June 26, 2023
- When Toronto voters enter the polling booth to elect a new mayor on Monday, they will have to scan a roster of 102 candidates on a ballot three columns wide and 34 rows deep. The list includes a handful of frontrunners, but also a host of nontraditional candidates, including an up-and-coming comedian, a teenager, and one well-known climate activist who says he’s running on behalf of his dog Molly. Low barriers to entering the race — plus an unexpected opening for the job after John Tory abruptly ended his eight-year-long reign — have led to the largest recorded number of contenders vying to lead one of North America’s largest cities. That’s compared with 31 candidates in last October’s mayoral contest.
- HSBC Holdings Plc is planning to leave its Canary Wharf headquarters and downsize to a smaller office in the City of London, the latest sign of how a shift to flexible work is reshaping demand for offices and another blow to the Docklands district. The lender, which launched a review in September, said its preferred option is BT Group Plc’s former head office near St Paul’s, according to a memo seen by Bloomberg News. The bank said it “will now begin more detailed discussions on a potential lease, with the intention to move in late 2026.” HSBC has been looking for alternatives to its Docklands skyscraper as it looks to a more flexible workspace and adapts to the post-pandemic cityscape, according to a memo sent last year by the bank’s chief operating officer John Hinshaw. The lease on its current 1.1 million square foot headquarters is due to expire in 2027.
- Suncor Energy says taking measures and working with third-party experts to investigate and resolve the situation, and has notified appropriate authorities. At this time, not aware of any evidence that customer, supplier or employee data has been compromised or misused as a result of this situation
- European equities retreated for a sixth day on Monday after falling the most since mid-March last week, as investors mulled the risks from an attempted armed uprising in Russia and focused on the outlook for economic growth and monetary policy. The Stoxx Europe 600 Index slid 0.4% by 9:22 a.m. in London, set for the longest losing streak since October. More cyclical sectors, like banks, travel and leisure and automakers, led the decliners. Chemicals and retail sectors outperformed. The European equity benchmark posted its worst weekly drop since mid-March last week after a slew of interest-rate hikes on Thursday, which included the Bank of England’s bigger-than-anticipated increase, and on signs of a worsening economic downturn. Central banks have been moving aggressively to combat inflation, which is proving to be stickier than expected, and this is putting a lid on the stocks rally.
- Government bonds rallied and stocks dropped as investors hedged the risk that economies would flag under central banks pushing their inflation-fighting zeal and rate-hiking campaigns too far. Investors have been growing more anxious that central banks determined to extinguish inflation will keep pushing rates higher and risk breaking fragile economies. Futures on the S&P 500 fluctuated after the gauge suffered its worst week since March, while yields on benchmark US Treasury yields dropped five basis points.
- Asian stocks were mixed as traders assessed the market impact from a revolt in Russia that challenged Vladimir Putin’s control of the country. Chinese markets dropped. The MSCI Asia Pacific Index edged 0.1% lower after fluctuating between small gains and losses, with TSMC and Tencent among the biggest drags to the gauge. Benchmarks in mainland China were the biggest losers in the region as onshore markets reopened after the dragon boat festival. Weak holiday spending data added to concerns that the recovery has lost momentum. Meanwhile, Hong Kong’s Hang Seng Index resumed losses after its worst weekly drop since March.
- Oil erased an earlier gain as broader financial markets held steady after the dramatic but short-lived rebellion in Russia over the weekend. West Texas Intermediate traded near $69 a barrel, while Brent futures were also little changed. An eerie calm fell on Moscow after the end of the uprising led by Yevgeny Prigozhin, head of the Wagner mercenary group. Yet investors are weighing the potential for more turbulence in Russia, a major OPEC+ producer. The country’s war in Ukraine has already upended trade flows, with major consumers in Asia boosting imports of Russian energy, and any prolonged turmoil in the nation could reverberate through global oil markets.
- Gold edged higher as geopolitical uncertainty increased following an attempted mutiny by Russian mercenary group Wagner, while investors weighed recessionary signals. Bullion rose as much as 0.6% on Monday after closing 1.9% lower last week on hawkish commentary from US and European central banks. Copper also inched up, while other industrial metals including nickel and zinc declined. Spot gold rose 0.5% to $1,931.44 an ounce as of 11:25 a.m. in London. The Bloomberg Dollar Spot Index declined 0.1% after climbing 0.8% last week. Silver, platinum and palladium gained.
- China’s consumer-driven recovery is showing more signs of losing momentum as spending slows on everything from holiday travel to cars and homes, adding to expectations for more stimulus to support the economy. Domestic travel spending during the recent holiday for the dragon-boat festival was lower than pre-pandemic levels, according to official data released this weekend. Home sales figures are below the level in previous years, while estimates for June car sales showed a drop from a year ago. The rebound in consumption after China shed its Covid controls has propelled growth so far this year, but confidence is weak and evidence is mounting that the economy may need more help. After the central bank cut policy rates earlier this month, economists raised their expectations for more monetary and fiscal stimulus, and state-run media outlets have also published a series of articles in recent days highlighting possible avenues of support.
- Investors added money to exchange-traded funds that buy emerging market stocks and bonds last week. This was the third straight week of inflows. Inflows to U.S.-listed emerging market ETFs that invest across developing nations as well as those that target specific countries totaled $444.7 million in the week ended June 23, compared with gains of $869.2 million in the previous week, according to data compiled by Bloomberg. So far this year, inflows have totalled $10.3 billion.
