July 24th, 2017


Daily Market Commentary



Canadian Headlines

  • Rayonier Advanced Materials Inc. has raised its bid for Canadian lumber and paper producer Tembec Inc. by 17 percent, winning support from two large shareholders that had said they wouldn’t back the deal without an increase. Rayonier Advanced is now offering Tembec investors the choice of receiving C$4.75 a share in cash — valuing the company at roughly C$475 million ($379 million) — or 0.2542 Rayonier Advanced shares for each Tembec share.
  • The merger of Alberta’s two main conservative parties creates a new political force in the heart of Canada’s oil patch that threatens to unseat Premier Rachel Notley and kill the province’s carbon tax. Members of the Wildrose and Progressive Conservative parties voted Saturday to create the United Conservative Party. Combined, those parties hold 30 of 87 districts, though they received 52 percent of the vote in the last election.



World Headlines

  • European stocks fell as the earnings season’s busiest week kicked off, with carmakers and energy shares leading declines. The Stoxx Europe 600 Index fell 0.5 percent at 10:28 a.m. in London, extending a drop after data that showed the euro-area economy in July grew at the slowest pace in six months.
  • In some ways, 2017 is shaping up as a year of opposition between European and U.S. stock volatility. The VStoxx Index and CBOE Volatility Index have moved in different directions for an 11th week this year, or about 38 percent of the time, the most on record. The performances echo those of the two regions’ benchmark equity gauges, with the Euro Stoxx 50 Index down almost 6 percent from its high in May while the S&P 500 Index hit a fresh record last week.
  • Asian shares fluctuated near a 10-year high, as energy producers and industrial firms retreated before a flurry of earnings this week. The MSCI Asia Pacific Index was little changed at 159.58 as of 4:31 p.m. in Hong Kong, a trading day after reaching its highest level since December 2007.
  • OPEC and its allies indicated they weren’t planning any big changes to their supply deal, even as oil prices remain below $50 a barrel amid growing skepticism that their output cuts are working. Capping rising oil production from Nigeria and Libya — both exempt from the current agreement — won’t be on the agenda at the meeting on Monday in St. Petersburg, Russia.
  • Gold steadied near a 1-month high as the dollar held near the lowest in more than a year before this week’s Federal Reserve meeting. Silver retreated from a 3-week high.
  • The International Monetary Fund revised down its 2017 growth forecast for the U.K., citing slower-than-expected expansion at the start of the year. The pace will slow to 1.7 percent from 1.8 percent in 2016, the IMF said in anupdate of its World Economic Outlook, after predicting a pickup to 2 percent in April.
  • The U.S. Federal Reserve will unveil the timing of its balance sheet unwind in September and wait until December to raise interest rates again, according to a Bloomberg survey of 41 economists. Results of the survey, conducted July 18-20, showed economists are growing increasingly concerned over the recent slowing of inflation, compared with a similar questionnaire in June.
  • There’s a risk of a global trade war should President Donald Trump decide to restrict imports of steel, according to Japan’s leading mills group, which warns any new U.S. curbs on the metal may provoke a tit-for-tat response that could drag in other products. Concern would deepen about the potential spread of protectionism if Trump acts, Kosei Shindo, chairman of the Japan Iron and Steel Federation, told reporters in Tokyo on Monday.
  • Grab raised $2 billion from Didi Chuxing and SoftBank Group Corp. in the largest–ever venture fundraising in Southeast Asia, joining forces with two companies instrumental in driving Uber Technologies Inc. out of China.
  • Growth in the euro-region economy started the third quarter at the weakest pace in six months as manufacturing cooled. A composite Purchasing Managers’ Index fell to 55.8 in July from 56.3 in June, IHS Markit said on Monday. The figures indicate that gross domestic product is expanding at a 0.6 percent quarterly pace, compared with 0.7 percent in the second three months of the year.
