June 21, 2023
- Home Capital has received an exemption from the Toronto Stock Exchange’s requirement to hold its annual meeting by June 30, provided that it is held on or prior to September 29. The meeting will not be held if the acquisition by Smith Financial is completed on or prior to September 29.
- Allied Properties Real Estate Investment Trust agreed to sell its urban data center portfolio in downtown Toronto to KDDI Corp. for C$1.35 billion. The sale is expected to close before the end of the third quarter this year, subject to Competition Act approval and customary closing conditions. Allied will use about C$1 billion of the proceeds to retire debt and the balance to fund its upgrade and development activity over the remainder of 2023 and into 2024
- European equities were steady as investors prepared for the congressional testimony of Federal Reserve Chair Jerome Powell, while hotter-than-expected UK inflation figures kept a lid on sentiment. The Stoxx Europe 600 was down less than 0.1% as of 10:42 a.m. in London, with the FTSE 100 Index erasing losses of as much as 0.6% to trade flat. Real estate stocks were among the worst performers while automotive shares outperformed after a report showed auto sales in Europe continued their upward trajectory in May. European stocks have been resilient in the first half of the year, amid earlier optimism surrounding China’s reopening — a key market for large regional firms — and later on bets that central banks would pause rate hikes. Still, concerns about persistent inflation and a weaker European economy linger, and elevated bond yields could threaten the rally.
- Stocks struggled for direction as a hot inflation reading in the UK proved a cautionary tale for global central banks fighting inflation and markets wagering they’re close to the end of their tightening cycles. Futures contracts on the S&P 500 fluctuated in a narrow range after the gauge notched its first back-to-back losses in nearly four weeks. Economic bellwether FedEx Corp. tumbled 3% in premarket trading after its outlook fell short of analyst consensus estimates on weakened demand. The second-quarter stock rally has hit a wall as investors lose their enthusiasm amid crowded bullish positioning, narrow breadth, high valuations, and hawkish Fed signals. Goldman Sachs Group Inc. strategists including Cormac Conners and David J Kostin recommend hedging S&P 500 exposure. Goldman’s base case is for the S&P 500 to climb to 4,700 in 12 months but the investment bank also sees a drop to 3,400 as possible if a recession becomes more likely.
- Asia’s stock benchmark was poised for a third-straight day of declines, as a selloff in Chinese stocks gathered momentum ahead of holidays. The MSCI Asia Pacific Index slipped as much as 0.8%, with gauges in Hong Kong and mainland China leading declines in the region. The Hang Seng China Enterprises Index dropped more than 2% as a lack of aggressive stimulus from China disappointed some traders, with a weaker yuan also weighing on risk appetite. Overall, sentiment was subdued in Asia ahead of Federal Reserve Chair Jerome Powell’s congressional testimony on Wednesday and Thursday. Traders are seeking clarity on the central bank’s interest-rate path after what was seen as a hawkish pause this month.
- Oil endured another choppy session as traders took stock of China’s efforts to stimulate the economy and awaited commentary from the head of the US Federal Reserve that may shape the outlook for interest rates. West Texas Intermediate for August delivery edged lower toward $71 a barrel after dropping as much as 0.6% early in the session. While China has taken a series of incremental steps to aid growth, there is concern that its moves may lack sufficient punch. Oil has dropped in the first half as China’s reemergence from its strict Covid Zero policies failed to gain traction and global crude supplies, including from Russia, proved abundant. In response, the Organization of Petroleum Exporting Countries and its allies have announced supply cuts to try and tighten the market.
- Gold held steady — after falling Tuesday — before a speech from Federal Reserve Chair Jerome Powell that may shed more light on the path for interest rates. Yields on US 10-year Treasuries edged higher on speculation a hawkish Powell will double down on the Fed’s commitment to vanquish inflation during his semi-annual testimony to Congress on Wednesday. On Tuesday, Bullion dropped below its 100-day moving average and below the $1,940 to $1,980-an-ounce range it’s been in for most of June. On Wednesday, spot gold was down 0.1% at $1,934.62 an ounce as of 10:25 a.m. in London. The Bloomberg Dollar Spot Index added 0.1%. Silver, palladium and platinum fell.
- Analysts are becoming more optimistic toward Toyota Motor Corp. as fears retreat that the world’s biggest automaker is lagging in a shift to electric vehicles. At least four companies including Nomura Securities Co. and Mizuho Securities Co. raised their price targets for Toyota since the Japanese automaker unveiled details of battery development plans and other technologies last week, according to data compiled by Bloomberg. Nomura raised its price target to 3,100 yen ($22) from 2,650 yen, the highest among analysts covering Toyota, the data show. The stock closed at 2,218.5 yen on Wednesday. Toyota’s shares had their best week in about seven years in the period to June 16 as the automaker showed a wide range of technologies under development including next-generation batteries such as all-solid-state batteries, or ASSBs. Some analysts see room for the rally to extend as the firm is expected to post record operating profits in the year ending March 2024, helped by recovering production and a boost to its earnings from a weaker yen.
- UK inflation remained higher than expected for a fourth month, ratcheting up pressure on the Bank of England to hike interest rates more aggressively. The Consumer Prices Index rose 8.7% in May, the same as the month before, the Office for National Statistics said Wednesday. Core inflation, excluding food and energy, accelerated unexpectedly to 7.1% from 6.8%. Economists had expected a headline reading of 8.4% and core to remain unchanged. The figures raise the specter of the central bank opting for a bigger rate increase on Thursday, stepping up the pace of its quickest monetary tightening in four decades. It also puts into peril Prime Minister Rishi Sunak’s promise to cut inflation in half this year.
