April 5, 2023
- Toronto home prices rose for a second month as buyers coming out for the traditional spring selling season were met with a smaller number of newly listed properties. The benchmark price for a home in Canada’s largest city climbed 2.5% to C$1.12 million ($830,000) in March from a month earlier, according to a report released Wednesday by the Toronto Regional Real Estate Board. Both sales and new listings in the greater Toronto area were down from a year earlier. Toronto property prices are bouncing back from a slump attributed to last year’s surge in borrowing costs, which caused values to plunge more than 19%. Part of the price increase in March could be due to a tighter market, as new listings fell by a much bigger annual rate than sales.
- Teck Resources Ltd.’s public rejection of a $23 billion offer from Glencore Plc has fired the starting gun on a three-week countdown for the Swiss commodities giant to keep its proposal alive. Glencore isn’t actually trying to buy any Teck shares yet. There would be little point, after the company’s controlling investor — Canadian mining patriarch Norman Keevil — made clear he’s not interested in selling. Instead, the future of Glencore’s proposal for now depends on convincing Teck’s other shareholders to reject the company’s current strategy to split into two, at a vote scheduled for April 26. Ironically, the same dual-class structure that gives Keevil his power through supervoting shares may also provide an opportunity for Glencore. Teck’s plan to separate its base metals and coal businesses will require two-thirds approval from both sets of investors separately — the powerful “A” shares dominated by the Keevil family, as well as the regular “B” shares.
- European stocks dipped slightly as investors rotated into more defensive sectors ahead of the Easter holidays, while mulling the outlook for monetary policy amid softening economic data. The Stoxx 600 Index was 0.2% lower by 10:17 a.m. in London. Defensive sectors, such as utilities, telecoms and healthcare, outperformed, while tech — the winner of a recent rotation toward growth shares — dropped. European stocks had their worst March since 2020, and faced with mixed economic data, the outlook for monetary policy is getting harder for traders to predict. Defensive and growth stocks have benefited from a recent rotation in European equities as recession worries resurfaced following the banking sector turmoil. Most markets in Europe will be closed Friday and Monday in observance of the Easter holidays.
- Stocks and US index futures dropped as hawkish messages from the New Zealand and Australian central banks signaled a prolonged fight against inflation and revived concerns about an economic slowdown. Contracts on the S&P 500 Index slipped 0.2% and Europe’s Stoxx 600 declined for a third day. Gold traded near a 13-month high, while Treasury yields rose. Meanwhile, the two-year Treasury yield rose 5 basis points to 1.2%, after a 14 basis point drop yesterday. Swap contracts downgraded the odds of a quarter-point rate hike at the Fed’s May meeting to around 50%, compared with a peak of 70% on Tuesday.
- Asian stocks fell, led by a slump in the heavyweight Japanese market, as investors remain concerned about the impact of higher borrowing costs on the world economy. The MSCI Asia Pacific Index fell as much as 0.5% with Toyota Motor and Daiichi Sankyo among the biggest drags on the gauge. New Zealand’s equity benchmark erased gains to fall 0.3% while its currency jumped after the central bank unexpectedly raised interest rates by 50 basis points. Markets in China, Hong Kong and Taiwan were shut for a holiday. Japan’s Topix slid 1.9% with the yen’s recent strength also weighing on local shares. The currency has climbed about 5% from its March low against the dollar and a renewed focus on the narrowing gap between US and Japanese yields has opened up the door for further gains, some traders say.
- Oil steadied as traders await official US inventory data following a volatile start to the week marked by unexpected OPEC+ supply cuts. West Texas Intermediate traded near $81 a barrel after closing at the highest level in almost 10 weeks. The industry-funded American Petroleum Institute reported nationwide crude stockpiles fell by 4.3 million barrels, including a drop at the key storage hub in Cushing, Oklahoma, according to people familiar with the data. Crude rallied by almost 7% in the first two days of the week after the Organization of Petroleum Exporting Countries and its allies including Russia blindsided the market with a surprise supply cut. The cartel’s move, apparently aimed at investors betting against gains, reinvigorated the debate among leading banks about whether crude can rally back to $100 a barrel.
- Gold extended a surge to a 13-month high after US data showed the jobs market loosening, diminishing bets the Federal Reserve will hike interest rates again. The precious metal on Tuesday closed above the $2,000 an ounce threshold for the first time since March 2022, after data showed vacancies at US employers dropped in February to the lowest since May 2021. It’s a welcome sign for the Fed, which has tried to cool the labor market to slow inflation. Spot gold rose 0.1% to $2,022.56 an ounce as of 10:16 a.m. in London, after closing up 1.8% in the previous session. The Bloomberg Dollar Spot Index was steady. Silver edged lower after surging 4.3% on Tuesday, while platinum and palladium were little changed.
- Iron ore extended its decline as China continued its sweeping campaign to tame prices. The steelmaking raw material has fallen almost 6% this week and neared a four-month low earlier Wednesday before paring losses as fresh regulatory pressures hit market sentiment. On Tuesday, China’s National Development and Reform Commission urged futures companies to analyze the iron ore market in an objective manner to avoid exaggerating the atmosphere of price increases. The announcement arrived after China last month vowed to implement steel output cuts for a third year and in January summoned traders to explain iron ore price hikes. Tightening regulatory pressures come just as the market is aiming for a boost in steel consumption, led by the nation’s usual peak construction period from April to June.
