August 14th, 2017

 

Daily Market Commentary

 

 

Canadian Headlines

• President Donald Trump has set the terms for revamping the North American Free Trade Agreement: Cut the U.S. trade deficit or he’ll walk away. That could entail convincing Mexico and Canada to commit to buy more American products. The White House will have its work cut out for it, but leading the charge is an aggressive group of trade players who aren’t used to taking no for an answer.
• Patrick Drahi’s Altice NV is considering asking Canada Pension Plan Investment Board and BC Partners to help fund a potential bid to buy cable broadcaster Charter Communications Inc., according to people with knowledge of the matter.

 

 

World Headlines

• European stocks advanced from a five-month low as investor concerns over a standoff between the U.S. and North Korea eased. The Stoxx Europe 600 Index rose 0.7 percent at 8:17 a.m. in London. Banks led gains, following bond yields higher, while technology shares were also among the best performers.
• The risk-off mood that gripped markets last week showed signs of easing, with shares in Europe following Asian equities higher and American stock futures advancing as the prospect of a war between the U.S. and North Korea receded. Havens including gold, Treasuries and the yen fell.
• Most Asian equities rose as concerns over tensions between the U.S. and North Korea eased after American officials talked down the possibility of an imminent nuclear war.
• Oil traded near $49 a barrel as Libyan output and exports declined amid security threats and a labor dispute in the port of Zueitina. Futures fell 0.3 percent in New York after Friday’s 0.5 percent gain. Libya’s biggest oil field cut output by more than 30 percent, a person familiar with the matter said Sunday, while the head of a union said loadings at Zueitina ceased after employees demanded better working conditions.
• Gold prices are set to jump to a four-year high of $1,400 an ounce by the end of the year over mounting tensions between North Korea and the U.S., and surging demand in the world’s biggest consumers.
• China’s home sales grew last month at the slowest pace in more than two years amid regulators’ moves to rein in soaring prices. The value of new homes sold rose 4.3 percent to 779 billion yuan ($117 billion) in July from a year earlier.
• Alibaba and Tencent can count themselves among the world’s costliest technology companies after a stellar run. To justify those lofty valuations, China’s two largest corporations have to deliver on some of the riskiest bets they’ve placed in years. Alibaba Group Holding Ltd., which created China’s largest online bazaar but has scant brick-and-mortar experience, spent $8 billion investing in a string of retailers including Suning Commerce Group Co. to prove it can transform old-school shopping.
• The U.S.’s top general reassured South Korea that President Donald Trump is prioritizing a diplomatic solution to tensions with North Korea, echoing comments from administration officials who sought to tamp down fears of imminent nuclear war. General Joseph Dunford, chairman of the U.S. Joint Chiefs of Staff, reaffirmed the U.S. commitment to protect South Korea after a meeting with President Moon Jae-in, spokesman Park Su-hyun told reporters in Seoul on Monday.
• Japan’s second-quarter gross domestic product data put the nation in an unexpected spot: at the top of the growth table among Group of Seven advanced economies. The strongest domestic demand in years helped drive Japanese GDP to a sixth consecutive quarter of expansion, elevating hopes for a sustainable recovery in an economy that’s been better known in recent years for tepid inflation and a declining population than beating forecasts.
• Angela Merkel’s main rivals for the Chancellery stepped up their criticism of her handling of Germany’s domestic and international agenda, slamming her for failing to address the diesel scandal rocking the auto industry and accusing her of kowtowing to President Donald Trump. Six weeks before federal elections that will determine whether Merkel wins a fourth term, Social Democratic Party grandees went on the attack in a bid to help her SPD challenger, Martin Schulz, reel in a poll lead for Merkel’s bloc of as much as 17 percentage points.
• JD.com Inc. posted revenue that topped all analyst estimates as a partnership with backer Wal-Mart Stores Inc. helped China’s second-largest online mall accelerate sales in everything from fresh food to women’s fashion. Sales leapt 44 percent to 93.2 billion yuan ($14 billion) in the quarter ended June, besting the 89.6 billion yuan average of projections compiled by Bloomberg.
• RWE AG climbed to a seven-week high as Germany’s biggest electricity generator said full-year profit will be at the upper end of its forecast range. The Essen-based utility expects a “significantly improved” full-year result from its European Power division on increased profitability of its natural gas plants, the company said as it reported first-half adjusted net income that missed analysts’ estimates.
• Bitcoin soared past $4,000 for the first time on growing optimism faster transaction times will hasten the spread of the cryptocurrency. The largest digital tender jumped to a peak of $4,187 Monday, a gain of nearly 17 percent since Friday, after a plan to quicken trade execution by moving some data off the main network was activated last week.
• The angry birds at Rovio Entertainment Oy are set to lay a golden egg for the company’s founders. The firm is planning an initial public offering as early as next month that could value the maker of the Angry Birds mobile games and movie at about $2 billion, said people familiar with the matter.
• The pros who make their living forecasting the economy overwhelmingly expect President Donald Trump and his fellow Republicans to push through tax cuts in time for next year’s congressional elections. They just don’t think that the reductions will do all that much to help the economy in 2018. That’s the message from the latest Bloomberg monthly poll of economists, taken Aug. 4 to Aug. 9. Of 38 respondents, 29 expect Congress to pass tax-cut legislation by November 2018.
• In a sign that dealmaking in the financial-technology sector may be heating up, a German fintech firm has made the rare move of acquiring another startup to beef up its customer base. Deposit Solutions GmbH, a Hamburg-based company that enables consumers to move their savings around a network of 15 European banks to find the best interest rate, today acquired Savedo GmbH, a Berlin startup in the same field. The terms of the deal, which Deposit Solutions announced in a statement, were not disclosed.
• Mitsubishi UFJ Financial Group Inc. is looking to hire in Saudi Arabia as the lender seeks to benefit from privatizations valued at more than $350 billion over the next five years.
• Toshiba Corp.’s talks to sell its chips business to a consortium led by Bain Capital hit an impasse over the timing of payments for the business and governance issues, according to people familiar with the matter, casting doubt on the company’s ability to complete a deal quickly.
• The chief executive officer of Telit Communications Plchas resigned following an internal review into a 25-year-old indictment involving a wire fraud case in Boston. Oozi Cats stepped down with immediate effect, the U.K. technology company said in a statement Monday.
• Not all bond investors will run for the hills should the European Central Bank announce a tapering timeline for its $2 trillion government-debt purchase program. David Hollis, a multi-asset money manager at Allianz Global Investors GmbH, is preparing for the day when the ECB says when and by how much it will scale back acquisitions so he can dive into German bunds
• Britain’s goodbye to fossil-fuel cars by 2040 could boost the need for dirtier natural gas-powered stations. The government’s goal to replace gasoline and diesel cars with those powered by electricity could see the construction of so-called open-cycle gas stations, said Carsten Poppinga, senior vice president of trading and origination at Statkraft AS, the Norwegian utility that operates hydro power plants and wind farms across the U.K.
• Titan Co. Ltd., India’s top maker of branded jewelry by market value, expects sales from its Tanishq stores to rise 30 percent this fiscal year as the country’s tax overhaul helps to attract more customers and the company expands its network. The shares rose to a record even as bullion prices fell.
• Delta Air Lines Inc. is eyeing New York and Los Angeles as the main bases for Bombardier Inc.’s new jetliner next year, offering a glimpse of how carriers can add service economically with the midsize aircraft. Dallas is also likely to get a lot of C Series flights, Delta said in an internal memo to pilots.

 

*All sources from Bloomberg unless otherwise specified