August 25th, 2017
Daily Market Commentary
- Canadian stocks rose for a third day on low trading volume as copper prices hit a three-year high, boosting materials shares. The S&P/TSX Composite Index gained 13 points or 0.1 percent to 15,076.16 on volume that was 20 percent below the 30-day average. Materials stocks added 0.5 percent as copper prices reached their highest level since 2014.
- Valeant Pharmaceuticals International Inc. has been selling assets, paying down debt and riding a recovery of its shares from their lowest point last spring. But one big uncertainty — its potential legal costs — just got bigger. Lord Abbett & Co., the mutual fund company, filed a securities fraud lawsuit against Valeant on Wednesday alleging that it bought shares in the drug giant at an artificially high price because of misinformation provided by Valeant.
- Canada, the world’s largest softwood-lumber exporter, affirmed its willingness to sue the U.S. if trade talks on the homebuilding material fail. The U.S. has “mischaracterized” what Canada has proposed in terms of defined market share, Canada’s Ambassador to the U.S., David MacNaughton, said Thursday at a press conference in Washington. The only qualification Canada wants for defined market share is that the country can supply excess lumber to the U.S. in the event that American suppliers can’t meet domestic demand fully.
- European stocks inch higher, adding to the previous session’s gain, led by resource-related stocks. Food retailers take a hit after Amazon said it will cut prices at Whole Foods. The Stoxx Europe 600 is up 0.2%, on track to eke out a gain of 0.3% for the week. All eyes are on Jackson Hole, with speeches from both Draghi and Yellen.
- Stocks advanced as a commodity rally boosted shares of raw-material producers. The dollar slipped against most major peers and bonds declined before Janet Yellen and Mario Draghi speak in Jackson Hole.
- Japanese shares rose as automakers and banks provided the biggest boost to the benchmark gauge while the yen extended declines against the dollar. The Topix index recouped most of its losses for the week, with volume on the gauge 19 percent below its 30-day average Friday.
- Oil trimmed a fourth weekly decline as traders braced for impact of Hurricane Harvey on a U.S. refining hub in the Gulf of Mexico. Gasoline futures surged to the highest in four months. Front-month crude futures rose 0.7 percent in New York, paring Thursday’s 2 percent decline. Gasoline gained as much as 4.6 percent. While some oil and gas production has shut in the Gulf, the storm is bearing down on an area in the U.S. state of Texas that is home to much of the nation’s refining capacity.
- Bullion futures’ 60-day volatility fell to the lowest since 2005 as investors await clues on the pace of monetary tightening from policy makers in Jackson Hole. While the haven investment is supported by concerns that the U.S. Treasury may run out of money before a debt limit is raised, sentiment could turn quickly if leading central bankers deliver hawkish statements.
- HTC Corp., the beleaguered manufacturer that once ranked among the world’s top smartphone makers, is exploring options that could range from separating its virtual-reality business to a full sale of the company, according to people familiar with the matter.
- Jay Y. Lee is set to spend the next five years in prison, one of the harshest sentences handed to a South Korean chaebol executive, after a court convicted him of bribing his way to greater control of the Samsung empire his family founded.
- Japan’s key measure of price changes rose ever so slightly in July, lagging well behind gains in economic growth as the central bank struggles to spur significant improvement in inflation. Price increases are still well below the Bank of Japan’s 2 percent target, even as the economy expands. The BOJ was forced to push back the projected timing of meeting the objective for the sixth time at its July policy meeting, despite years of extraordinary monetary easing.
- Foreign Secretary Boris Johnson softened his Brexit stance by acknowledging Britain will have to pay to depart the European Union, joining fellow Leave campaigners in making concessions aimed at guaranteeing the divorce goes through. A month after labeling a purported bill of 100 billion euros ($120 billion) as “extortionate” and telling EU officials they could “go whistle,” Johnson on Friday said on BBC radio that “of course we will meet our obligations.”
- A price war has raged in U.S. supermarket aisles for well over a year, bloodying retailers big and small. On Monday, Amazon.com Inc. plans to toss a smart bomb into the fray. The online giant’s move to slash prices on everything from organic baby kale to fair-trade bananas on the same day its $13.7 billion acquisition of Whole Foods Market Inc. closes showed the “high-velocity decision making” Amazon founder Jeff Bezos claims as his hallmark, and sent shares of Kroger Co., Costco Wholesale Corp. and Wal-Mart Stores Inc. reeling Thursday.
- Hurricane Harvey strengthened on its path toward the Texas coast, forecast to become the worst storm to strike the region in more than a decade. The price of gasoline rallied as it threatened to wreak havoc on the heart of America’s energy sector.
- Signs are mounting that rising home values are starting to close the door for more Americans, threatening to temper the momentum in residential real estate. Purchases of previously owned houses unexpectedly fell in July to an 11-month low and sales of new homes were the weakest this year, reports showed this week.
- Slovenia will do everything it can to remain in the fast lane of the European Union as the world’s largest trading bloc begins discussing further integration, Prime Minister Miro Cerar said. The debate over deeper integration among the EU’s members is intensifying following the election of French President Emmanuel Macron. That may lead to more concrete proposals after Germany’s elections next month that his ally Chancellor Angela Merkel is expected to win.
- China’s central bank pulled the most funds from the financial system in almost two months this week, adding to concerns over tight liquidity ahead of quarter-end demand. The People’s Bank of China refrained from offering reverse-repurchase agreements for the second day in a row Friday, which resulted in a withdrawal of funds because of maturities. The authority has drained 330 billion yuan ($50 billion) in open-market operations this week, the most since the five days through June 30.
- Fiat Chrysler Automobiles NV did little to quell speculation that the manufacturer is considering ways to streamline its portfolio to focus on mass-market cars, saying it regularly reviews strategic proposals.
- An activist shareholder in Refresco Group NV urged shareholders to vote against the soft-drink bottler’s planned $1.25 billion acquisition of Cott Corp.’s soda business, putting pressure on the Dutch company to consider other options, including selling itself to the highest bidder.
- Venture-capital firm Benchmark asked a Delaware judge to temporarily block Uber Technologies Inc. co-founder Travis Kalanick from filling two vacant company board seats, claiming his interference hampers the search for his successor as chief executive officer.
- The Brazilian government faces opposition from some allies in Congress over plans to sell off its stake in Eletrobras, the state-run energy provider and Latin America’s largest power company.
*All sources from Bloomberg unless otherwise specified