- Japan’s government unveiled a $6.3 billion deal to buy out and privatize JSR Corp., taking direct control of the world leader in chipmaking compounds at a time US-Chinese tensions threaten to fragment the $550 billion global semiconductor industry. Government-backed Japan Investment Corp. plans to offer shareholders ¥4,350 ($30.40) a share in a tender offer around December, the company said Monday in a statement. That’s a roughly 35% premium to JSR’s Friday close and works out to as much as ¥903.9 billion, JSR said. The move could help Tokyo expand control over compounds essential for making advanced semiconductors. Founded in 1957, JSR is the world’s leading maker of photoresists and one of three Japanese companies, along with Shin-Etsu Chemical Co. and Tokyo Ohka Kogyo Co., that control the global supply of fluorinated polyimide and hydrogen fluoride.
- PacWest Bancorp sold a $3.5 billion asset-backed loan portfolio to Ares Management Corp. as it continues to offload assets to boost its liquidity amid concerns about deposit outflows. Ares’s Alternative Credit funds bought the specialty finance portfolio backed by assets including consumer loans, mortgages and timeshare receivables, the fund manager said in a statement Monday. PacWest said in a filing that the first tranche of the deal closed last week and brought $2 billion of cash proceeds before transaction costs. PacWest is taking steps to bolster its finances after runs on deposits struck several regional lenders earlier this year, leading to the collapse of three California-based banks and one in New York. Earlier this month, it completed the first part of the sale of a separate $5.7 billion loan portfolio to real estate investment company Kennedy Wilson Holdings Inc.
- One of Wall Street’s most bearish strategists said US equities are facing a wall of worry, which could fuel a sharp selloff in the near future. Morgan Stanley’s Michael Wilson, whose outlook for a market slump in 2023 has yet to materialize, sees the S&P 500 at risk of a near-term drawdown. He expects the benchmark index to end this year at 3,900 — about 10% below Friday’s close — before rising to 4,200 in the second quarter of next year. Morgan Stanley is sticking with an outlook for earnings that’s below the market consensus, expecting S&P 500 EPS to be $185 this year compared with the average estimate of $220. Wilson said deteriorating pricing and top-line disappointment will drive the earnings misses.
- Hollywood actor Ryan Reynolds and AC Milan owner RedBird Capital Partners are leading a group of investors taking a stake in Renault SA’s Alpine Formula 1 team that values the business at $900 million. RedBird, Otro Capital and Maximum Effort Investments will spend €200 million ($218 million) for a 24% share in Alpine Racing Ltd., the unit helming Alpine’s Formula 1 activities, Renault said. Alpine is hosting an event later Monday to give more details on its investment and future product lineup. Renault Chief Executive Officer Luca de Meo’s Formula 1 efforts are a key plank of his strategy of expanding its Alpine sports-car business and move toward electrification. After rebranding Renault’s Formula 1 team as Alpine, de Meo is now developing a fully electric lineup of seven models starting with the A290 city car next year and a crossover model in 2025.
- Rishi Sunak’s government said it is stepping up efforts to tame soaring inflation by threatening a crackdown on corporate profiteering and signaling its determination to limit public sector pay rises. Chancellor of the Exchequer Jeremy Hunt will meet industry regulators this week to discuss how to ensure firms are not taking advantage of the economic turmoil by raising prices, while the prime minister hinted on Sunday he may take the unusual step of rejecting recommendations by the independent pay review bodies for public sector wage increases if they are too high. Both measures point to the government trying to work with the Bank of England to tackle the UK’s stubborn inflation problem. The central bank was criticized by members of Sunak’s Conservative Party after it raised rates by half a point to a 15-year high of 5% last week, its most aggressive move in months, amid fears it would trigger more mortgage pain for ordinary Britons during a cost-of-living crisis.
- German Defense Minister Boris Pistorius said his nation is prepared to station a permanent brigade of about 4,000 troops in Lithuania to help bolster NATO’s eastern flank against potential Russian aggression. Ukrainian President Volodymyr Zelenskiy discussed the possible threat of a “terrorist attack” on the occupied Zaporizhzhia nuclear power plant with the leaders of the US, Canada and Poland, calling international attention to the issue “insufficient.” Ukrainian forces have taken control of the village of Rivnopil in the Donetsk region near the border with the Zaporizhzhia region, Deputy Defense Minister Hanna Malyar said on Telegram. Malyar said last week that eight villages and towns had been retaken in the south of the country.
- Europe is set to exceed €1 trillion ($1.09 trillion) in primary bond market issuance after nine new deals were offered in the region on Monday. It’s a similar pace to 2020 and 2021, when the €1 trillion mark was also reached in June, according to data compiled by Bloomberg. Last year, amid the volatility caused by Russia’s invasion of Ukraine, soaring inflation and aggressive interest rate hikes by global central banks, the figure was reached in September. Nine issuers are on track to raise a minimum of €4.8 billion in Europe on Monday as borrowers push ahead with funding plans before the summer slowdown. Companies and public sector borrowers have also been making the most of relatively stable market conditions in the past few weeks, following the banking-sector turmoil earlier in the year.
- International Business Machines Corp. will buy software company Apptio for $4.6 billion as the company pushes deeper into automation technology. IBM will use available cash on hand for the transaction, which is expected to close in the latter half of 2023, the company said in a statement on Monday. Apptio is currently owned by private equity firm Vista Equity Partners, which bought it for $1.9 billion in 2019. Apptio, founded in 2007, sells online services that, among other things, help companies manage their information-technology budgets, forecasting and analysis. The majority of Fortune 100 companies use its products, according to the company’s website, which lists Bank of America Corp., Cargill Corp. and Chevron Corp. among its clients