October 6, 2023
- Statistics Canada will release employment data for Sept. at 8:30 a.m. Ottawa time. Economists in a Bloomberg survey expect a gain of 20,000 positions, and a jobless rate of 5.6%.
- Prime Minister Justin Trudeau’s government outlined the first steps of a plan to stabilize food prices as Canadians continue to hammer his Liberal Party in the polls over the high cost of living. Industry Minister Francois-Philippe Champagne and Finance Minister Chrystia Freeland provided details on Thursday, several weeks after meeting with executives of grocery stores and food manufacturers. Champagne said the top five grocery chains — Walmart Inc., Loblaw Cos., Metro Inc., Empire Co. and Costco Wholesale Corp. — have agreed to support efforts to restore price stability to store shelves. Shares of the Canadian grocers showed little immediate reaction to the news.
- Canada will join an India-hosted parliamentary speakers’ summit of Group of 20 nations, signaling both countries are keen to cooperate in legislative affairs despite tensions over the killing of a Sikh separatist leader. Raymonde Gagné, speaker of the Senate of Canada, has agreed to participate in the two-day summit to be held in New Delhi starting Oct. 13, said Om Birla, speaker of the lower house of India’s parliament. The summit aims to forge parliamentary cooperation among G-20 nations.
- Canada’s government is considering a plan to induce municipalities to limit the number of Airbnb units, Globe & Mail reports, citing two unidentified federal government officials. One of the officials said the plan aims to relieve rental shortages in large cities, as well as in tourism spots where there isn’t enough housing for tourism staff.
- Asian stocks gained, led by a rally in Hong Kong shares, while other markets were more muted with all eyes on the US payroll data for cues on the Federal Reserve’s policy path. The MSCI Asia Pacific Index rose as much as 0.7% Friday, paring its slide for the week to 1.6%. Chinese tech giants Tencent, Alibaba and Meituan were among the biggest contributors to the gauge’s advance. The benchmark tumbled into a technical correction earlier this week amid concern over higher-for-longer US rates.
- European stocks gained, trimming their third straight weekly decline, as investors await monthly US payrolls report later in the day to gauge the monetary policy path of the Federal Reserve. The Stoxx Europe 600 Index was 0.4% higher as of 9:33 a.m. in London, with insurance and banking stocks outperforming. Food and beverage was the worst performing sector after US peers dropped Thursday, with Nestle SA shares dropping to lowest since March 2021.
- US equity futures ticked higher after the S&P 500 fell 0.1% Thursday and the tech-heavy Nasdaq 100 slipped 0.4%. Tesla Inc. slipped in premarket trading as the electric-vehicle maker cut prices on its most popular cars in the US.
- Treasuries slightly cheaper across the curve ahead of September jobs report, with futures trading just off Thursday session highs, as stock futures hold small gains. Gilts underperform in early London session, adding to upside pressure on Treasury yields. US yields 2bp-3bp cheaper with curve spreads little changed on the day; 10-year around 4.74%, middle of Thursday’s range, with gilts lagging by 1.5bp in the sector.
- The nonfarm payrolls report is forecast to show employers slowed hiring last month, with 170,000 jobs being added last month, down from 187,000 in August. Job data earlier this week provided a discordant narrative: job-openings overshot estimates, while a measure of private employment from ADP was weaker than forecast..
- Bloomberg Economics estimates nonfarm payrolls increased 173k in September – slower than August, but still above the 100k that Fed Chair Jerome Powell estimates is the neutral rate. The absence of large layoffs might suggest the labor market is resilient, but that’s always how it seems before recessions. Rather, sharp increases in unemployment usually begin with a slowdown in job growth, with large layoffs coming only later.
- Copper was on track for the biggest weekly slump since November before US labor figures are released later Friday. The metal, widely seen as an economic bellwether, was steady near the lowest level this year on the London Metal Exchange. The monthly US payrolls report will be closely watched for indications on whether the Federal Reserve will need to hike rates again this year.
- Gold was steady near its lowest level since March, as markets braced for a monthly US payrolls report that will help determine the future path for Federal Reserve interest rates. Bullion’s on track for a second straight week of losses, driven by a surge in US bond yields as the Fed stood firm on its message that monetary policy will stay tighter for longer.
- Oil headed for its biggest weekly drop since March as worries about the global economy clouded the demand outlook, with commodities rocked by gains in the US dollar and a surge in bond yields. West Texas Intermediate held above $82 a barrel after closing Thursday at the lowest level since late August. The US crude benchmark has tumbled more than 9% this week, with deep losses Wednesday and Thursday. The combination of technical traders and a spiraling options market is a key factor in the drop.
- Russia allowed a return to seaborne exports of diesel just weeks after imposing a ban that roiled global markets, taking other steps instead to keep sufficient fuel supplies at home. Shipments can resume provided that the fuel is delivered to the nation’s ports by pipeline, according to a statement on the government’s Telegram account. Such flows to Russia’s western ports account for the bulk of exported volumes.
- Saudi Arabia’s economic output is expected to contract this year as a series of oil-supply cuts pose a risk to the kingdom, according to the World Bank. Gross domestic product in the OPEC+ member is now seen shrinking 0.9% this year, according to the World Bank’s latest economic update for the region. That’s a downward revision from the bank’s estimate in May, which saw the kingdom’s economy growing 2.2%.
- European mining stocks may be in focus after Bloomberg reported China Mineral Resources, the buying agency set up to increase Beijing’s clout in iron ore, is in negotiations with Rio Tinto and other leading miners over next year’s supply. In the talks with the world’s four largest suppliers — which also include BHP, Vale and Fortescue Metals — the group is seeking preferential terms on transport, grades and delivery arrangements
- The leaders of the European Union and the US are seeking to announce an interim deal at an Oct. 20 summit on steel and aluminum trade that would avert the re-imposition of Trump-era tariffs on billions of dollars of transatlantic commerce. Top White House and European Commission officials are negotiating a provisional political agreement that would cover the two main planks of the so-called Global Steel and Aluminum Arrangement that the EU and US have been negotiating since 2021: tackling non-market excess capacity and carbon emissions, according to people familiar with the talks.
