October 19th, 2017
Daily Market Commentary
- A C$1.7 billion ETF tracking the biggest Canadian stocks is indicating the recent rally has more room to run. Shares in the Horizon S&P/TSX 60 Index ETFrecently formed a golden cross trading pattern, meaning the short-term moving average has broken above the long-term moving average — a buy signal. After underperforming most of the developed world for the first eight months of the year, Canada’s benchmark has outpaced global stocks since early September, bolstered by gains in financial, consumer discretionary and energy sectors.
- Caisse de Depot et Placement du Quebec, one of Canada’s largest pension funds, will scale back its high-carbon investments such as coal while boosting its renewable holdings in a bid to help fight climate change. Already among the world’s largest renewable energy investors, the Caisse is pledging to increase low-carbon investments by 50 percent over three years, according to a statement Wednesday. This will represent more than C$8 billion ($6.4 billion) in new investment, the Caisse said.
- Cenovus Energy is in an agreement to sell its Palliser crude oil and natural gas assets in southeastern Alberta to Torxen Energy and Schlumberger for cash proceeds of $1.3 billion.
- Europe’s Stoxx 600 extends losses to as much as 0.8%, while Spain’s IBEX 35 slides as much as 1%, after Catalan President Carles Puigdemont said the regional parliament may declare independence from Spain unless the government in Madrid agrees to talks.
- U.S. stock-index futures fall as Catalan crisis heats up after Spanish government said it will proceed with suspending Catalan autonomy. U.S. stocks advanced for a fourth day on Wednesday, hitting new record levels.
- Asian stocks outside of Japan retreated after a swathe of economic reports that showing China’s economic expansion remains intact failed to buoy sentiment. The MSCI Asia Pacific Index dropped 0.2 percent to 167.02 as of 4:57 p.m. in Hong Kong. The Hang Seng Index, Asia’s best performing benchmark gauge this year, tumbled almost 2 percent, the most in two months.
- Oil dropped in New York, snapping four days of gains, as traders took profit amid disruption in Iraq and U.S. product inventories grew. Futures fell as much as 1.7 percent after rising almost 3 percent the past four sessions. Gasoline stockpiles expanded for a fourth week, while distillate supplies rose for the first time since August, U.S. government data showed.
- Gold for immediate delivery +0.2% to $1,282.90/oz after a 3-day slump sparked by rallying equity prices.
- European Union emission allowances advanced to their highest since January last year after lawmakers reached a provisional deal to gradually tighten the cap on airlines and make the system resistant to potential turmoil should Brexit talks fail. EU lawmakers are seeking to set rules this year for the market through 2030, including establishing a reserve starting in 2019 to soak up an accumulated glut. Representatives of EU governments and the European Parliament on Wednesday reached a provisional deal that would introduce an annual reduction of the number of emission permits for airlines in the market and protect the program from Brexit.
- OPEC sent its strongest signal yet for an extension of production cuts until the end of 2018, saying preparations for the next meeting are taking their lead from Russian President Vladimir Putin’s tentative backing for a further nine-months of curbs. If the Organization of Petroleum Exporting Countries and allies including Russia decide they need to extend their supply deal, it should be done at least until the end of next year.
- Pacific Investment Management Co. acquired 1.7 billion pounds ($2.2 billion) of bonds backed by the riskiest type of U.K. mortgages, according to people with knowledge of the matter. The company was the sole buyer last week of a Co-Operative Bank Plc securitization backed by home loans made to so-called non-conforming borrowers, a group that may have previous court judgments or insolvencies, said the people, who asked not to be identified because the deal is private. Pimco also bought into 3 billion pounds of similar Co-Op Bank securitizations in May and August.
- Nestle SA and Unilever gave predators targeting the consumer-goods business more ammunition, reporting weak sales for a summer in which North American hurricanes and European rains further undermined already tepid consumer demand for big brands. The Swiss owner of Nespresso coffee and Poland Spring water reported its weakest nine-month sales since at least 1999, while the Anglo-Dutch maker of Magnum and Ben & Jerry’s ice cream posted third-quarter revenue growth that fell well short of estimates. Both companies said bad weather curbed demand for refreshments, compounding Big Food’s struggle to revive growth.
