October 11th, 2018

Daily Market Commentary

Canadian Headlines

  • Canadian cannabis stocks jumped after spending most of the day (Wednesday) in the red, rising after a report that tobacco company Altria Group Inc. is in talks to acquire a stake in Aphria Inc.
  • Chinese oil buyers are making a beeline for a bargain across the Pacific. With Canadian oil over 60 percent cheaper than U.S. benchmark West Texas Intermediate and global marker Brent, China’s refiners are being lured to the heavy, sludgy crude. That’s because — apart from being a source of fuel — it’s rich in bitumen, a black residue used to build everything from roads to runways and roofs.
  • Toronto-Dominion Bank wants customers to complete nine out of every 10 routine transactions on their own within three years. “Today in Canada we have 81 percent of financial transactions done on a self-serve basis, which is digital and ATM,” Rizwan Khalfan, chief digital and payments officer at Canada’s largest lender, said in an interview. “We’re targeting 90 percent.”
  • A natural gas pipeline rupture in British Columbia forced refineries in Washington to cut output, pushing gasoline prices higher in the Pacific Northwest.



World Headlines

  • The biggest stock sell-off since February rolled from the U.S. through Asia on Thursday, with benchmarks from Tokyo to Hong Kong seeing declines in excess of 3 percent.
  • European equities are following their pummeled Asian counterparts lower, with the Stoxx 600 at its lowest levels since January 2017. All Estoxx sectors slumped, with weakness in commodities and metals weighing on oil and basic-resource names. The FTSE MIB is set to enter bear-market territory, as local banks pare initial strength to trade lower by 0.7%.
  • The S&P 500 was set to extend losses after Wednesday’s stock rout spread to Asia and then landed with slightly less force in Europe. With a sector rotation hammering pricey technology stocks, Treasury yields hovering near the highest in seven years, a trade war bubbling up and luxury stocks suffering from Chinese border checks, investors had plenty of reasons for caution.
  • Gold holds advance amid risk-off sentiment in markets after a rout in U.S. equities extends to Asia. Copper and nickel were the biggest losers among industrial metals after stock markets slumped over renewed fears for global economic growth as the fallout from the trade war intensified.
  • Oil headed for the biggest two-day drop since July as fears over a worsening trade war rattled global markets. Futures dropped as much as 2.1 percent in New York, extending Wednesday’s 2.4 percent slide.
  • Global finance chiefs played down the economic risks posed by the biggest U.S. stock sell-off since February, with many describing the decline as a long-awaited correction. “The fundamentals of the U.S. economy continue to be extremely strong, I think that’s why the stock market has performed as well as it has,” U.S. Treasury Secretary Steven Mnuchin told Bloomberg News at the IMF’s annual meeting in Bali, Indonesia. “The fact that there’s somewhat of a correction given how much the market has gone up is not particularly surprising.”
  • President Donald Trump slammed the Federal Reserve as “going loco” for its interest-rate increases this year in comments hours after the worst U.S. stock market sell-off since February. Trump said in a telephone interview on Fox News late Wednesday night the market plunge wasn’t because of his trade conflict with China: “That wasn’t it. The problem I have is with the Fed,” he said. “The Fed is going wild. They’re raising interest rates and it’s ridiculous.”
  • An outsize retreat in small and mid-cap stocks over recent weeks could be a possible sign of an upcoming deeper market correction, according to major asset managers, including London & Capital and JPMorgan Asset Management. Both in the U.S. and Europe, declines in small-cap stock indexes have been more pronounced than for blue-chip equivalents since the end of August. History shows that to be a possible warning sign. Back in 2007, the small-cap Russell 2000 Index peaked three months ahead of the large-cap index, giving some investors ample time to prepare for the nearly 60 percent stock market plunge that followed during the financial crisis.
  • Britons became more reliant on credit cards to fund spending in the third quarter, the Bank of England said in a report published Thursday. Demand for unsecured lending increased “significantly” in the three months through September, “solely driven” by a jump in credit cards, according to the BOE’s survey of banks and building societies. However, lenders said they expect demand to decrease, while they also see the availability of credit falling this quarter.
  • The U.S. and China are set to use the latest gathering of the world’s finance chiefs to marshal support for their respective cases in a trade dispute that shows no sign of ending soon. Finance ministers and central bankers from the International Monetary Fund’s 189 member nations are gathering in Bali, Indonesia this week for the fund’s annual meeting. While the agenda will include discussions on the broader health of the global economy, it will also be an opportunity for American and Chinese officials to cobble together alliances.
  • Brexit negotiators are edging toward a compromise on the thorniest issue in talks, even as officials on both sides warned that obstacles still stand in the way of a deal. EU chief Brexit negotiator Michel Barnier said Wednesday that a deal is within reach, and officials in Brussels and London said some progress was being made in intense negotiations. While the Telegraph reported late Wednesday that an agreement had been clinched, EU and U.K. officials warned in public and in private against predictions that a deal is in the bag.
  • Apple Inc has signed a deal with Dialog Semiconductor Plcto license the U.K. chip designer’s power management technology and acquire certain assets, including more than 300 staff.
  • BMW AG will plow 3.6 billion euros ($4.1 billion) into securing control of its Chinese joint venture, a deal that will see the German automaker retain more of its earnings in the world’s biggest car market and potentially spur similar moves by its rivals. The agreement with Brilliance China Automotive Holding Ltd. makes BMW the first automaker to take advantage of China’s policy to let foreign companies take majority control of their local partnerships. The luxury-car maker said Thursday it is increasing its stake in the venture with Brilliance to 75 percent from the current 50 percent.
  • Manhattan landlords are offering tenants more deal sweeteners than a year ago as developers continue to add supply, and mortgage rates and taxes are drawing in would-be home buyers willing to stick it out a while longer in the rental market
  • A booster failure during a Soyuz rocket launch forced the two crew members to abort their mission to the International Space Station and return to Earth in the first such emergency landing for the Russian-built spacecraft since 1975.
  • The most powerful hurricane on record to hit Florida’s Panhandle left wide destruction and at least two people dead and wasn’t nearly finished Thursday as it crossed Georgia, now as a tropical storm, toward the Carolinas, that are still reeling from epic flooding by Hurricane Florence.


*All sources from Bloomberg unless otherwise specified