October 17th, 2018

Daily Market Commentary

Canadian Headlines

  • Canadian stocks regained their footing on Tuesday, posting their biggest gain since April 18, amid a rally in technology shares. U.S. equities also gained on positive corporate earnings reports.
  • Canada’s drive to legalize marijuana kicks off early Wednesday with store openings on the Atlantic Coast, giving the country a massive head start in developing a global pot market that some analysts peg at $150 billion.



World Headlines

  • European stocks erased initial gains with automakers sliding after Goldman Sachs Group Inc. called the third quarter a “challenging” period for the region’s industry. The Stoxx Europe 600 Index was little changed as of 11:24 a.m. CET, erasing a prior advance of as much as 0.7 percent. The automakers’ index declined 1 percent after Goldman said there’s potential for a downward earnings revision by suppliers. Tech shares, by contrast, led advancing sectors, helped by a strong outlook from semiconductor-equipment maker ASML Holding NV.
  • Major equity markets across Asia rallied Wednesday amid an upbeat outlook from the U.S. tech sector, but the top performing market today doesn’t have a single tech stock. While shares in Japan, Taiwan and South Korea rallied by more than 1 percent as chipmakers and other IT companies provided a boost to the gauges, the Philippine Stock Exchange Index — with no tech stocks among its 30 members — was the biggest gainer Wednesday with a 1.7 percent gain at the close.
  • U.S. stocks gained the most in more than six months as corporate earnings provided a respite from tensions over trade and geopolitics. The dollar declined. The S&P 500 surged more than 2 percent, all 30 members of the Dow Jones Industrial Average advanced and small caps in the Russell 2000 Index notched the best gain since the day after the 2016 election.
  • U.S. equity futures turned lower on Wednesday and European stocks reversed an advance as the investor confidence that powered gains a day earlier faded. The dollar edged higher and Treasuries were steady.
  • Oil fell as traders weighed contradictory assessments of U.S. crude inventories before the release of government data later Wednesday. Futures slid 0.6 percent in New York. The American Petroleum Institute was said to report a 2.13 million-barrel drop in stockpiles, while a Bloomberg survey forecast a 2.5 million-barrel gain.
  • Spot bullion posted two consecutive weeks of gains in early October, the first back-to-back advance since April, as global equities retreated and demand for haven assets started to reemerge. On Wednesday, the metal held near the highest level since July.
  • U.K. inflation slowed more than expected in September, giving the Bank of England room to move slowly on the path of raising interest rates. While faster pay growth may be strengthening price pressures, the uncertainty from Britain’s imminent divorce from the European Union is also undermining the economy. BOE Governor Mark Carney says a limited and gradual series of rate hikes are needed to keep inflation in check, and markets expect the next move to come after the U.K. formally leaves the bloc in March.
  • China’s broadest measure of new credit jumped in September, exceeding all estimates, as officials changed the dataset to reflect surging bond issuance amid steps to encourage investment in infrastructure.
  • Market participants have a burning question for the Federal Reserve: How high will policy makers hike interest rates before pausing for a breather? Meeting minutes set for release at 2 p.m. Wednesday in Washington are unlikely to offer answers, but they may drop a few hints about how officials are thinking.
  • Passenger car registrations in Europe slumped 23 percent during September after new emissions test rules took hold, reversing gains made in August when automakers were hurrying vehicles out the door to beat the deadline.
  • The U.S. joined other World Trade Organization members in temporarily blocking the U.K.’s bid to stay in a $1.7 trillion public procurement alliance, according to three officials familiar with the proceeding. Britain, which will lose its current access to the group after leaving the European Union in March, will try again next month to reach an agreement to stay in the pact.
  • A deadly explosion at a Crimean school may have been a terror attack, President Vladimir Putin’s spokesman said Wednesday. The possibility of terrorism “is being considered,” Dmitry Peskov told reporters on a conference call.
  • Special Counsel Robert Mueller is expected to issue findings on core aspects of his Russia probe soon after the November midterm elections as he faces intensifying pressure to produce more indictments or shut down his investigation, according to two U.S. officials.
  • Netflix Inc. is growing faster than even its most bullish fans on Wall Street predicted, soothing doubts about its global prospects and sending its already-stratospheric stock higher. After a stumble with its previous results, the world’s largest paid online TV network added far more subscribers than analysts expected in the third quarter.
  • Junk bond investors were back to focusing on supply shortages as no new issues were added to the calendar on Tuesday and none have priced since Oct. 5. Year-to-date supply of approximately $155b is the lowest since 2009. This is the largest supply shortage since 2008 with calls, tenders and maturities exceeding issuance, JPMorgan said yesterday.
  • Cboe, Intercontinental Exchange and Nasdaq shares may fall after the SEC said the New York Stock Exchange and Nasdaq failed to justify fee increases.


*All sources from Bloomberg unless otherwise specified