December 14th, 2020

Daily Market Commentary

Canadian Headlines

  1. Oil Back Above $50 After Tanker Explosion Near Saudi Port. Oil climbed past $50 a barrel after another tanker explosion in the Middle East raised concerns over the region’s stability, and as the first Covid-19 vaccine was poised to be distributed across the U.S. Futures rose as much as 1.7% in London. The explosion, at the Saudi Arabian port of Jeddah, comes three weeks after an oil tanker was damaged in a possible attack at the Saudi terminal of Shuqaiq. While the attack is small, it symbolizes a wider geopolitical risk that could impact energy in the region.
  2. Aviva to Sell Aviva Vietnam Life Stake to Manulife Financial. Manulife Vietnam will be the exclusive provider of bancassurance solutions to VietinBank customers in Vietnam soon after regulatory approval is obtained. Manulife expects the partnership to be accretive to diluted core earnings per common share in 2022 and the impact on the LICAT ratio is expected to be less than 1%
  1. Apollo Said to Consider Higher Offer for Canada Casino Owner. Apollo indicated during negotiations with the company in August that it was considering an offer of C$38 to C$41 per share, according to documents filed with securities regulators. A revised bid would likely stay within that range.
  2. Dollarama Says Insiders Tied to Rossy to Sell 2.5m Shares. GRI Investments, a private corporation controlled by the Rossy family, and Rossy Foundation have agreed to sell respectively 875,000 and 1,625,000 shares in block trades to a financial institution. Trades are expected to close on or about Dec. 15

World Headlines

  1. Stocks started off the week in a bullish mood as investors took comfort from further stimulus bill negotiations and the impending deployment of the first vaccine in the U.S. S&P 500 futures gained about 0.6%, with the first deliveries of the Pfizer-BioNTech vaccine in the U.S. due to arrive Monday morning. A bipartisan group of lawmakers is set to unveil a $908 billion pandemic relief bill the same day, although there is “no guarantee” Congress will pass it, a key negotiator said. In Europe, cyclical shares powered stocks higher and the pound jumped after Brexit talks were extended past a Sunday deadline, raising hopes of a deal.
  2. U.S. government agencies were hit by a “global intrusion campaign” of cyber-attacks that exploited a flaw in the update of a software company, cyber-security firm FireEye said, which the Washington Post reported was a breach by Russian government hackers. The attack was made on systems within the U.S. Treasury and Commerce departments and those of other government agencies in a breach that started months ago, the newspaper reported. They included snooping on emails at the Treasury Department and an arm of the Commerce Department, Reuters reported.
  3. President Donald Trump and other top U.S. officials will be offered the newly approved coronavirus vaccine within days as part of a plan to ensure continuity in government amid the pandemic, people familiar with the effort said.
  4. The streak of tranquility for U.S. stocks appears to be cracking as the Cboe Volatility Index has solidly broken through a key pivot line that it was flirting with for several sessions. November had been as unkind to equity volatility as it had been heaven for the S&P 500 Index, driving the so-called “fear gauge” below the 2111 band that served as a floor back in August.
  5. Zoox Inc., the self-driving startup owned by Inc., unveiled a fully autonomous electric vehicle with no steering wheel that can drive day and night on a single charge. The vehicle, which Zoox describes as a driverless carriage or robotaxi, can carry as many as four passengers. With a motor at each end, it travels in either direction and maxes out at 75 miles per hour. Two battery packs, one under each row of seats, generate enough juice for 16 hours of run time before recharging, the company said. To commercialize the technology, Zoox plans to launch an app-based ride-hailing service in cities like San Francisco and Las Vegas.
  6. Goldman Strategists Say SPACs May Spur $300 Billion M&A Activity. Special-purpose acquisition companies, or SPACs, have raised $70 billion in 2020 — a fivefold increase from last year, according to strategists led by David Kostin. Driving the deal boom is a hunt for yield, a shift in SPAC focus to growth stocks from value and retail investors looking for nontraditional and early-stage businesses, they said.
  7. The European Union’s chief negotiator, Michel Barnier, told a private meeting of ambassadors that a trade deal with the U.K. could be completed as soon as this week, but there are still significant differences to be bridged. The U.K. has made concessions on the level playing field and is now pushing the bloc to soften its demands on fisheries, Barnier told envoys from the EU’s 27 member states on Monday, according to two diplomats with knowledge of the meeting. A compromise on the latter subject could unlock the accord, Barnier said.
  8. Speculators’ positioning in British pound futures has flipped from short to long for the first time in three months as talks between the U.K. and the European  Union entered a critical phase. Non-commercial investors increased their net positions in sterling futures by the most since Jan. 14.
  9. Panetta Says ECB Is Ready to Expand Pandemic Buying If Needed. The European Central Bank is ready to boost its emergency bond-buying program if needed, Executive Board member Fabio Panetta said one day after Germany announced a hard lockdown in response to a surge in coronavirus cases.
  10. Norway, western Europe’s biggest oil producer, is set to boost crude supply next year as self-imposed output quotas come to an end, consultant Rystad Energy AS said. The Nordic country may raise production to more than 1.9 million barrels a day in January from around 1.7 million a day in December, according to Rystad. That would coincide with a gradual easing of output cuts by OPEC and its allies, which was agreed on this month after almost a week of fraught negotiations.
  11. Gold Falls as Investors Track Vaccine Rollout and Stimulus Talks. Exchange-traded funds cut 117,294 troy ounces of gold from their holdings in the last trading session, bringing this year’s net purchases to 23.8 million ounces, according to data compiled by Bloomberg. This was the third straight day of declines.

*All sources from Bloomberg unless otherwise specified