January, 17th 2017
Daily Market Commentary
- The big question for Wednesday’s rate announcement is whether Bank of Canada Governor Stephen Poloz downplays some of the biggest signs yet of a recovery from an oil shock, and plays up risks associated with the Donald Trump presidency.
- European stocks fell on Tuesday, losing ground for a second day, as investors awaited U.K. Prime Minister Theresa May’s speech in which she is set to detail her plan for Brexit.
- The S&P 500 Index surged to a fresh record this month both in nominal terms and also after adjusting for inflation amid optimism President-elect Donald Trump’s policies will boost U.S. growth and consumer prices.
- K. inflation accelerated to the fastest pace in more than two years in December as the pound’s decline drove a surge in import costs. A separate report showed the cost of imports soared at the fastest annual rate in more than five years.
- Metals: Gold: 1215.60 (+$12.87, +1.07%), Silver: 17.04 (+$0.23, +1.35%); Copper: 2.6425 (-1.80%); Aluminum: 0.8188 (+0.75%); Nickel: 4.6213 (-0.69%); Zinc: 1.2322 (-1.21%)
- Energy: Crude: 52.95 (+1.11%); Brent: 56.45 (+1.06%); Nat Gas: 3.45 (+0.76%)
- Brent oil traded above $56 a barrel after Saudi Arabia said output cuts from OPEC and other producers will balance the market by June. Output from China, which is not part of the production deal, is forecast to continue its decline this year.
- Gold advances for seventh straight day, headed for longest run of gains since Nov. 4, ahead of a speech by U.K. Prime Minister Theresa May on Tuesday where she’ll say that the country’s likely to pull out of the EU single market for goods and services.
- Canadian home prices rose in December at the slowest pace in two years, adding to evidence the nation’s housing market is cooling. Prices rose 0.1 percent from the prior month, the Canadian Real Estate Association said Monday, citing its benchmark home indexes. That’s the slowest pace since November 2014.
- Canadian stocks fell Monday as auto-parts makers including Martinrea International Inc. dropped amid concerns a Trump border tax would hit Canada hard. Trading was light with U.S. markets closed for the Martin Luther King Jr. holiday.
- Finance Minister Bill Morneau is considering reintroducing a risk cushion as he prepares Canada’s next federal budget amid economic uncertainty driven in part by the Trump administration. In a move that would inflate deficit forecasts, the government is now considering reinstating some form of cushion because of several risk factors including President-elect Donald Trump.
- The Congolese government has dropped objections to Freeport-McMoRan Inc. and Lundin Mining Corp.’s $3.8 billion combined sales of one of the country’s biggest mines to Chinese companies, bringing an end to an eight-month dispute.
- Morgan Stanley just reported fourth-quarter earnings that beat on the top and bottom lines. The firm reported earnings per share of $0.81 on revenue of $9.0 billion. Trading revenues beat expectations, coming in at $3.2 billion ($2.77 billion expected).
- UnitedHealth Group Inc., the biggest U.S. health insurer, posted fourth-quarter profit that topped estimates, driven by growth at the Optum technology and consulting business.
- Hyundai Motor Co. and affiliate Kia Motors Corp. said they will spend $3.1 billion in the U.S. in the next five years, joining other vehicle manufacturers in announcing investment plans amid threats from President-elect Donald Trump of higher levies on auto imports from Mexico.
- GM has also announced plans to invest up to $1 billion in U.S. (Globe & Mail)
- Noble Energy Inc. agreed to buy Clayton Williams Energy for $2.7 billion in stock and cash to expand in America’s hottest shale play. The combination will create the second-largest acreage position in the Southern Delaware Basin of the Permian shale formation.
- British American Tobacco Plc reached agreement to buy full control of Reynolds American Inc. with a sweetened $49.4 billion offer, bringing a successful end to almost three months of bartering with the maker of Camel cigarettes.
- BP Plc boss Bob Dudley is not yet ready to boost spending despite the rebound in oil prices. The company will keep capital expenditure below $17 billion this year and next, Chief Executive Officer Dudley said. That’s $6 billion lower than 2014, when crude prices first started to slump, showing that the impact of the two-year industry downturn still lingers.
- Rolls-Royce Holdings Plc, Europe’s largest maker of commercial jet engines, agreed to pay about 670 million pounds ($807 million) to resolve U.S. and U.K. investigations into allegations its representatives bribed foreign officials to win business. The stock jumped to a six-month high.
- Chinese stocks stabilized after a five-day losing streak for the benchmark Shanghai gauge as small-cap shares rebounded and the central bank added funds to the banking system.
- Asahi Group Holdings Ltd., Japan’s largest brewery that acquired almost $11 billion in European beer assets, is considering more overseas deals, said its president. Japanese makers of consumer goods like beer and cigarettes are scrambling to expand overseas as the domestic population shrinks and becomes more elderly. Asahi, the country’s biggest brewery, is also contending with intensifying competition in its home market, from rival Kirin Holdings Co. and upstart craft beer makers.
- AirAsia Bhd., Southeast Asia’s biggest discount carrier, expects to get binding bids for its aircraft-leasing unit by March, Group Chief Executive Officer Tony Fernandes said.
- Vietnam will increase the limits of foreign ownership in banks as early as this year to quicken the overhaul of the nation’s banking system and further lure overseas investments to boost economic growth. Vietnam caps foreign ownership in banks at 30 percent and is seeking more investment to help strengthen the financial system, which has been hobbled by a surge in non-performing loans to state-owned companies.
- Having weathered nuclear shutdowns and industry reforms, Japan’s electricity producers are loading up on long-dated borrowing as investors desperate for higher yields lap up the debt. Power companies have issued 110 billion yen ($964 million) of notes maturing in at least 15 years in the period started April, more than five times the amount a year earlier.
*All sources from Bloomberg unless otherwise specified