  • The world is leaning less on its biggest economy to sustain the global recovery, according to the International Monetary Fund. The fund left its forecast for global growth unchanged in the latest quarterly update to its World Economic Outlook, released Monday in Kuala Lumpur. The world economy will expand 3.5 percent this year, up from 3.2 percent in 2016, and by 3.6 percent next year, the IMF said.
  • KKR to announce Monday that it has agreed to pay $66.50 per share in cash to acquire WebMD Health Corp., Reuters reports, citing an unidentified person familiar.
  • Trade Secretary Liam Fox will meet his U.S. counterpart in Washington on Monday as the U.K. seeks a trans-Atlantic trade deal as soon as possible after leaving the European Union. Fox, who said on Sunday it will be a “difficult discussion,” is expected to hold talks with U.S. Trade Representative Robert Lighthizer and Commerce SecretaryWilbur Ross before meeting members of Congress during a two-day trip.
  • China’s small-caps share gauge, cowed by the nation’s battle against speculators, is on the verge of becoming cheaper than the Nasdaq Composite Index for the first time on record. The ChiNext Price Index’s valuation based on reported earnings is now at 36.2, compared with 34.3 for the Nasdaq, leaving the narrowest gap since the Chinese board started in 2010.
  • The land of Abenomics is betting on Modinomics. The demand is so strong that assets of Nomura Holdings Inc.’s India equity fund quadrupled to almost 400 billion yen ($3.6 billion) in just the past year. Japanese investors owned $13 billion of Indian stocks and bonds at the end of June, the most in data going back to 2012, according to India’s regulator.
  • Inveravante, the investment firm owned by Spanish billionaire Manuel Jove, is considering a sale of its Avantegenera renewable-energy unit amid consolidation in the industry, according to people familiar with the matter. Inveravante’s clean-energy assets, which include wind, hydraulic and solar power plants in countries such as Spain and Brazil, could fetch 500 million euros ($583 million) to 1 billion euros.
  • BMW AG sought to defuse concerns about possible collusion with other German automakers by rejecting allegations of cheating on diesel emissions and downplaying talks with rivals as being focused on promoting exhaust-treatment technology in Europe. With uncertainty clouding the German auto industry, BMW said it has gone farther than competitors to ensure its diesel cars meet regulatory guidelines while still performing well on the road.
  • Telecom Italia SpA advanced in Milan trading as Chief Executive Officer Flavio Cattaneo prepared to step down after weeks of mounting tension with the carrier’s biggest shareholder, Vivendi SA. The board and Telecom Italia’s compensation committee are meeting on Monday to discuss the terms of a mutual termination agreement for the 54-year-old CEO, the Milan-based company said Friday. Vivendi declined to comment.
  • The Port of Seattle is adding to this year’s flood of airport and shipping terminal bonds by selling $608 million of debt in one of this week’s biggest offerings. So far this year, municipal bonds sold for airports, ports and marinas total $9.3 billion, up from about $7.5 billion a year ago, according to data compiled by Bloomberg.
  • Poland’s president vetoed part of a controversial overhaul of the judiciary that’s brought tens of thousands of demonstrators into the streets and pitted the nation’s government against its partners in the European Union and the U.S. Going against the ruling party which backed his presidency, Andrzej Dudastruck down bills that would have replaced Supreme Court judges and revamped the Judicial Council that makes key personnel decisions.
  • Amazon.com Inc. has made a bid to acquire Indian digital payments startup FreeCharge from e-commerce operator Snapdeal, a person with direct knowledge of the matter said. The offer is worth between $50 million to $80 million, the person said, asking not to be identified as the negotiations are private.
  • Japan’s Mitsubishi Tanabe Pharma Corp. said it will buy Israeli drugmaker NeuroDerm Ltd. in a $1.1 billion deal that gives it control of experimental drugs for central nervous disorders and the opportunity to expand further in the U.S.



*All sources from Bloomberg unless otherwise specified