November 17th, 2017
Daily Market Commentary
- Overbond Ltd. is looking to shake up the primary bond market by broadening access to its digital platform that connects fixed-income investors with corporate issuers. The Toronto-based company, founded in 2015, will on Friday make its data hub available via mobile and desktop applications in the U.S. and Canada, expanding its reach to 5,000 market participants, according to a press release seen by Bloomberg.
- TransCanada Corp. shut its Keystone oil pipeline after a spill in South Dakota, days before a Nebraska regulator will decide whether its long-delayed new pipeline can proceed. The line spilled approximately 5,000 barrels early Thursday in Marshall County, the company said in a statement. The conduit, which can carry about 600,000 barrels of crude a day from Alberta’s oil sands to the U.S. Midwest and on to Texas, is expected to remain shut while the company responds to the spill.
- Canadian stocks snapped a seven-day losing streak, as most major sectors — with the exception of energy — moved higher. The S&P/TSX Composite Index added 57 points or 0.4 percent to 15,935.37, the biggest gain since Nov. 6. Technology shares rose 1.2 percent as Shopify Inc. jumped 6 percent, part of a broader tech rally in the U.S. Financials had the biggest influence to the upside, rising 0.7 percent, while energy fell 0.3 percent, tracking the decline in the price of crude
- Asian equities rose for a second day, paring back the first weekly decline since September, as Washington took one step closer to tax reform. The MSCI Asia Pacific Index climbed 0.4 percent to 170.16 as of 4:39 p.m. in Hong Kong, with technology and finance stocks leading gains. The MSCI Asia Pacific Information Technology Index jumped 0.9 percent, taking its year-to-date rally to 60 percent, the best among sectors.
- Rebound proves short-lived for European stocks, trading little changed on Friday after bouncing from a seven-day selloff. The Stoxx Europe 600 Index is unchanged, heading for a second weekly decline. The benchmark is down 3% since a two-year high reached Nov. 1.
- Oil climbed, paring losses earlier this week, as Saudi Arabia moved to dispel doubts over Russia’s readiness to extend output curbs. Futures rose 1.5 percent in New York, trimming the weekly decline to 1.4 percent, after Saudi Arabia’s Energy Minister Khalid Al-Falih said OPEC should announce an extension of output curbs when it meets on Nov. 30.
- Gold heads for first back-to-back weekly gain since September as dollar retreats amid report Special Counsel Robert Mueller has issued a subpoena to President Donald Trump’s election campaign, and as investors weigh complex path ahead for U.S. tax reform plan. Bullion for immediate delivery +0.4% to $1,283.85/oz by 11:20am in London; +0.7% this week, +0.4% last week
- Hours after House Republicans jubilantly passed their tax bill, their colleagues on the Senate Finance Committee approved a far different version — one that postpones difficult questions as lawmakers rush to refashion much of the U.S. economy on a tight timeline. The Senate plan’s most pronounced differences from the House bill include provisions to delay a corporate tax-rate cut by one year and to make various individual tax breaks expire by 2026. Thanks to an 11th hour change in the Senate Finance panel, the two plans would both create new limits on the carried-interest tax break that benefits investment managers.
- U.K. Prime Minister Theresa May is locked in a new Brexit stand-off with European leaders as diplomatic efforts to reach a breakthrough in talks by year-end yield little. EU leaders, including those who have met May in the last 24 hours, declared it’s up to the U.K. to make further concessions. They want more clarity on what the U.K. is prepared to pay when it leaves.
- Special Counsel Robert Mueller served U.S. President Donald Trump’s election campaign a subpoena in mid-October, according to two people familiar with the matter, in the latest sign that his criminal investigation is aggressively pursuing links between campaign officials and Russia. The subpoena to more than a dozen campaign officials sought documents related to any contacts they had with Russian operatives, according to one of the people who requested anonymity to speak about sensitive investigative matters.
- Zimbabwean President Robert Mugabe could be impeached if he refuses to bow to pressure from military generals to resign, according to four officials who are close to mediation efforts aimed at ending a political standoff in the southern African nation. The military placed the 93-year-old Mugabe under house arrest early Wednesday and detained top officials who’d backed the president’s wife, Grace, to succeed him. The military denies having orchestrated a coup and says it is only targeting criminals close to the president who are damaging the country.
- South Africa will face more fiscal difficulties and higher financing costs should state-owned companies’ debt continue rising and if the nation’s local debt is downgraded to junk, the International Monetary Fund said. If state entities such as cash-strapped power utility Eskom Holdings SOC Ltd. and South African Airways request more state support, the government will have to step in to help, removing fiscal space for “more socially useful activities,” Montfort Mlachila, the lender’s senior resident representative in the country, said Thursday in an interview in Johannesburg.
