October 10th, 2018
Daily Market Commentary
- Canadian stocks fell for a third day, their longest losing streak in a month, as U.S. equities rebounded. The loonie pared earlier losses against the greenback. The S&P/TSX Composite Index fell as much as 0.6 percent to the lowest since May 9, with tech and materials pacing declines. Pot stocks, consumer staples and real estate rose.
- Alberta Premier Rachel Notley said the province may soon announce more plans to help the local energy industry reap more value from its resources amid a slump in Canadian crude prices. “We will have more to say in the weeks to come around other things that we can do to provide more value-added opportunities here in Alberta” to help ease the province’s bottlenecks in crude pipelines and rail shipping, Notley said in response to questions at a press conference in Edmonton.
- Parkland Fuel agrees to buy 75% of SOL, a privately-held fuel marketer in the Caribbean owned by the Simpson Group, for total consideration of $1.21 billion plus customary post-closing adjustments, with SOL acquiring 12.16m shares in the capital of Parkland.
- Treasury yields resumed their upward march on Wednesday ahead of more U.S. debt sales and as traders await a fresh round of inflation data for the world’s biggest economy. The mood in stocks soured, and European equities turned lower as American futures drifted and Asian peers erased an advance. Telecom stocks lead the Stoxx 600 Index with a 2% gain as investors reassess their view on the beaten-down sector that’s cheapest in years.
- Oil held near $75 a barrel as Hurricane Michael threatened supply in the U.S. just as the nation’s stockpiles were forecast to increase. Futures in New York were little changed after rising to a week’s high on Tuesday. Hurricane Michael has curtailed production in the Gulf of Mexico by 40 percent as it rushes toward Florida as a “dangerous” storm.
- Gold’s back to treading water as investors weigh President Donald Trump’s criticism of the Federal Reserve’s pace of interest-rate increases. Bullion prices have largely been little changed since dropping on Monday by the most since mid-August. Trump said the U.S. central bank is moving too fast with hikes and dismissed concerns about inflation.
- Iron ore’s on the move, rewarding the bulls. Benchmark spot prices have advanced to the highest level since March, breaking out of a long run in the $60’s range, while high-grade material is being propelled back toward $100 a metric ton amid signs of sustained demand in China.
- British and European Union officials are locked in talks in Brussels over a compromise Brexit deal that could see the U.K. remain temporarily in the EU’s customs regime, people familiar with the negotiations said. With just a week before a crucial summit of EU leaders that could determine the outcome of Brexit, officials from each side are wrangling over a potential solution to the biggest sticking point: how to keep the Irish border free from customs infrastructure. The U.K. is now unlikely to present any fresh proposals publicly and negotiators have not waited for one, the people said.
- Greece’s central bank blamed Italy’s populist fiscal policy for a plunge in the stock prices of local banks, in the first official acknowledgment that the country’s plans to widen its budget deficit next year are having effects elsewhere in the euro area.
- Investors may be ignoring the risk that financial conditions could tighten sharply and send tremors through the global economy, the International Monetary Fund warned. “Asset valuations appear to be relatively high in some markets, notably in the United States,” the IMF said Wednesday in its latest Global Financial Stability Report. “Overall, market participants appear complacent about the risk of a sharp tightening of financial conditions.”
- Utilities are warning that lights in the Carolinas may go out for the second time in a month, thanks to Hurricane Michael. Duke Energy Corp. said Michael may trigger outages lasting for “several days,” according to a statement Tuesday. The Charlotte, North Carolina-based company issued a similar notice Monday for its 1.8 million Florida customers.
- The options market is getting ahead of itself. The recent revival of stock swings has pushed the S&P 500 Index’s implied volatility to its highest level since April 2017 relative to actual moves in the gauge — an indication that traders are paying to hedge against further turbulence. The Cboe Volatility Index has jumped 37 percent in the last four days, the most since March, while the S&P 500’s 1.5 percent drop was only the biggest since June.
- The Bank of England’s Financial Policy Committee is concerned about the rapid growth of leveraged lending, including to U.K. businesses, it said in a report published on Tuesday.
- The biggest post-crisis shift in the investment landscape may be looming, threatening more pain for investors besieged by an uptick in real interest rates and cross-asset volatility. Bonds and equities are doing something they don’t usually do — fall in unison — with the latest move driving their normal inverse correlation to the weakest levels of the past two decades. The relationship has come completely apart only three times in that period, and each episode was followed by an equity market slump, including the last one, in 2014.
- Poland’s President Andrzej Duda appointed 27 justices to the Supreme Court on Wednesday, defying an injunction and flaming a row with the European Union over the country’s adherence to democratic values. The Main Administrative Court issued the injunction to prevent the government from completing its overhaul until the European Court of Justice rules on the revamp. In a historic first, the EU’s executive sued the Polish government in September for rule of law violations, judging that its repeated judicial overhauls undermine the independence of courts.
- Ikea plans to expand to about a dozen new markets in the coming years, including branching into South America, as the Swedish furniture giant aims to reach a total of 3 billion potential customers by 2025.
- Vodafone Group Plc shares hit their lowest since 2009 on Tuesday after rating downgrades and target price cuts by analysts who blamed 5G frequency auctioncosts, subscriber losses in Spain and an overly generous dividend. For most of the past nine years, analysts surveyed by Bloomberg have been more optimistic than investors about the stock.
- The U.S. is threatening to block the U.K. from a 46-nation public procurement agreement, a move that would deny British companies from accessing a near $2 trillion marketplace after leaving the European Union, according to two officials with knowledge of the situation.
- Republican groups have been pulling back in more than a half dozen tough House races to focus their resources in districts where they see a better chance to defend against a building midterm surge by Democrats. With less than a month until the Nov. 6 election and scores of House races in play, national GOP groups and allied super political action committees are conducting financial triage that will alter the prospects for candidates of both parties.
- U.S. intelligence services intercepted communications of Saudi officials discussing a plan to capture Saudi journalist and government critic Jamal Khashoggi, whose disappearance in Turkey last week threatens to damage the warm ties between the kingdom and Washington. The Saudis were discussing a plan to lure Khashoggi back to the kingdom, The Washington Post reported, citing a person familiar with the communications, which were intercepted before he vanished. Khashoggi, a columnist for the newspaper, was last seen entering the Saudi consulate in Istanbul on Oct. 2 and is feared to be detained or dead.
- China plans to increase the number of companies it deems systemically important financial institutions, people familiar with the matter said, a sign that policy makers are stepping up crisis-prevention efforts as the nation’s debt burden swells to unprecedented levels.
- A major U.S. telecommunications company discovered manipulated hardware from Super Micro Computer Inc. in its network and removed it in August, fresh evidence of tampering in China of critical technology components bound for the U.S., according to a security expert working for the telecom company.
*All sources from Bloomberg unless otherwise specified