March 28th, 2018
Daily Market Commentary
- Canadian stocks fell to the lowest in more than six weeks on a rollercoaster day that saw the benchmark gain as much as 0.5 percent and lose as much as 0.8 percent. The S&P/TSX Composite Index fell 82 points or 0.5 percent to 15,216.18, avoiding an even steeper decline in the U.S. The technology sector tumbled 3 percent, with Shopify Inc. down 5.9 percent and BlackBerry Ltd. losing 5.1 percent ahead of earnings due Wednesday morning.
- Quebec plans to balance its budget for a fourth straight year, allowing the province to pay down debt and lower taxes for small businesses and homebuyers with an election just six months away. Canada’s second-most populous province is committed to five more years of balanced books following a net surplus of C$850 million ($660 million) this fiscal year, even after setting aside C$2.29 billion in a debt-reduction pool known as the Generations Fund.
- European shares slump as concern over escalating trade tensions between the world’s two largest economies batters technology stocks worldwide. The Stoxx 600 Index drops 0.7%, following Asian and U.S. markets lower, after tech giants from Facebook to Apple slid on a report the U.S. is considering a crackdown on Chinese investments in technologies considered sensitive. Concern over rising trade tensions have curbed risk sentiment. Europe’s technology sector led declines on Wednesday, with chip maker ASML falling to a three-week low.
- The latest leg down for tech shares, which have been the driving force for much of the current bull market in global equities, comes at a sensitive time. Stock markets trading with high valuations and tighter liquidity are already being shaken by protectionist moves by Donald Trump. His administration ismulling a crackdown on Chinese investments in technologies the U.S. considers sensitive, the latest step in his plan to punish China for violations of intellectual-property rights.
- Asian equities pulled back, following a sharp decline in U.S. technology stocks and on worries of ongoing trade scuffles between the world’s two superpowers. The yen retreated against the greenback. The MSCI Asia Pacific Index dropped 1.3 percent to 172.43 as of 4:37 p.m. in Hong Kong, led by technology shares from Tencent Holdings Ltd., TSMC Co., to Samsung Electronics Co. Japan’s Topix slipped 1 percent, while Hong Kong’s Hang Seng Index lost 2.3 percent.
- Oil headed for its longest losing streak in almost a month on signs a global glut may persist. Futures in New York fell as much as 1.3 percent after dropping about 1 percent over the previous two sessions. An industry report was said to show a 5.32 million-barrel gain in U.S. crude inventories last week, far higher than the median estimate in a Bloomberg survey before government data later Wednesday. European stockpiles rose the most in five months last week.
- Gold declines for a second day as China said North Korea is willing to talk with President Donald Trump about giving up its nuclear weapons, and global trade war fears showed signs of easing.
- Poland signed a contract with the U.S. for the first phase of a Patriot air missile-defense system to soothe the NATO member’s concerns over Russia’s assertive stance in the region. Under the $4.75 billion deal, Poland’s largest-ever weapons purchase, Patriot producer Raytheon Co. will start deliveries of rockets and communication systems in 2022. The agreement follows Monday’s coordinated expulsion of more than 100 Russian diplomats by 24 nations in response to a nerve-agent attack in the U.K. and President Vladimir Putin’s unveiling of new weapons, including nuclear missiles he said could evade U.S. defenses.
- Concho Resources Inc. will buy rival shale oil producer RSP Permian Inc. in an $8 billion all-share deal, creating one of the largest producers in the region at the center of America’s energy boom. The deal comes as both oil majors and U.S. independent energy companies focus spending in the Permian, a region straddling West Texas and southeast New Mexico where strata of oil-bearing rock hold billions of barrels of oil.
- The Tel Aviv Stock Exchange has received more than 10 bids for all or part of the 71.7 percent stake it’s selling as it seeks to boost foreign investment in Israeli companies, the bourse’s CEO said Wednesday. Bids have come from foreign exchanges and financial institutions with experience running exchanges abroad, Ittai Ben-Zeev said in an interview with Bloomberg TV. The TASE has received more than one bid for the entire controlling stake, as well as several bids for minority positions, he said.