- Egypt’s dollar bonds plunged after Moody’s Investors Service downgraded the country’s ratings to one of the lowest rungs of speculative grade and the International Monetary Fund’s chief urged another devaluation. The bonds were among the biggest losers across emerging markets on Friday, falling even deeper into distressed territory after Moody’s lowered its assessment of Egypt’s sovereign debt by one notch to Caa1. Some of the securities hit record lows to around 50 cents on the dollar or below, before paring losses.
- Walt Disney Co. is holding preliminary discussions with potential buyers for its India streaming and television business including billionaires Gautam Adani and Kalanithi Maran, according to people familiar with the matter. The US entertainment giant’s senior executives have also gauged the interest of private equity funds considering the company is exploring a range of options, which could involve selling part of the Indian operations or a combination of the unit’s assets including sports rights and regional streaming service Disney+ Hotstar, the people said, asking not to be identified because the discussions are private.
- The RBI kept rates unchanged at 6.5% for a fourth straight meeting, as expected. Governor Shaktikanta Das warned of inflation risks from excess liquidity in the market, and surprised investors by announcing the central bank was considering selling bonds in order to soak up extra cash.
- Turkey intensified airstrikes on America’s Kurdish allies in Syria after the US shot down a Turkish drone in the region. Ankara said it struck oil wells, warehouses and headquarters operated by Kurdish YPG fighters.
- Treasury Secretary Janet Yellen is expected to push her reform agenda for the World Bank, meet with senior Chinese officials and may discuss new ways to limit Russia’s revenue from oil sales on a nine-day international trip set to start Sunday. Yellen will spend five days in Marrakech, Morocco, where the International Monetary Fund and World Bank are holding their annual meetings. On Oct. 20 she’s scheduled to deliver a speech on World Bank reforms, according to a senior Treasury official who spoke on Thursday with reporters, and will hold a press conference on Oct. 11.
- Tesla Inc. cut prices on its top-selling models in the US again, days after its third-quarter deliveries missed estimates. The carmaker marked down the starting price of the base Model 3 by $1,250 to $38,990, and discounted the long-range version of the sedan by the same amount to $45,990. Tesla also shaved $2,250 off the price of the performance version of the Model 3, which now starts at $50,990, and $2,000 off the long-range and performance versions of the Model Y sport utility vehicle, which now cost $48,490 and $52,490, respectively. The company reintroduced a cheaper version of the Model Y earlier this week. Tesla shares dropped 1.6% as of 5 a.m. New York time Friday, before the start of regular trading.
- Exxon Mobil Corp. is in talks to acquire Pioneer Natural Resources Co., according to a person familiar with the matter, nearing its largest takeover in more than two decades as the energy giant seeks to become the dominant US producer of shale oil. An agreement could be worth as much as $60 billion and may be completed in the coming days provided there are no complications, according to the Wall Street Journal, which first reported the talks on Thursday. At that size, it would potentially be the world’s largest takeover this year. The deal could also be Exxon’s biggest acquisition since merging with Mobil Corp. in 1999, marking its unquestionable return to the top of the US oil and gas industry after more than a decade in which upstart shale drillers set the agenda and drove growth. Pioneer shares rose 10% in pre-market trading, while Exxon was 1.8% lower.
- Aehr Test Systems (AEHR US) fell as much as 14% after the supplier of semiconductor test and production burn-in equipment reported its first-quarter results.
- AMC Entertainment Holdings Inc. (AMC US) gained 2.8% after it said it sold more than $100 million in advance tickets for the Taylor Swift/The Eras Tour Concert movie.
- Elf Beauty (ELF US) rose as much as 2.5% as Jefferies raised to buy from hold. The broker says it sees a buying opportunity following the recent valuation pullback in the cosmetics company.
- Shoals Technologies Group (SHLS US) rose as much as 4% as Piper Sandler raised to overweight from neutral. The broker said it’s upgrading the solar-energy equipment maker after the recent pullback in its shares
- The seemingly boundless popularity of Taylor Swift is boosting stock prices on both sides of the Atlantic. Shares of CTS Eventim AG surged on Thursday after the German live-events company said earnings would be driven higher by strong advance ticket sales for Swift’s The Eras tour. A few hours later, AMC Entertainment Holdings Inc. said it sold more than $100 million in advance tickets for the movie of the concert, sending the shares higher in Friday premarket trading. Bloomberg Economics expects fans of Swift — known as Swifties — and fellow superstar musician Beyoncé to have added $5.4 billion to US gross domestic product in the third quarter as they spend on concerts. The typical Swiftie spends $1,500 to attend a performance, including costs for tickets, hotels, flights and food.
- Companies based in the US are on track to halve the amount of ESG-labeled debt they issue this year, marking a clear departure from the trend on the other side of the Atlantic, according to an analysis by Goldman Sachs Group Inc. The divergence should be seen in light of the different regulatory environments in the two regions, with Europe creating an infrastructure that supports issuance of debt incorporating environmental, social and governance goals, said Goldman analysts including Michael Puempel and Sienna Mori. This year is likely to see just $40 billion of ESG corporate investment-grade issuance in the US dollar market, according to the Goldman analysts. That’s half the amount issued by US companies last year, and just 40% of the level reached in 2021, they said. The slump means that ESG-related issuance only accounts for 3% of total dollar-denominated supply in the investment-grade market, Goldman estimates