October 30, 2017
Daily Market Commentary
- Canopy Growth Corporation is proud to announce that it has agreed to enter into a strategic relationship with the leading total beverage alcohol supplier in the United States, Constellation Brands. Constellation is a leading international producer and marketer of a fast-growing, high-performing portfolio of beer, wine and spirits brands. As part of the strategic relationship, an affiliate of Constellation will invest approximately C$245 million in Canopy Growth in exchange for common shares that, following the transaction, will represent a 9.9% equity share in the Company.
- Yet it’s here, in an unremarkable warehouse in the foothills of the Ruby Mountains, that Barrick Gold Corp. has created an in-house coding hub to design software for its nearby Cortez operation — one step in its plan to use technology to revolutionize the business. From underground WiFi to sensors that track the output of every miner, it’s all part of what Cisco Systems Inc. Executive Chairman John Chambers calls an “audacious goal” by his Barrick counterpart John Thornton to drag gold mining into the 21st century.
- Former TransCanada Corp. chief operating officer Alex Pourbaix will become chief executive of Calgary’s Cenovus Energy Inc. Nov. 6 after CEO Brian Ferguson retires this week. Mr. Pourbaix spent 27 years at TransCanada, recently running its commercial wing and overseeing of its power and oil-pipeline business lines until he retired in May. (Globe and Mail)
- European stocks are little changed amid earnings, while Spanish equities bounce back from Friday’s slump after the weekend brought no fresh worries for investors assessing the Catalan crisis. The Stoxx Europe 600 Index is down 0.1%, after a weekly advance fueled by a dovish ECB update. Spanish banks are leading the IBEX 35’s 1.4% gain, following a slump sparked by a Catalonia’s separatist leaders declaring independence on Friday.
- Investors will watch some of the world’s most influential policy makers this week for more clues about quantitative easing and the path of monetary tightening, with the Bank of Japan first up on Tuesday, followed by the Fed on Wednesday and the Bank of England on Thursday. Of those, only the Bank of England is expected to hike this time round. Meanwhile, speculation continues over who Trump will choose as the next Fed chair, with Governor Jerome Powell said to be the front-runner.
- Asian stocks edged higher a second session as a rally in U.S. technology shares on positive earnings surprises underpinned gains in Taiwan and South Korea, offsetting weaker performance in China and Japan. The MSCI Asia Pacific Index rose 0.3 percent to 167.77 as of 4:19 p.m. in Hong Kong.
- Oil extended a two-year high above $60 a barrel in London amid growing signs that OPEC and Russia will press on with supply curbs, and as pipeline flows from Iraq were disrupted. Brent crude futures added 0.3 percent. Saudi Arabian Crown Prince Mohammed bin Salman last week backed extending production cuts by the Organization of Petroleum Exporting Countries and its allies beyond March, following a similar endorsement by Russian President Vladimir Putin earlier this month.
- Gold drops after U.S. equities hit fresh records, while investors await an announcement on who will helm the Federal Reserve as well as release of central bank’s preferred inflation gauge, latest jobs data this week.
- Iron ore holdings stacked up at China’s ports have surged to the highest level in two months, adding to signs that the nation’s widespread curbs on steelmakers’ output are starting to bite as policy makers clamp down to try to ensure clean air over winter.
- Euro-area economic confidence surged to its highest in almost 17 years, reflecting an improved outlook for a region that not long ago was blighted by record joblessness and a double-dip recession. The index of industry and consumer sentiment rose to 114 in October from a revised 113.1 the previous month, the European Commission in Brussels said on Monday.
- Charges possible on Monday against one or more people will be the first public glimpse into Special Counsel Robert Mueller’s six-month probe of Russian meddling in the 2016 presidential election and possible collusion by Donald Trump’s campaign. The potential spectacle threatens to overshadow a big week for the president, as he prepares to end weeks of suspense by naming a new chair of the Federal Reserve, and embarks Friday on an 11-day trip to Asia.