- Kim Jong Un just sent a powerful message to U.S. PresidentDonald Trump ahead of planned talks: China is back on North Korea’s side. The North Korean leader and his wife received a warm welcome in his first trip abroad since taking power in 2011, holding talks with President Xi Jinping and meeting a host of dignitaries. Xi told Kim that China has made a “strategic choice” to have friendly ties with North Korea, and they would “remain unchanged under any circumstances.”
- Facebook said it will roll out a centralized system for its users to control their privacy and security settings in response to an outcry over the way it has handled personal data. The system, which will be introduced to Facebook users globally over the coming weeks, will allow people to change their privacy and security settings from one place rather than having to go to roughly 20 separate sections across the social media platform.
- Takeda Pharmaceutical Co. is considering its biggest takeover ever — a bid for Shire Plc that could top $50 billion and would boost the Japanese company’s position in drugs for cancer, gastrointestinal diseases and nervous-system ailments. The acquisition would widen Takeda’s capabilities in key areas and provide it with some treatments that are in the late stages of testing, the company said in a statement Wednesday. Shire, based in Lexington, Massachusetts, and listed in London, gained as much as 26 percent.
- Saudi Arabia and SoftBank Group Corp. signed a memorandum of understanding to build a $200 billion solar power development that’s exponentially larger than any other project. SoftBank founder Masayoshi Son, known for backing ambitious endeavors with flair, unveiled the project Tuesday in New York at a ceremony with Saudi Crown Prince Mohammed Bin Salman. The powerful heir to the throne of the world’s largest crude exporter is seeking to diversify the economy and wean off a dependence on oil.
- BlackBerry Ltd. set a record quarter for software revenue, further cementing recent success the company has had in winning corporations over to its new non-phone offerings. Revenue was $239 million, beating the average estimate of $215.5 million and overshooting even the most optimistic analyst prediction. Software revenue was $218 million and 70 percent of that was recurring, as opposed to one-time licensing payments.
- The U.K. plans to hire an extra 1,000 customs and immigration staff to ensure the security of the country’s border after Brexit. The extra workers will be funded from an additional 395 million pounds ($560 million) pledged to the Home Office, Philip Rutnam, the top civil servant at the department, told lawmakers on Parliament’s Home Affairs Committee on Wednesday. They’re supplementary to 300 new workers recruited in the fiscal year that’s about to end, he said.
- Plantronics to buy digital communications, collaboration company Polycom in a deal consisting of estimated $690 million net debt, $948 million in cash and 6.352 million Plantronics shares.
- Chinese conglomerate HNA Group has reached an agreement to sell its stake in Guangzhou Rural Commercial Bank Co. to two local state-owned buyers, according to people familiar with the matter. Any disposal would add to the $6.7 billion in stocks and properties that HNA has sold in the past few months, according to data compiled by Bloomberg. HNA is planning to sell 100 billion yuan ($16 billion) in assets during the first half of the year, people familiar with the matter have said.
- Glencore Plc is considering a bid for the Optimum coal operations in South Africa, which it sold in 2015 to a company part-owned by the politically connected Gupta family, according to two people familiar with the matter. Optimum supplies fuel to state power utility Eskom Holdings SOC Ltd. and became a lightning rod issue for critics of the Gupta family members and their friendship with former president Jacob Zuma. Glencore placed the mine in bankruptcy protection in 2015 after Eskom refused to renegotiate an unprofitable supply contract and issued penalties. The asset then was sold to a company owned by the Guptas and Zuma’s son Duduzane, with support from then-Mineral Resources Minister Mosebenzi Zwane, who traveled to Switzerland to meet with Glencore Chief Executive Officer Ivan Glasenberg and was later criticized by the nation’s graft ombudsman.
- The U.S. is taking aim at President Xi Jinping’s strategy to make China a global leader in the high-tech industries of the future. After slapping tariffs on 20th century industries like steel, President Donald Trump is now mulling curbs on 10 strategic industries that Beijing aims to dominate this century. The measures may be announced as early as this week on industries that form the thrust of the “Made in China 2025” plan to boost high-end machinery, aerospace, new-energy vehicles and biotechnology.
*All sources from Bloomberg unless otherwise specified