- The recent arrests of Saudi princes and officials accused of corruption won’t harm foreign investment or the kingdom’s plan for an initial public offering of its oil company, said Energy and Industry Minister Khalid Al-Falih. The purge among the upper ranks of the Saudi government and extended royal family has roiled oil markets and sown doubts about the kingdom’s plans to raise as much as $100 billion by selling a stake in Saudi Arabia Oil Co., the world’s largest crude producer.
- Mario Draghi predicted that euro-area workers will soon start winning bigger pay increases, relieving pressure on his European Central Bankto keep supporting the economy. The ECB president, who has for years struggled to combat low inflation, reiterated on Friday that a “key issue” keeping prices down is that wages aren’t rising. But after pumping tin monetary stimulus that has helped bring unemployment down and spur consumption, he now sees a nascent change.
- After rebuffing its $7.2 billion offer, Santos Ltd. won’t be swayed by speculation Harbour Energy Ltd.’s planning to make another offer for the Australia energy producer. Harbour is preparing to make another cash offer of about A$5.30 a share within weeks, said a person with knowledge of the situation, confirming an earlier report by the Australian Financial Review.
- The euro extended its weekly gain to more than 1 percent as the dollar came under broad-based pressure amid tax-plan fatigue and renewed concerns over the Trump-Russia probe. Dollar fatigue dominates medium-term names, while short-term accounts that sold the greenback after the Mueller news took profit soon after the London open, providing the Bloomberg Dollar Spot Index with a temporary boost. The euro has shifted to a buy-the-dips currency, as the strong euro-area recovery that initiated its gains this week was highlighted once more in comments from European Central Bank President Mario Draghi.
- A default by Noble Group Ltd. now “appears probable,” according to Fitch Ratings Inc., which cut the Hong Kong-based commodity trader’s credit rating by two steps, adding further pressure on executives as they seek to hammer out fresh terms with their lenders. Fitch cut the trader to CC from CCC, deeper into junk territory, according to a statement on Friday that came just before the close of trade in Asia. The assessor said it defines the new score as one where “default of some kind appears probable,” and it’s appropriate for issuers who have “publicized discussions on a restructuring, but not formally started one.”
- What’s bad for the developed world can be good news for emerging-market bulls. The developing-nation stock rally will continue through 2018 as expansion in advanced economies will be limited, tempering interest-rate increases, according to Gary Greenberg, the London-based head of emerging markets at Hermes Investment Management Ltd. The asset class is “fairy valued” and the return on equity for the MSCI Emerging Markets Index can breach 12 percent in 2018 — compared with this year’s 11.4 percent, he said.
- India’s equity benchmark rose for a second day after Moody’s Investors Service raised the nation’s sovereign bond rating for the first time since 2004, boosting bank stocks. The S&P BSE Sensex climbed 0.7 percent to 33,342.80 at the 3:30 p.m. close in Mumbai. Metals, property and banks were the biggest gaining sub-indexes. The NSE Nifty 50 also increased 0.7 percent to 10,283.60, rising back above its 50-day moving average.
- The last time Romania’s economy outpaced China’s was 2008, shortly before financial crisis engulfed most of the planet. Politicians basked in that success before the Balkan nation also succumbed, eventually requiring a 20 billion-euro ($24 billion) bailout. Almost a decade later, Romanian growth — an annual 8.8 percent last quarter — is once again outshining the world’s second-biggest economy, the result of a consumer-led boom driven by lower taxes and higher state wages.
- Sliding share prices for U.K. retailers and the potential for accelerating wage inflation next year are catching the eye of Invesco Perpetual fund manager Martin Walker. As most investors are fleeing consumer stocks, Walker is increasing his exposure. Retailers such as J Sainsbury Plc and Marks & Spencer Group Plc now make up about 7.5 percent of Invesco Perpetual’s 1.2 billion-pound ($1.6 billion) U.K. Growth Fund, compared with about 3 or 4 percent a couple of months ago, he said in a phone interview.
- Carson Block, the short seller who rose to fame by making savvy bets against Chinese companies, says it’s getting tougher to target overvalued shares in Hong Kong because the market is rife with manipulation. Chinese investors are using the Hong Kong exchange link to artificially inflate prices of shares targeted by short sellers, Block, the founder of Muddy Waters Capital LLC, alleged in an interview on Friday. He said he thinks that some of the manipulation is directed by government-linked funds, without providing evidence.
*All sources from Bloomberg unless otherwise specified