- Canal+, the French broadcaster owned by billionaire Vincent Bollore’s Vivendi SE, has agreed to buy a significant minority stake in Hong Kong-listed PCCW Ltd.’s Viu unit as part of a partnership agreement between the two media groups. The European firm paid $200 million for a 26.1% stake in Viu, an over-the-top video streaming platform available in Asia, the Middle East and South Africa, according to a statement on Wednesday. The investment could swell to $300 million in total if certain conditions are met. After that transaction is complete, Canal+ would then have the option to further increase its stake to 51%, the statement showed. The deal will help accelerate the growth of Viu’s content and its geographical reach, while bolstering Canal+’s presence in Asia, according to the statement.
- The US money-market industry, one of the big winners on Wall Street as the Federal Reserve hiked interest rates, is getting another lift with more tools at its disposal to attract investors and expand its unprecedented mountain of cash. That’s the backdrop for Wednesday’s kickoff of Crane’s Money Fund Symposium, the marquee annual event for a business that has seen assets grow by some $1 trillion in the past year to a record of almost $5.5 trillion. The roughly 450 participants will gather as a crucial debate rages in markets over whether it’s time to abandon these ultra-safe funds in favor of stocks or long-maturity bonds. The Fed’s aggressive tightening has been a boon for money markets, which have drawn investors seeking a haven from volatility and tiring of the skimpy rates on bank accounts. The industry can point to a major change from a year ago that it expects will help it retain that appeal and keep cash rolling in.
- FedEx Corp. gave a 2024 profit outlook below analyst expectations as a drop in package demand offsets Chief Executive Officer Raj Subramaniam’s $4 billion cost-cutting plan. Adjusted earnings in the next fiscal year will be $16.50 to $18.50 a share, the Memphis-based courier projected Tuesday in a statement. The midpoint of $17.50 compares with the $18.31 average of analysts’ estimates compiled by Bloomberg. FedEx’s shares fell 3.1% in premarket trading in New York on Wednesday. Rival courier companies in Europe also fell in early trading with Deutsche Post down 2.7% and PostNL falling 1.4%.
- A Chinese company plans to invest $1.5 billion in a cathode factory in Hungary, the latest big-ticket investment that the government says will make the eastern European Union nation a hub for the electric car industry. Zhejiang Huayou Cobalt Co. will set up its first European factory in Hungary, Foreign Minister Peter Szijjarto told reporters on Wednesday. Hungary has become a meeting point for premium German car manufacturers such as Mercedes-Benz Group AG and BMW AG and Asian battery makers, mostly from China and South Korea. The government in Budapest says these investments, beyond helping to meet climate goals, also serve as a model for East-West economic cooperation at a time of tension.
- The European Union has assessed that it can’t legally confiscate outright frozen Russian assets and instead is focusing on using those assets temporarily, according to a document obtained by Bloomberg. The EU is zeroing in on two options as it keeps exploring how it could harness more than €200 billion ($219 billion) in frozen Russian central bank assets and channel them to Ukraine, the report said. Many of the funds are at settlement giant Euroclear Ltd., where they generated nearly €750 million by the first quarter of this year. An EU working party on the use of Russian reserves frozen under the bloc’s sanctions has been discussing how to gather information and assessing options under EU and international law. Its members see “no credible legal avenue allowing for the confiscation of frozen or immobilized assets on the sole basis of these assets being under EU restrictive measures,” it concluded. Instead it favors channeling windfall profits from the investments to Ukraine.
- Underwater noises have been detected in the search for a submersible carrying five people that is missing near the wreck of the Titanic, with only about one day’s worth of oxygen remaining on the vessel. A Canadian plane with sonar capabilities looking for the Titan vessel picked up sounds and search teams are trying to find out where they came from, the US Coast Guard said in a post on Twitter. Remotely operated vehicles used in the search are being relocated, while data from the aircraft that detected the noises have been shared with US Navy experts to feed into future searches, the Coast Guard said.
- China said US President Joe Biden had made a “public political provocation” by referring to his Chinese counterpart Xi Jinping as a “dictator,” as fresh tensions flared in bilateral ties just days after meetings to stabilize relations. Chinese Foreign Ministry spokeswoman Mao Ning called the US leader’s comments “irresponsible” at a regular press briefing in Beijing on Wednesday. “It is against the basic facts and diplomatic protocols, seriously violates China’s political dignity and amounts to public political provocation,” she added. Biden told a crowd at a California fundraiser on Tuesday the Chinese leader had been blindsided by an alleged spy balloon floating over the US earlier this year, saying “he didn’t know it was there.” “That’s what the great embarrassment for dictators — when they didn’t know what happened,” Biden said.
- Bitcoin climbed to the highest level since early May, buoyed by crypto initiatives involving major players from the traditional financial sector. The largest digital asset rose as much as 3.6% and traded at $28,988 as of 7:48 a.m. in New York on Wednesday, lifting the token’s rebound this year to 74%. Smaller coins such as Ether, Cardano and Solana also posted gains. Crypto investors have drawn succor from the start of a digital-asset exchange, EDX Markets, backed by firms including Citadel Securities, Fidelity Digital Assets and Charles Schwab Corp. Separately, BlackRock Inc. and WisdomTree Inc. have applied in quick succession to launch spot US Bitcoin exchange-traded funds.