December 7th, 2020
Daily Market Commentary
- Prime Minister Justin Trudeau is set to name Michael Sabia, former chief executive officer at Caisse de Depot et Placement du Quebec, as the top bureaucrat at Canada’s finance department, according to Maclean’s magazine. Trudeau is expected to make the announcement this week, Maclean’s reported. The prime minister’s office declined to comment Sunday night, and officials at the finance department didn’t immediately reply.
- ATS Automation Tooling Systems Inc. Monday said it agreed to buy CFT S.p.A., a supplier of processing and packaging equipment to the food and beverage equipment market, for 88 million euros (US$106.7 million), or EUR4.60 a share. The deal represents a nearly 82% premium to Friday’s closing price of EUR2.53 for CFT and a total enterprise value of EUR166 million for the Parma, Italy, company.
- Toronto-Dominion Bank sold the largest Canadian dollar senior bail-in bond since April last week, securing funding as the market stares down the last two full business weeks of 2020. TD sold C$1.75 billion ($1.37 billion) of five-year bonds, the largest such issue in the domestic market since smaller rival Canadian Imperial Bank of Commerce priced a C$2 billion transaction, according to data compiled by Bloomberg. Friday’s TD deal came at a time when the risk premium in the loonie corporate bond market touched its tightest level since late February.
- European stocks retreated as concern over the possible collapse of Brexit trade-deal talks weighed on sentiment. The Stoxx Europe 600 Index dropped as much as 1% before paring its fall to 0.3% by 12:05 p.m. London time. Retailers, banks and automakers were among the biggest decliners.
- A global equity rally showed signs of stalling Monday as investors weighed signs the deployment of a vaccine may be nearing against renewed U.S.-China tensions. Treasuries were steady with the benchmark yield near its highest in nine months at just under 1%. Asian shares traded mixed with Hong Kong stocks underperforming, while U.S. and European contracts edged down. The S&P 500 Index notched a fresh all-time high on Friday. Testing the positive sentiment Monday was news that the U.S. is preparing sanctions on some Chinese officials. The yen ticked higher and the dollar traded flat.
- Oil fell from its strongest close in nine months, hampered by weaker risk sentiment in global markets. Crude futures were down 1.9% in New York, with the dollar trading higher and European stock markets declining. It follows a rally last week after OPEC and its allies agreed to add 500,000 barrels a day of output from January to a market that’s showing signs of recovery.
- Gold declined as the dollar strengthened amid rising geopolitical tensions between the U.S. and China, and concerns that Brexit talks could collapse.
- A British official warned that talks over a future trade deal with the European Union could collapse on Monday unless negotiators make progress in the next few hours. Prime Minister Boris Johnson is due to speak to European Commission President Ursula von der Leyen on Monday evening and that conversation will be a make-or-break moment, another U.K. official said. At a briefing in Brussels on Monday, Michel Barnier, the European Union’s chief negotiator, told envoys from the bloc’s 27 member states that it’s up toJohnson to make the next move and denied that the two sides are nearing a breakthrough over their longstanding disagreement over fishing, according to officials with knowledge of his comments.
- Iron ore futures in Singapore are heading for another record close, extending their dramatic rally as robust Chinese import data reflected continued demand from the nation’s steelmakers. Purchases by users in the largest steelmaker were close to 100 million tons in November, a record for that month, according to figures from the customs administration on Monday. That pushed year-to-date imports to 1.073 billion tons, surpassing the full-year volume for 2019. On a broader level, China’s overall exports last month jumped by the most since early 2018.
- Bipartisan negotiators on a $908 billion pandemic relief package are planning to unveil more details of their proposal on Monday, aiming to settle on language that can satisfy enough Republicans and Democrats to secure passage of one final tranche of Covid-19 aid before Congress breaks for the year. The outline of the plan spurred a flurry of optimism last week when it won the endorsement of House Speaker Nancy Pelosi, Senate Minority leader Chuck Schumer and a number of Republican senators as a basis for fresh talks after a half-year of stalemate.
- A massive mobilization to deliver vaccines gets underway this week, with the U.K. set to launch Pfizer Inc.’s shot beginning Tuesday. The U.S. could approve the vaccine as early as Thursday. Global coronavirus cases surpassed 67 million, with record infections sweeping across U.S. states and hospitalizations rising by almost 2,000 a day.
- Christine Lagarde’s first full year as European Central Bank president is poised to end with the fanfare of another stimulus expansion for the region’s pandemic-crippled economy. The ECB chief’s likely move this week to add emergency monetary aid and pledge ongoing support through an unprecedented crisis will mark a starkly different tone from her first press conference almost exactly 12 months ago, in what already seems a bygone age.
- Facebook Inc. will soon be hit by federal and state antitrust lawsuits accusing the social media giant of abusing its dominance and thwarting competition, according to three people familiar with the matter. Lawsuits are expected as soon as this week from the Republican-led Federal Trade Commission and a group of state attorneys general led by New York’s Letitia James, a Democrat, according to the people, who described the plans under condition of anonymity.
- Copper is “too hot to handle” following a recent rally and prices may retrace on a fightback from the physical market, Citigroup Inc. says in a commodities outlook, preferring aluminum and zinc in 1Q next year on much tighter conditions.
- Australia issued a warning on trade, saying uncertainties from its souring ties with China and the lingering impact of an earlier drought will push down the value of its agriculture exports. The value of shipments is set to decline 7% in 2020-21 to the lowest level in five years, according to a report from the government forecaster Abares. While that’s a slight improvement from its September estimate of a 10% slump, the downturn comes in a year of solid domestic production growth.
- Universal Music Group is acquiring Bob Dylan’s entire song catalog, a collection that spans six decades and includes many of the most iconic tracks in music history. Universal didn’t disclose a price for the deal, though Dylan’s songs are worth more than $200 million, according to people familiar with the terms. The collection encompasses 600 works, from early-’60s songs such as “Blowin’ in the Wind” and “The Times They Are a-Changin’” to an album released just this year, “Rough and Rowdy Ways.”
- December is set to be the busiest year-end on record for initial public offerings in the U.S., with DoorDash Inc. and Airbnb Inc. ready to start trading this week in long-awaited listings. The two startups, which are aiming to raise a combined $6.2 billion at the top-end of their price ranges, will propel the month’s IPO volume to all-time high, surpassing the $8.3 billion mark set in December of both 2001 and 2003, according to data compiled by Bloomberg. IPOs on U.S. exchanges have already raised a record $156 billion this year, the data show.
*All sources from Bloomberg unless otherwise specified