August 28th, 2017
Daily Market Commentary
- Canadian stocks fell, ending a three-day advance, pressured by energy shares as Hurricane Harvey approached the Texas coast. The S&P/TSX Composite Index lost 20 points or 0.1 percent to close at 15,055.99. The benchmark was up 0.7 percent on the week.
- Statistics Canada reports growth data on Thursday that will confirm the nation’s economy has entered rarefied territory. Economists are forecasting an expansion in second-quarter gross domestic product at about the same 3.7 percent pace recorded in the first three months of this year. Even with an anticipated second-half slowdown, that should leave Canada flirting with 3 percent growth for all of 2017.
- European stocks decline following a surge in the euro towards $1.20 after Draghi did not express concern about the currency’s recent rally at Jackson Hole as some analysts had expected.
- Futures on American equity indexes slipped, paring gains from the biggest weekly advance in a month, as investors prepared to gauge consequences for stocks and industries from the strongest storm to hit the U.S. since 2004. September contracts on the S&P 500 Index were down 0.1 percent as of 5:21 a.m. in New York, after the underlying index climbed 0.7 percent last week and ended within 1.6 percent of its record close set Aug. 7.
- Stocks in Hong Kong and China led gains in Asian equity markets as rising money market rates on the mainland boosted sentiment on lenders. The MSCI Asia Pacific Index added 0.1 percent to 160.62 as of 4:19 p.m. in Hong Kong, after posting its biggest weekly gain in five weeks. The Philippines market is closed for a holiday.
- Gasoline surged to the highest in two years and oil declined as flooding from Tropical Storm Harvey inundated refining centers along the Texas coast, shutting more than 10 percent of U.S. fuel-making capacity. Motor fuel prices rose as much as 6.8 percent, while New York oil futures slipped 0.9 percent. Harvey, the strongest storm to hit the U.S. since 2004, made landfall as a hurricane Friday, flooding cities and shutting plants able to process some 2.26 million barrels of oil a day.
- Gold futures are headed for the first close above $1,300 an ounce this year as the Federal Reserve’s near silence on policy at the annual Jackson Hole gathering emboldened investors, hurting the dollar and buoying demand for the metal, which has risen 13 percent this year.
- The record heap of iron ore that was amassed at China’s ports over a two-year buildup is showing signs of unwinding, with holdings shrinking for five straight weeks as steelmakers in the world’s top producer eat into the pile to help meet robust demand after Australian cargoes dipped.
- Gilead Sciences Inc. agreed to buy Kite Pharma Inc. for about $11.9 billion, making one of its biggest deals ever to expand beyond its eroding hepatitis C drug franchise. Gilead will pay $180 a share in an all-cash deal, according to a statement Monday. That’s 29 percent above the Friday closing price for Santa Monica, California-based Kite.
- Samsung Electronics Co., the world’s biggest maker of memory chips, will invest $7 billion in a Chinese semiconductor plant to meet growing demand for the NAND flash memory used in smartphones and other devices. The spending will take place over a three-year period and be focused on its plant in Xi’an, the Suwon, South Korea-based company said in a statement Monday.
- California is set to lead borrowers in the U.S. municipal debt market by selling $2.5 billion of bonds, the largest deal among the $7.4 billion set for this week. The sale comes after a rally in the price of California’s bonds this year as the state reaps the financial benefits from the booming technology industry, rising real estate prices and a record-setting stock market that’s boosted its income-tax collections.
- Under pressure from its banks, Toshiba Corp. is racing to resolve several final disagreements with Western Digital Corp. before it can complete a deal to sell its chips business to the U.S. company and other investors by the end of August, according to people familiar with the matter.
- Billionaire Patrick Drahi’s Altice NV plans to buy back as much as 1 billion euros ($1.2 billion) of stock during the next 12 months, while continuing to look for potential acquisition targets.
- Uber Technologies Inc. will appoint Expedia Inc.’s Dara Khosrowshahi to run the global ride-hailing leviathan, two people familiar with the matter said. He’ll succeed co-founder Travis Kalanick, who led the firm to $20 billion in annual bookings before scandals forced him out.
- The predicted boom in construction stocks under President Donald Trump is turning into a bust. Trump promised to deliver a $1 trillion infrastructure early in his first year but is now talking about trying to get one through Congress by year-end, with concern it may be pushed into 2018.
- Brexit talks resume on Monday with Prime Minister Theresa May under pressure on two fronts: European negotiators are pushing her to reveal her hand, while the opposition Labour Party has made a bid to lure May’s critics to their side. Labour’s announcement that it wants Britain to stay in the European Union’s single market and customs union for up to four years after it leaves the bloc — and possibly longer — looks set to strengthen the hand of anti-Brexit Conservatives to push for a softer split.
- India and China appeared to end a months-long military standoff in the Himalayas, with both sides seeking to portray the withdrawal as a victory. India said both sides agreed to an “expeditious disengagement” of troops at Doklam, a plateau near the Indian border that is claimed by both China and Bhutan. China’s foreign ministry said later that India withdrew personnel and equipment from Chinese territory, and vowed to continue exercising “sovereign rights” in the area.
- Littelfuse Inc. agreed to buy IXYS Corp. for an equity value of about $750 million as the U.S. fuse maker expands into semiconductors with the largest acquisition in the company’s 90-year history.
- MetLife Inc.’s bondholders agreed to forfeit their right to prevent the insurer from paying a stock dividend or repurchasing shares, even if the company’s losses swell. The insurer will pay $26 million to debtholders, the New York-based company said Monday in a statement. MetLife offered $10 for every $1,000 in principal to win their support. That’s up from the initial proposal of $2.50, which was opposed by top investors. The deal covers about $3.2 billion in securities.
- China’s creating the world’s largest power company. The government of President Xi Jinping approved the merger of Shenhua Group Corp., the country’s top coal miner, with China Guodian Corp., among its largest power generators, the State-owned Assets Supervision and Administration Commission said Monday. With assets of 1.8 trillion yuan ($271 billion), the new entity will be the world’s second-biggest company by revenue and largest by installed capacity.
- Founders of DLF Ltd., India’s largest listed developer, agreed to sell a 33.3 percent stake in their rental property assets to Singapore’s sovereign wealth fund GIC Pte for $1.4 billion. The transaction implies an enterprise value of about $5.6 billion for DLF’s commercial assets, according to a joint statement from the developer and GIC.
- CBS Corp. snapped up ailing Australian television broadcaster Ten Network Holdings Ltd., securing an offshore testing ground for its on-demand streaming service. The most-watched U.S. network agreed to buy Sydney-based Ten, which has lost money for five straight years, and provide immediate funds to save it from collapse, the Australian company’s receivers and administrators said Monday in a statement.
*All sources from Bloomberg unless otherwise specified