July 12th, 2017


Daily Market Commentary



Canadian Headlines

  • What a long, strange trip it’s been for Canadian monetary policy makers. In 2015, Bank of Canada Governor Stephen Poloz cut rates twice to get ahead of falling oil prices that ultimately led to below-potential growth, a technical recession and about C$60 billion ($46 billion) a year in lost income. Now, with the output gap shrinking, traders and 25 of 33 economists surveyed expect Poloz to raise the central bank’s overnight interest rate by 25 basis points to 0.75 percent in a decision due Wednesday at 10 a.m. in Ottawa.
  • OPEC’s first assessment of world markets in 2018 showed that, despite cutting output, the group is still pumping too much crude. Even though the Organization of Petroleum Exporting Countries delivered on pledges to reduce supply, its output exceeded demand in the first half of this year, according to a report from the group. Its production was 32.6 million barrels a day in June.



World Headlines

  • European stocks advanced as investors prepared for two days of testimony by Federal Reserve Chair Janet Yellen, which may give clues on when the central bank will start reducing its balance sheet. The Stoxx Europe 600 Index rose 0.5 percent as of 8:30 a.m. in London, with 18 of 19 sectors advancing. Energy shares climbed the most, tracking oil prices higher.
  • Asian equities extended gains for a third day as technology shares rallied, tracking their U.S. counterparts’ advance, as investors await testimony from Federal Reserve Chair Janet Yellen.
  • The biggest oil traders feeling the squeeze in a world awash with crude are seeking an edge by offering tailor-made cargoes in an offshore megastore. By selling bespoke from a fleet of ships anchored off Singapore and Malaysia, the likes of Vitol Group, Trafigura Group, Glencore Plc and Gunvor Group are seeking to lure buyers who are becoming more demanding.
  • Gold holds gains after two-day advance as controversy over Donald Trump Jr.’s emails sparks some haven demand. Gold imports by India, the world’s second-biggest user, more than doubled in June from a year earlier amid a rush by jewelers to build up inventories ahead of a tax change.
  • British consumers are continuing to see their spending power eroded by feeble wage increases and the rising cost of living, despite unemployment falling to a 42-year low. Regular earnings rose 2 percent in the three months through May from a year earlier, up slightly from April but well behind the rate of inflation, the Office for National Statistics said. As a result, real pay fell by 0.5 percent.
  • Mexico’s decision to allow private companies to explore for oil and gas started to pay off after the discovery of at least a billion barrels in a new offshore field. A consortium of Premier Oil Plc, Sierra Oil & Gas S de RL de CV and Talos Energy LLC made the discovery in the shallow waters of the southern Gulf of Mexico just two years after winning the exploration license.
  • Royal Dutch Shell Plc agreed to sell its stake in Shell E&P Ireland Ltd., owner of a 45 percent interest in the Corrib gas venture, for as much as $1.23 billion. A subsidiary of the Canada Pension Plan Investment Board will initially pay $947 million and then additional payments of as much as $285 million from 2018 to 2025.
  • Razer Inc. is shooting for a Hong Kong initial public offering that could value the gaming gear maker at as much as $5 billion and help fund development of its own mobile phone, people familiar with the matter said.
  • Takata Corp. will recall an additional 2.7 million airbag inflators in the U.S. after they concluded they could explode in a crash despite using a chemical additive to ensure their safety. The inflators were made from 2005 through 2012 and installed in vehicles manufactured by Nissan Motor Co., Mazda Motor Corp. and Ford Motor Co., according to a recall notice posted to the National Highway Traffic Safety Administration’s website.
  • The Indian rupee may weaken as global funds start to hit buying limits for the nation’s debt and valuations for equities look expensive, according to HSBC Holdings Plc.
  • Bain Capital is preparing to sell its controlling stake in Chinese education provider RISE at a valuation of about $1 billion, people with knowledge of the matter said. The buyout firm plans to send out information on RISE, which offers immersive American English lessons at its network of after-school learning centers, to potential buyers in the next few weeks.
  • NRG Energy Inc., the U.S. power generator facing pressure from billionaire investor Paul Singer to reduce costs, is planning job cuts and asset sales after finishing a review of its businesses, according to people familiar with the situation.
  • Landis+Gyr AG, a Swiss energy metering company, is seeking to raise as much as 2.4 billion Swiss francs ($2.5 billion) in its initial public offering as its majority owner Toshiba Corp. looks for cash to bankroll its turnaround.
  • Abu Dhabi National Oil Co. is planning an initial public offering of its service stations unit and may seek a value of as much as $14 billion, according to people familiar with the matter. The company known as Adnoc, may appoint investment banks for the share sale, likely to be on the Abu Dhabi stock exchange, as early as this week, the people said, asking not to be identified as the information is private.
  • Attorney General Jeff Sessions is poised to announce a major law enforcement action this week targeting health-care fraud, focusing on opioid treatment programs exploiting Obamacare insurance plans, according to two people familiar with the matter.
  • San Miguel Corp. expects profit to increase about five times faster than the Philippine economy this year as the beermaker’s diversification into oil, toll-roads and power businesses pays off. Earnings may climb to 70 billion pesos ($1.4 billion) this year from 52 billion pesos in 2016, San Miguel President Ramon Ang said. That also exceeds the 60 billion peso profit outlook Ang gave in March.
  • The best returns among the largest markets this year have propelled the value of Indian equities above $2 trillion. The nation’s stock market is now the world’s ninth biggest by that measure and is closing the gap to Germany and Canada.
  • More than half a dozen Republican and Democratic senators have discussed alternatives to the embattled GOP health-care bill, even as Majority Leader Mitch McConnell said he plans a vote next week to muscle the Obamacare repeal measure through the Senate.
  • Deutsche Bank AG is targeting the Middle East as a priority region in wealth management as the bank seeks to recoup assets that were lost late last year when concerns about its capital levels prompted some clients to leave.


*All sources from Bloomberg unless otherwise specified