- Lennar Corp. agreed to acquire CalAtlantic Group Inc. in a share and cash deal that values the Irvine, California-based homebuilder at $9.3 billion including debt. The deal, which will create the largest U.S. homebuilder, will see shareholders in CalAtlantic receive 0.885 shares of Lennar Class A stock, the companies said in a joint statement on Monday.
- Novartis AG agreed to buy Advanced Accelerator Applications SA for about $3.9 billion in cash, snapping up a radiopharmaceutical company whose drugs are used to diagnose and treat diseases such as cancer. Novartis will make a cash tender offer of $82 for each of AAA’s American depositary shares, the Basel, Switzerland-based company said in a statement Monday.
- President Donald Trump played up the theatrics as he announced his plans to name a new Fed chief this week, setting up the big reveal during a week packed with market-moving information. Trump is leaning toward appointing Federal Reserve Governor Jerome Powell to be the next leader of the Fed, according to three people familiar with the matter.
- Nintendo Co.’s Switch console is becoming a major pillar of its business. The Kyoto-based company almost doubled its annual profit forecast after production of the hybrid console accelerated and customers bought more games than anticipated. Shares in Germany rose as much as 3 percent in low-volume trading.
- The European Central Bank is examining UniCredit SpA’s landmark bad-loan sale of 17.7 billion euros ($20.6 billion) to assess if the price the bank reported is inflated by fees that should be stripped out, according to people familiar with the matter.
- Apollo Global Management, J.C. Flowers & Co. and Cerberus Capital Management have made binding offers for HSH Nordbank AG, the German shipping lender that has been controlled by regional governments since the financial crisis, according to people with knowledge of the bidding. Apollo and J.C. Flowers submitted a joint bid, while Socrates Capital, a London-based asset manager, and Lone Star Funds have also made separate offers, the people said, asking not to be identified because the talks are private.
- CenturyLink Inc.—trying to seal a $34 billion deal to buy Level 3 Communications Inc., facing a $12 billion consumer fraud case, and fighting a lawsuit by the Minnesota attorney general—got some more bad news last week in the form of a securities fraud class action.
- Akzo Nobel NV is considering a merger with U.S. rival Axalta Coating Systems Ltd. in a bid to keep the embattled Dutch paintmaker independent and create a transatlantic specialty coatings giant. The Amsterdam-based company is “currently in constructive discussions” regarding a merger of equals with Axalta to create a leading global paints and coatings company, Akzo Nobel said in a statement on Monday. Axalta is the world’s largest maker of auto refinish paints, with a market value of $8.1 billion.
- HSBC Holdings Plc’s $100 billion bet on Asia is bearing fruit, driving its third consecutive increase in quarterly revenue just months before Chief Executive Officer Stuart Gulliver hands the reins to John Flint. Asia posted the biggest revenue gain among of the bank’s five regions, helping it report higher-than-expected third-quarter adjusted revenue of $13 billion. During the period, HSBC added $1.1 billion of loans in Guangdong, the southern Chinese province where the lender has targeted expansion. Dampening sentiment, costs were 6 percent higher than analysts expected.
- Owens Corning has agreed to buy insulation maker Paroc Group from CVC Capital Partners in a 900 million euros ($1 billion) deal, helping the glass and materials maker enlarge its European footprint. The transaction, subject to regulatory approvals, is expected to close in early 2018, the company said in a statement late Sunday. The deal is anticipated to add to earnings per share next year, excluding some costs, according to the statement.
- Wal-Mart Stores Inc. has named Roger Burnley as chief executive officer and president of Asda, seeking to turn around the fortunes of its struggling U.K. business. Burnley, now deputy CEO, will assume the top role from incumbent Sean Clarke on Jan. 1, the company said in an emailed statement. The move marks a second change at the top of Asda in quick succession, after Clarke was parachuted in from the U.S. retail giant’s China business last year to help stem a slide in sales.
*All sources from Bloomberg unless otherwise specified