July 27th, 2017
Daily Market Commentary
- Officials within Prime Minister Justin Trudeau’s government are concerned the Bank of Canada is moving too quickly to raise interest rates, fearing higher borrowing costs could inadvertently trigger a downturn. Governor Stephen Poloz raised the central bank’s key overnight rate this month for the first time since 2010, and another increase is expected by the end of the year.
- Potash Corp. of Saskatchewan Inc., the crop-nutrient producer planning to merge with Agrium Inc., posted second-quarter earnings that beat analysts’ estimates amid signs of a rebound in demand for the company’s namesake fertilizer. Second-quarter net income was 24 cents a share, the Saskatoon, Saskatchewan-based company said Thursday in a statement, exceeding the 19-cent average of 10 estimates compiled by Bloomberg. Sales fell to $1.12 billion from $1.05 billion a year earlier, beating the $987 million average estimate.
- Suncor Energy Inc., Canada’s largest oil producer by market value, posted second-quarter profit that missed estimates following an outage and maintenance at its Syncrude oil-sands facility. Profit was 12 Canadian cents a share, excluding some items, the Calgary-based company said Wednesday in a statement.
- Teck Resources Ltd., Canada’s largest diversified miner, reported earnings that beat expectations on record second-quarter steelmaking coal sales and production. Net income rose to C$577 million ($464) in the quarter compared with C$15 million a year earlier, Vancouver-based Teck said Thursday in a statement. Adjusted earnings per share totaled C$1.
- European stocks struggled for traction on one of the busiest days for earnings of the year, after a series of positive corporate results spurred equities across Asia. The dollar steadied after slumping in the wake of the Federal Reserve’s latest decision.
- The U.S. central bank said near-term risks to the economic outlook appear balanced, but consumer price growth remains below its target, signaling policy makers may kick off a reduction in the Fed’s $4.5 trillion balance sheet in September even as they avoid rushing to raise rates. As the initial market reaction fades, investors are returning their focus to a corporate earnings season in which more than 80 percent of S&P 500 companies that have reported so far delivered higher-than-expected profit.
- Japanese shares rose as technology companies gained on optimism over corporate earnings, overshadowing a decline in banks after the U.S. Federal Reserve signaled that inflation remains persistently below its target.
- Oil traded near an eight-week high above $48 a barrel in New York after U.S. crude stockpiles shrank to the lowest level since the start of the year. Futures were little changed above $48 a barrel in New York after prices rose 1.8 percent on Wednesday. American inventories declined by 7.21 million barrels last week to the lowest level since Jan. 6, according to an Energy Information Administration report.
- Gold trades near highest level in more than a month as dollar sinks after Fed signals that inflation remains below target, fueling speculation the central bank won’t rush to raise rates.
- Senate Republicans who have promised to demolish Obamacare are swerving toward a bare-bones approach that might eliminate just a few pieces of the landmark health-care law. Struggling under their slim 52-48 majority, Republicans say this week’s debate — including an all-night blizzard of amendment votes late Thursday known as vote-a-rama — may ultimately lead to a bill that merely ends the mandate that all Americans have insurance or pay a penalty, along with a few other provisions.
- India’s central bank is considering letting mutual funds and insurance companies lend bonds in the repurchase market after shortages of the securities earlier this year impacted yields in the secondary market, according to a person with knowledge of the matter.
- European natural gas traders will have to wait a bit longer for the summer lull. Norway, the region’s second-biggest supplier, said the Kollsnes plant that processes about 40 percent of the country’s gas exports, will need major repair work in the middle of September. The unplanned reduction in flows sent prices in the U.K. to a two-month high, with aggregate volumes so far in July already more than double last year’s levels.
- Nestle SA warned that sales growth this year will be the weakest in at least two decades, giving activist investor Dan Loeb ammunition for his campaign to overhaul the world’s largest food company. Organic revenue growth will be at the lower half of its 2 percent to 4 percent forecast, the maker of Nespresso capsules and Perrier bottled water said Thursday.
- Glencore Plc is in talks to buy from Yancoal Australia Ltd. a piece of the $2.69 billion Rio Tinto Group assets that the miners fought over earlier this year, according to people with knowledge of the situation.
