July 9th, 2018


Daily Market Commentary

Canadian Headlines

  • Stephen Poloz can’t hold off raising interest rates any longer. Economists are predicting the Bank of Canada governor will resume tightening policy this Wednesday in what would be the first increase in borrowing costs since January. More hikes are set to follow as businesses warn of wage pressures and inflation remains above the central bank’s target.
  • Retaliating against any U.S. auto tariffs would be “catastrophic” for Canada’s auto industry and the wider economy, Michael Hatch, chief economist of the Canadian Automobile Dealers Association, tells reporters in Ottawa (Friday). Report from dealers group says a trade war with U.S. over autos would threaten as much as 30,000 jobs at car lots, out of an industry that employs 156,000 people
  • A flurry of activity in a remote Canadian town is raising optimism that Royal Dutch Shell Plc and its partners (LNG Canada) are ready to go ahead with the nation’s largest infrastructure project: a C$40 billion ($30 billion) liquefied natural gas terminal that could at last unlock energy exports to Asia.

World Headlines

  • European equities climbed for the fifth day as investors turned their attention away from the U.S.-China trade concerns and began preparing for the earnings season. The Stoxx Europe 600 Index added 0.5 percent as miners increased 2.3 percent, followed by energy shares.
  • Asian stocks rose, with the regional benchmark set for its biggest gain in more than a month. The MSCI Asia Pacific Index gained 1.2 percent, the most since June 4, to 165.94 as of 4:11 p.m. in Hong Kong. Chinese large cap stocks climbed the most in two years, bouncing back from a bruising run of losses in the lead up to the imposition of U.S. tariffs last Friday. The yuan also rose after retreating for four weeks straight.
  • U.S. stock index futures rose amid abating worries over global trade tensions and as investors look ahead to the corporate earnings season, with results for JPMorgan Chase, Wells Fargo & Co. and Citigroup due this week.
  • Gold climbs to two-week high as dollar weakens after U.S. June payrolls report, investors weigh trade war impact between China and U.S.
  • Oil steadied in New York as traders weighed the threat to Iranian supplies from U.S. sanctions against signs of increased drilling by American producers. West Texas Intermediate futures were little changed. Japan will halt purchases of Iranian crude after September unless it receives a waiver from the U.S., according to people with knowledge of the matter. President Donald Trump’s administration is trying to choke off Iranian sales after quitting a nuclear agreement with the OPEC member.
  • Emerging-market currencies had their biggest advance in weeks as calm descended on a trade battlefield between the world’s biggest economies. But the rally will likely end when the U.S. and China resume their tit-for-tat dispute..
  • Groupon Inc. surged in premarket trading after a report that the discount-slinging website is actively seeking a buyer. The merchandise and voucher vendor has approached several public companies in recent weeks to try to drum up interest in a sale, Recode reported on Saturday, citing two people it said were briefed on the effort and without identifying the companies involved.
  • Nissan Motor Co., the Japanese carmaker that was embroiled in a vehicle-inspection scandal last year, said an internal check found employees had falsified exhaust emission and fuel-economy data at five local factories.
  • U.K. Prime Minister Theresa May moved quickly to contain a crisis in her government after her chief Brexit negotiator quit, replacing him with a young euroskeptic and insisted she would press ahead with her vision for the divorce.
  • Xiaomi Corp.’s market debut has failed to convince investors that it’s capable of shedding a reliance on cheap phones and becoming an internet giant. The Chinese smartphone behemoth now faces intense scrutiny while it tries to prove it should be twice as expensive as Apple Inc. After raising $4.7 billion in an initial public offering selling stock at the bottom of its marketed range, the first day of trade saw the shares slide as much as 6 percent in Hong Kong. The IPO had been touted as the culmination of a remarkable turnaround and the starting gun for a clutch of mega debuts but it came amid sliding markets and an escalating trade spat between the U.S. and China.
  • Samsung Electronics Co. will open the world’s largest mobile phone factory in India, in a win for Prime Minister Narendra Modi’s flagship program to lure investors to manufacture in the South Asian nation.
  • Indonesia will send a team of trade negotiators to the U.S. to help save a long-running export preference deal that President Donald Trumpis threatening to abandon.
  • The top U.S. communications union is joining a coalition calling for the Federal Trade Commission to break up Facebook Inc., as the social media company faces growing government scrutiny and public pressure.
  • Trump says he’ll announce his pick to replace Supreme Court Justice Anthony Kennedy, who’s retiring from the top U.S. court after 30 years. Appeals court Judge Thomas Hardiman was solidly in the mix as of Sunday after being first runner-up a year ago, said three people familiar with the process. Judge Brett Kavanaugh looked to have the inside track within the White House last week but may have hit a snag.  “An exceptional person will be chosen,’’ Trump promised Sunday evening on Twitter.


*All sources from Bloomberg unless otherwise specified