October 12th, 2018

Daily Market Commentary

Canadian Headlines

  • Canada is applying quotas and a 25 percent tariff on steel imports from China and other countries to avoid becoming a dumping ground for steel in the face of metal levies imposed by U.S. President Donald Trump.
  • Canadian waste management firm Terrapure Environmental Ltd.is exploring an initial public offering, according to people familiar with the matter. The Burlington, Ontario-based company is working with banks on the potential share sale, which could raise about C$300 million ($230 million), said the people, who asked not to be identified because the matter is private. The company could file with regulators for the IPO as early as next month.
  • Natural gas has begun flowing again on a pipeline in British Columbia after a rupture on an adjacent line forced oil refineries in Washington to cut output and sent gasoline prices soaring up and down the West Coast.

 

 

World Headlines

  • The Stoxx Europe 600 index gained for the first time in three days, though still headed for its worst week since February, led by miners as most industrial metals gained. U.S. equity-index futures also climbed, suggesting the S&P 500 may snap its six-day losing streak when American markets open.
  • Shares across Asia rose in afternoon trading Friday, with markets in Hong Kong, Taiwan and South Korea gaining at least 1.9 percent. Japanese stocks reversed earlier losses, with the benchmark Topix index edging up 0.1 percent.
  • Industrial metals regained some poise after two days of turmoil on global markets, with zinc leading gains and copper rising as Chinese customs data pointed to strong demand. (China, the world’s top copper user, imported record volumes of concentrate last month, soothing investors jitters about underlying demand.)
  • Oil pared a weekly loss as investor focus shifted from broader market turmoil spurred by a plunge in U.S. equities to looming shortages from Iran’s dwindling exports.
  • The International Energy Agency cut forecasts for oil demand this year and next because of growing threats to global economic growth, yet warned that dwindling spare oil supplies will keep prices high.
  • This month’s bond-market slump hasn’t jolted the majority of Wall Street strategists from one core view: that the Treasuries yield curve will keep flattening well into next year. Strategists at most of the Federal Reserve Bank of New York’s primary dealers expect the spread between 2- and 10-year yields to narrow through the first half of 2019, according to yield forecasts compiled by Bloomberg.
  • The yuan is “broadly in line” with China’s economic fundamentals, a senior IMF official said, days before the U.S. Treasury Department is scheduled to release a closely watched report on currency manipulation. China’s currency has fallen more than 6 percent this year against the dollar, prompting speculation it may fall through the key level of 7 per dollar. The decline has attracted the notice of the U.S., which is locked in a tit-for-tat tariff dispute with Beijing. In an interview Thursday, Treasury Secretary Steven Mnuchin said the U.S. wants to make sure the depreciation isn’t a “competitive devaluation.”
  • Global finance chiefs warned that tensions over trade and rising interest rates threaten to turn the world economy into a battleground just as global growth peaks. A year since they toasted the most synchronized expansion in years, policy makers at the IMF’s annual meeting fretted this week that the upswing may come apart as governments turn inward and the Federal Reserve creates ripples by tightening monetary policy.
  • The biggest U.S. bank leaned on old-fashioned lending in the third quarter to weather a slump in fixed-income trading. JPMorgan Chase & Co. said net interest income — revenue from customers’ loan payments minus what it pays depositors — jumped to a record $13.9 billion in the period, helped by rising interest rates and steady growth in what the bank considers core loans. Bond-trading revenue fell 10 percent.
  • BlackRock Inc. won a mandate to manage 30 billion pounds ($40 billion) of assets for Lloyds Banking Group Plc, the latest twist in a hotly contested battle to win a slice of 109 billion pounds that Schroders Plc is also vying for.
  • Airbus SE could build a longer-range version of its newest narrow-body jet by 2023, according to prospective buyer Air Transat, beating a competing Boeing Co. model to the market. The Canadian carrier’s president, Jean-Francois Lemay, has been briefed by Airbus on its thinking regarding service entry for the proposed aircraft, as well as by leasing firm AerCap Holdings NV, the biggest supplier to its fleet, he said in an interview in London.
  • British American Tobacco Plc and Imperial Brands Plc led cigarette stocks lower on concern the U.S. Food and Drug Administration is planning to propose strict limits on the amount of nicotine in traditional cigarettes.
  • Patisserie Holdings Plc finance chief Chris Marsh was arrested as U.K. fraud prosecutors opened a probe into an accounting scandal that threatens to shutter the cake baker’s 200-plus stores. The owner of the Patisserie Valerie chain said in a statement Friday that Marsh was arrested overnight and has been released on bail. The U.K.’s Serious Fraud Office said in a statement that it had opened a criminal probe of an individual but declined to comment further.
  • The mysterious disappearance of a prominent Saudi government critic is prompting some company leaders to back away from the “Davos in the Desert” event intended to showcase Prince Mohammed bin Salman’s modernization plan for the desert kingdom. Turkish officials allege Jamal Khashoggi, a Washington Post columnist who lived in self-imposed exile, was murdered in the kingdom’s consulate in Istanbul after entering the building on Oct. 2. They now say they have audio and video recordings that show a Saudi security team detained Khashoggi in the consulate before killing him and dismembering his body, the Washington Post reported. Saudi officials say Khashoggi left the building unharmed.

 

*All sources from Bloomberg unless otherwise specified