- Noble Group Ltd.’s crisis escalated as Moody’s Investors Service Inc. flagged an elevated risk of default after the embattled Hong Kong-based commodity trader warned of a quarterly loss of as much as $1.8 billion and announced more asset sales.
- Verizon Communications Inc. returned full-force to wireless subscriber growth with a blistering 614,000 customer additions in the second quarter, proving the biggest U.S. wireless carrier can hold its own in a competitive market with unlimited-data plans.
- AstraZeneca Plc plunged by a record after suffering a setback to its next-generation cancer medicine, hurting Chief Executive Officer Pascal Soriot’s ambition to join the league of the world’s five largest drugmakers. A combination of two immuno-therapies — part of a new class of drugs that activate the body’s defense system to attack tumors — failed to do better than chemotherapy in checking the growth of lung tumors in some patients in the study dubbed Mystic, the U.K. drugmaker said in a statement on Thursday.
- Comcast Corp. has found one way to dull the threat from cord-cutters: make hit movies. For the second quarter in a row, the cable giant’s film division was the standout, helping drive profit that beat quarterly estimates from analysts. Second-quarter revenue at Universal Pictures jumped 60 percent to $2.16 billion from a year earlier.
- Consumers probably spent enough last quarter to help U.S. growth rebound from a tepid start to the year. The rest of the economy is giving less of a lift, and the pickup is unlikely to last. Gross domestic product expanded at a 2.5 percent annualized rate from April to June, according to the median estimate in a Bloomberg survey ahead of figures due Friday. While that would be an improvement over the first quarter’s 1.4 percent, some of the upswing owes to the dissipation of temporary factors such as low heating bills, delayed tax refunds and volatility in inventories.
- Schneider Electric SE agreed to buy U.S. power-systems maker ASCO Power Technologies for $1.25 billion as the French company expands in North America and seeks to offset falling sales at its infrastructure division.
- Energy Capital Partners, the private equity firm that owns the largest stake in U.S. power generator Dynegy Inc., is now in advanced talks to buy its rival Calpine Corp., according to people familiar with the matter. Energy Capital may announce a deal to buy the Houston-based company as soon as next week.
- Fiat Chrysler Automobiles NV’s second-quarter profit jumped 16 percent as a shift to sport utility vehicles, including surging global demand for the Maserati luxury brand’s new Levante SUV, made up for a fading American car market. Adjusted earnings before interest and taxes rose to 1.9 billion euros ($2.2 billion) from 1.63 billion euros a year earlier.
- Libor, the benchmark underpinning more than $350 trillion of financial products, will be phased out by the end of 2021, as U.K. regulators and banks look to replace the scandal-tarred indicator with a more reliable system.
- Dow Chemical Co. posted higher second-quarter sales of silicones, strengthening the bottom line as the company prepares to complete its historic $75 billion merger with DuPont Co. Total sales volumes jumped 11 percent, led by the agriculture and silicone-related businesses, Dow said Thursday as it reported earnings. Prices on average rose 5 percent.
- Schroders Plc said inflows from North American clients in the first half are helping the U.K. asset manager to turn around its U.S. business, despite one investor pulling a 5.8 billion-pound ($7.6 billion) mandate.
- Samsung Electronics Co.’s quarterly profit and revenue topped analysts’ estimates, fueled by the success of its new Galaxy S8 smartphones and demand for semiconductors. Net income rose to a record 10.8 trillion won ($9.6 billion) in the three months ended June, the Suwon, South Korea-based company said in a filing Thursday, exceeding the 9.75 trillion won average of projections compiled by Bloomberg. Sales rose 20 percent to 61 trillion won.
- Apollo Global Management LLC amassed $24.6 billion for the largest fund ever raised by a leveraged-buyout firm, crowning a string of record-setting war chests as investors hunt for better returns.
- Hong Kong billionaire Li Ka-shing’s CK Infrastructure Holdings Ltd. is close to acquiring CVC Capital’s German metering business Ista International GmbH, people familiar with the matter said. A deal could be announced as soon as Thursday, according to one of the people, who asked not to be identified because the information is private. The Essen, Germany-based meter company could fetch an equity value of 2 billion euros ($2.2 billion) to 2.5 billion euros.
*All sources from Bloomberg unless otherwise specified