form of demand in Asia, though the path may clear to allow further gains later this year. While the current rally in global benchmark prices to over $71 a barrel will put pressure on government finances in Asia’s import-dependent nations, the level of fiscal stress typically doesn’t determine their crude purchases. Instead, the volume of shipments is influenced by the state of demand for fuel from industries and consumers in the world’s biggest oil-consuming region.
    • Gold is holding below its 100-day moving average, typically a bearish signal that could suggest the metal will fall further after sliding toward the bottom of its recent trading range. Silver also declined and is heading for its lowest close of the year. Gold fell Tuesday as the U.S. dollar rose and global stocks climbed, reducing demand for haven assets. Investors are showing confidence that the equity rally will get a further boost from a flood of corporate earnings due this week.
    • Venezuela sold about $400 million in gold despite a growing international push to freeze the country’s assets, according to two people with knowledge of the matter. The amount, which would equal almost 9 tons, was reflected by a drop in the bank’s total reserves, which fell to $8.6 billion on April 12, according to data provided by the central bank. About $5.1 billion of that is gold.
    • The best start to a year for emerging-market equities since 2009 has taken the benchmark index to less than 3 percent below a bull-market threshold. But unlike in the past, it’s not commodity producers driving the rally, but e-commerce companies such as Alibaba Group Holding and Naspers Ltd. That underscores how the growing middle classes in China and India are creating greater opportunities for the global investor than oil producers and miners.
    • At a time when Britain’s shopping streets are getting emptier, it’s perhaps surprising that the U.K.’s best performing stock since the turn of the century is not a tech phenomenon but a humble sneaker seller. JD Sports Fashion Plc shares have risen by 7,374 percent since Jan. 1, 2000, hitting a record on Tuesday after the retailer reported profit ahead of expectations. The stock is by far the best performer on the FTSE All-Share Index over that period, with second-placed Diploma Plc, a building components and seals maker, having returned a comparatively measly 4,200 percent. Bookmaker Paddy Power Betfair Plc is in third, up about 3,800 percent.
    • UniCredit SpA ended one its most of its most significant legal disputes by settling a U.S. probe over sanctions violations, clearing the path for the lender to focus on growing its business after years of cleaning up legacy issues. The bank pleaded guilty to U.S. charges that it allowed Iranian customers to conduct transactions in violation of sanctions and agreed with several U.S. authorities to pay $1.3 billion to settle a case has been hanging over UniCredit since 2011. The amount is more than covered by provisions, resulting in a 300 million-euro ($340 million) boost to first-quarter earnings.
    • Afghanistan is pushing to exploit its potential wealth of minerals and metals to help shore up the government’s battered finances, with plans to offer foreigners rights to develop gold, copper, oil and other resources. The government will invite bids for as many as 14 mining projects, acting Minister of Mines and Petroleum Nargis Nehan said in an interview. Developers will need to pay royalty rates specified in laws passed in 2018 and 2017, instead of proposing these payments themselves.
    • European Central Bank officials lack enthusiasm for any revamp of their negative-interest rate tool and some doubt it will actually happen when an analysis of the policy is completed, according to people with knowledge of the matter. ECB policy makers aren’t opposed to President Mario Draghi’s move to examine the impact of the measure but many don’t yet see merit in a switch to so-called tiering to exempt some bank excess reserves from the deposit rate, said the people. They didn’t want to be identified because such discussions are confidential.
    • Bank of America Corp.’s consumer bankers outdid their colleagues in trading for the second quarter in a row as the company leaned on retail lending to generate record profit. Net interest income at the consumer unit — revenue from customers’ loan payments minus what the bank pays depositors — climbed 9.7 percent in first three months of 2019 from a year earlier, fueled by a rise in loans from the retail business. That outweighed a 13 percent drop in trading revenue.

*All sources from Bloomberg unless otherwise specified