- US President Joe Biden will visit Northern Ireland and the Republic of Ireland next week to coincide with the 25th anniversary of the signing of the Good Friday Agreement. Biden will first travel to Belfast in Northern Ireland from April 11 to 12, according to an emailed statement statement from the White House on Wednesday. He will then travel to Ireland until April 14. The trip to Northern Ireland will be to mark the “tremendous progress” since the signing of the Good Friday Agreement – the 1998 peace treaty which largely ended decades of sectarian violence in the region. Biden will “underscore the readiness of the United States to support Northern Ireland’s vast economic potential to the benefit of all communities,” the White House said.
- Johnson & Johnson said it agreed to pay $8.9 billion to resolve all cancer lawsuits tied to its talc-based powders and will make a fresh attempt to contain the liability within a bankruptcy filing by one of its units. The world’s largest maker of health-care products hopes to settle complaints from about 60,000 claimants and fund a trust set up in US bankruptcy court in Trenton, New Jersey, to cover future claims, the company said Tuesday in a securities filing. J&J has already withdrawn its talc-based baby powder and others, including Shower to Shower, from the market. J&J’s LTL Management unit filed a new Chapter 11 case to provide a basis for the trust, which outlines terms for settling the decade-long litigation. An earlier filing, which didn’t include a settlement, was rejected in January after an appeals court found J&J erred in using bankruptcy to block juries from hearing lawsuits and handing out damage awards. J&J wants a reorganization plan for LTL that caps all the talc liability.
- PT Merdeka Battery Materials will raise 8.75 trillion rupiah ($586 million) from its initial public offering in Jakarta as it prices shares at the top end of an expected range, according to people with knowledge of the matter. The firm, a unit of miner PT Merdeka Copper Gold, is selling 11 billion shares at 795 rupiah each, the people said, asking not to be named because the terms are not public. It had offered the shares at 780 to 795 rupiah apiece. The deal can be upsized by another 1.1 billion shares. Merdeka Battery is raising funds at a time of surging interest in the nickel industry, which sits at the heart of President Joko Widodo’s vision of developing an end-to-end electric vehicle supply chain onshore. It’s set to be the third largest IPO this year in the Southeast Asian country.
- President Joe Biden’s trade chief said the US is working with allies to counter unfair competition from China, seeking to create new agreements that bolster American supply chains and address longstanding vulnerabilities. The Biden administration, according to US Trade Representative Katherine Tai, is adopting a trade strategy that addresses problems that the US and its partners in the past failed to anticipate, such as China’s rise and its dominance of many parts of the global economy. One example is the Global Arrangement on Sustainable Steel and Aluminum that the US is negotiating with the European Union. It addresses China’s massive state subsidies, which the US has long said give Beijing an unfair advantage and cause global overproduction of the metals, reducing prices for American manufacturers.
- US 30-year fixed mortgage rates fell for a fourth-straight week, though applications to buy a home declined for the first time in a month. The contract rate slid 5 basis points to a seven-week low of 6.4% in the period ended March 31, Mortgage Bankers Association data showed Wednesday. The group’s index of mortgage applications to purchase a home decreased 3.5%. Mortgage rates have fallen repeatedly in recent weeks after the collapse of several banks helped drive down Treasury yields, which impact mortgage rates. That said, borrowing costs remain generally high and housing inventory low, keeping a cap on homebuying activity.
- Amazon.com Inc. and Microsoft Corp.’s cloud services could be limiting competition among internet companies in the UK, the country’s digital regulator said as it recommended Britain’s competition watchdog open an in-depth probe. Ofcom said Wednesday it had found evidence of practices that make it more difficult for people to switch and use multiple cloud suppliers, as part of its yearlong study into the cloud market. It said it was “particularly concerned” about Amazon and Microsoft because of their market position. Ofcom, which also oversees broadcasting, telecommunications and the postal service, opened a probe in October based on concerns that the so-called hyperscale cloud providers — Amazon’s AWS, Microsoft’s Azure, and Alphabet Inc.’s Google Cloud — might limit innovation and growth. They account for four-fifths of revenue in the UK public cloud infrastructure market, which Ofcom said is worth £15 billion ($18.7 billion).
- UBS Group AG Chairman Colm Kelleher said the integration of Credit Suisse Group AG will take three to four years, excluding the wind down of the investment bank. Even with downside protection in the form of government support, there’s a “huge amount of risk in integrating these businesses,” Kelleher said in prepared remarks for the bank’s annual general meeting on Wednesday. UBS agreed to buy its long-standing rival for 3 billion Swiss francs in a historic transaction last month after years of scandals, losses and failures in risk control weakened the bank. The government-brokered emergency deal was aimed at putting an end to a crisis of confidence at Credit Suisse that had started to spread across global financial markets.
- Chicago elected Brandon Johnson in the mayoral runoff, a progressive who plans to raise taxes on major corporations to boost the city’s revenue, after a divisive race that exposed divisions within Democratic politics. Johnson, the Cook County commissioner, beat rival Paul Vallas, a former head of Chicago Public Schools who was backed by financial executives and made crime the focus of his campaign, according to the Associated Press. “Chicago, tonight is just the beginning,” Johnson told a crowd of cheering supporters. “With our voices and our votes, we have ushered in a new chapter in the history of our city.”
- Israeli fighter jets struck Hamas weapons manufacturing and storage sites in the central Gaza Strip early Wednesday after a barrage of rockets and mortars from Gaza were fired at southern Israel. The rise in tensions comes as the Jewish Passover holiday is set to begin, overlapping with the holy Muslim month of Ramadan, and follows clashes overnight between Israeli police and Palestinians inside the Al-Aqsa Mosque in Jerusalem, in which some were injured. Just before the rockets flew toward the Israeli city of Sderot — and were shot down by Israel — Hamas had denounced the Israeli police action at Al-Aqsa. It had earlier urged Palestinians to go to the holy site and barricade themselves in to prevent Jews who might seek to enter as part of Passover observance.