- U.K. Prime Minister Theresa May will demand that the European Union move Brexit talks on to trade in a face-to-face showdown with leaders over dinner, even as EU officials see a breakthrough as all but impossible. May wants negotiations to move on to the future relationship and hopes to discuss how to make quicker progress during the meal at a Brussels summit on Thursday, according to a senior U.K. government official. While the EU is also keen to make progress, officials say the U.K. hasn’t done enough to translate the concessions of May’s speech in Florence, Italy, last month into concrete pledges.
- Facebook Inc. and Google are being blamed for helping Russia get Donald Trump elected, and there are calls to restrict their growing influence. Amazon.com Inc. is being forced to get customers to pay more sales tax. The Chinese government refuses to use Microsoft Corp.’s latest Windows offerings, and Apple Inc. faces a 13 billion euro tax bill.
- Stephen Squeri helped American Express Co. Chief Executive Officer Kenneth Chenault lead the firm through the Sept. 11 terrorist attacks and the 2008 financial crisis. But Chenault said a less-historic moment 30 years ago illustrates why Squeri is the right person to succeed him.
- London Stock Exchange Group Plc’s Xavier Rolet will leave by the end of next year, bringing an end to an era that has seen the shares soar despite the collapse of a $14 billion deal that would have created a European exchange powerhouse. The LSE said in a statement Thursday that it will start a search for a successor to Rolet, who has been in charge since May 2009. Rolet would have retired this year if all had gone to plan with the merger with Deutsche Boerse AG, but regulators blocked the takeover on antitrust concerns.
- Toyota Motor Corp. cleared aluminum parts supplied by Kobe Steel Ltd. of safety concerns, giving the embattled steelmaker a respite as companies around the world rush to check the safety of their products following revelations of data falsification. Shares of Kobe Steel rose, erasing earlier losses, after Toyota said aluminum plates received directly from the steelmaker and from other suppliers met both internal and statutory standards. The plates were used in parts such as hoods and rear hatches, it said. Honda Motor Co. and Mazda Motor Corp. also gave an all-clear on aluminum parts supplied by Kobe.
- Nissan Motor Co. will suspend all local car production for Japan from today for about two weeks as the company’s fallout from a lapse in vehicle quality inspection worsens. A production suspension is needed to reconfigure final inspection lines, the company said in a statement. The automaker will also increase the number of final inspectors, Chief Executive Officer Hiroto Saikawa said at a press conference at its Yokohama headquarters Thursday.
- Abertis Infraestructuras SA, the Spanish toll-road operator that’s at the center of a takeover battle, said its board concluded that an offer from Italy’s Atlantia SpA should be higher. The board found the bid to be “positive and attractive from the industrial point of view, but considers that the cash consideration value has margin of improvement,” Abertis said in a statement Thursday.
- Two of the parties in talks to join Chancellor Angela Merkel’s government want to explore a sale of the state’s 23.7 billion-euro ($27.9 billion) stake in Deutsche Telekom AG. Selling the holding is “a major demand” by the pro-market Free Democrats in talks to form a coalition, Michael Theurer, a senior FDP lawmaker, said Wednesday. The plan — also backed by the Greens, another potential coalition partner — is to use the money to speed up the rollout of fiber-based Internet connections to households, where Germany lags behind many European peers.
- AngloGold Ashanti Ltd. will halve its production from South Africa after agreeing to sell mines to Harmony Gold Mining Co. and a Chinese investment firm in an effort to stem losses in its home country. The world’s third-largest gold miner will sell Moab Khotsong, which includes the Great Noligwa mine, to Harmony for about $300 million and Kopanang to Heaven-Sent SA Sunshine Investment Co. for 100 million rand ($7.4 million), the Johannesburg-based company said in a statement on Thursday.
*All sources from Bloomberg unless otherwise specified