July 22nd, 2019

Daily Market Commentary

  • Canadian Headlines
    • GFL Environmental Inc., North America’s fourth-biggest waste hauler, filed for an initial public offering that would be the largest in Canada in about five years. The sale would aim to raise about $1.5 billion and value the company at about $15 billion, said a person familiar with the matter. Marketing will start in September, and the listing will be on the Toronto Stock Exchange and a yet-to-be-decided U.S. exchange, said the person, who asked not to be identified because the information isn’t public. All proceeds will go to the company’s treasury and be used to fund future growth, the person said.
    • Rather unexpectedly, the Senate Committee on Banking, Housing and Urban Affairs will hold a hearing on cannabis banking Tuesday. This marks the first time the Republican-controlled Senate has agreed to examine the so-called SAFE Act, which would allow banks to offer services to pot companies in compliance with state law. “On the legislative front, it is evident that the politics of cannabis is undergoing a transformation that is almost unparalleled in Washington,” Cowen & Co. analyst Jaret Seiberg said in a policy outlook call with reporters last week. “This has gone from an issue that Capitol Hill did not take seriously to one that is driving legislation and elections, and this all happened in the last two years.”


  • World Headlines
    • European equities opened little changed on Monday as oil majors gained on the geopolitical spat with Iran, while most sectors declined. The Stoxx Europe 600 Index was down less than 0.1%. Oil stocks surged, with BP Plc adding 0.6%, as tensions in the Persian Gulf remained elevated after Iran seized a British tanker. Swiss drugmaker Novartis AG fell 0.8% after adding 6.4% last week on an improved outlook. European investors are carefully watching corporate earnings for signs of an economic slowdown and any impact from the trade wars.
    • U.S. equity futures rose on Monday following a mixed session in Europe and Asia as investors looked ahead to a busy week of corporate earnings. Oil gained amid tensions in the Persian Gulf. Treasuries edged higher after traders pared bets the Federal Reserve will slash rates by a half-point this month, following comments from St. Louis Fed President James Bullard on Friday.
    • Stocks slipped throughout Asia, led by declines in Shanghai and Hong Kong as traders watched escalating tensions there. China’s new stock venue for technology startups was a bright spot as all 25 stocks rose on their debut.
    • Oil rose again, heading for its biggest gain in more than a week, after Iran’s seizure of a British tanker fanned concerns of a confrontation that could disrupt Middle East supplies. Brent futures added 2% to trade near $64 a barrel in London. The U.K. demanded the immediate release of the Stena Impero, which was taken by Iran’s Revolutionary Guard Corps in the Strait of Hormuz on Friday, though British Defense Minister Tobias Ellwood said in a Sky News Interview that he wanted to de-escalate the situation. The incident comes as U.S. sanctions on Iran heighten political tensions in the oil-rich region.
    • Investors withdrew money from exchange-traded funds that buy emerging market stocks and bonds last week. This was the second straight week of outflows. Outflows from U.S.-listed emerging market ETFs that invest across developing nations as well as those that target specific countries totaled $174.2 million in the week ended July 19, compared with losses of $314 million in the previous week, according to data compiled by Bloomberg. So far this year, inflows have totalled $11.9 billion.
    • Iran, locked in a worsening political standoff with Western powers, has handed down death sentences to several nationals accused of being part of a CIA-trained spy network uncovered earlier this year, an official said on Monday. Seventeen people were arrested in all, a senior intelligence official told foreign media in Tehran. None of the suspects are dual nationals, according to the official, who declined to be identified and didn’t say how many were sentenced to death.
    • Equifax Inc. agreed to pay up to $700 million to resolve U.S. federal and state investigations into the 2017 hack that compromised some of the most sensitive information of more than 140 million people. “Companies that profit from personal information have an extra responsibility to protect and secure that data,” FTC Chairman Joe Simons said in a statement. “Equifax failed to take basic steps that may have prevented the breach.“ Equifax will pay as much as $425 million to compensate consumers and provide credit monitoring to those whose information was exposed under a settlement announced Monday by the Federal Trade Commission. Equifax will separately pay $175 million to 48 states, the District of Columbia, and Puerto Rico, and an additional $100 million to the U.S. Consumer Financial Protection Bureau.
    • British Airways is preparing to go to court to block a potential walkout by pilots that’s threatening to disrupt flights at the height of the busy summer travel season. The airline, a unit of IAG SA, will go to the U.K.’s high court on Tuesday to seek an injunction against the British Airline Pilots Association, known as Balpa, should members vote Monday to proceed with strike action, according to a BA spokeswoman. The ballot is due to end around noon. BA’s labor dispute highlights the challenges facing European airlines in the middle of the warm-weather vacation season. In addition to possible walkouts, carriers have been hit by flight cancellations due to air traffic controller staff shortages. Ryanair Holdings Plc and Deutsche Lufthansa AGpilots are also weighing possible strike action. Walkouts by cockpit crews are particularly disruptive to airlines because they can ground flights.
    • Face-to-face negotiations between the top Chinese and U.S. trade negotiators could happen soon, according to Chinese state media, after a number of goodwill gestures by Beijing over the weekend. Chinese companies asked U.S. exporters about buying agricultural products and also applied for exemptions from China’s retaliatory tariffs on the goods, state-run Xinhua News Agency reported Sunday. That shows China’s “goodwill” and its commitment to fulfill its promises to the U.S., Xinhua said early today in a separate commentary. The two sides have been “cautiously showing each other sincerity and goodwill” recently and may meet for discussions soon, according to Taoran Notes, a blog run by the state-owned Economic Daily newspaper. In China’s eyes, the U.S. exclusions from punitive tariffs imposed on some Chinese goods and its push to allow American companies to supply Huawei Technologies Cowere positive signals to advance the talks, according to both Xinhua and Taoran.
    • UniCredit SpA is considering thousands of job cuts and slashing operating costs as part of a new strategic plan to be unveiled in December, according to people familiar with the matter. The Italian lender is weighing as many as 10,000 cuts, though final numbers are still under review and may be much lower, the people said, asking not to be identified as the matter is private. The dismissals will involve staff in Italy — where the company has the largest number of employees — as well as in other countries, they said. UniCredit may also reduce other operating expenses by as much as 10% in the plan, the people said.
    • When Saudi Arabia announced plans to sell shares in its crown jewel Aramco, international bankers scrambled to get a piece of the action. Three years on, they’re questioning whether what could be the world’s biggest IPO is worth their time and effort. Some banks, which worked on the deal for more than two years before the oil giant put it on hold, are having internal discussions about whether to re-pitch for a role as the kingdom restarts preparations for the listing, according to people with knowledge of the matter.
    • Halliburton Co., the world’s biggest provider of fracking services, projected foreign demand will continue to grow into next year, outpacing the shale patch in the U.S. The company on Monday reported second-quarter earnings that were higher than expected and said international revenue gained 6% from the preceding quarter, while North American sales were up 2%.

*All sources from Bloomberg unless otherwise specified