September 12th, 2017


Daily Market Commentary


Canadian Headlines

  • British Columbia’s new government expects a narrower surplus than the one estimated by its Liberal Party predecessors as spending soars to battle raging wildfires in one of Canada’s fastest-growing provinces. The New Democratic Party-led government forecasts a C$246 million ($203 million) surplus in the fiscal year ending March 31, according to a budget update presented Monday by Finance Minister Carole James. That compares with the C$295 million surplus estimate by the previous government in February. That’s due in part to the spiraling costs of battling the worst wildfires in the province’s history this summer.
  • Canadian stocks rose for the first time in six trading days in a classic risk-on rally spurred by investor relief that North Korea hasn’t tested another missile and Hurricane Irma didn’t cause as much damage as feared. The S&P/TSX Composite Index added 55 points or 0.4 percent to 15,040.30, its first gain since Aug. 31. Financials had the most influence to the upside as insurers rose, propelled higher by a hurricane that was less destructive than forecast.



World Headlines

  • Asian equities extended gains for a fourth day after U.S. stocks rose to a record as Hurricane Irma wreaked less damage than forecast and the United Nations’ sanctions against North Korea weren’t as stringent as expected. The MSCI Asia Pacific Index gained 0.3 percent to 162.81 as of 5:21 p.m. in Hong Kong as all industry groups advanced except utilities. Japan’s Nikkei 225 Stock Average rose the most among Asian indexes as the yen extended decline per U.S. dollar. India’s S&P BSE Sensex tracked other markets in the region, rising to one-month high. Philippines markets were shuttered as Manila was inundated with storms and flooding.
  • Oil steadied near $48 a barrel as refiners on the U.S. Gulf Coast continued to recover following two strikes from Hurricane Harvey, while Irma weakened further after moving inland. Futures slipped 0.5 percent in New York after rising 1.2 percent Monday.
  • Gold trades little changed as equities climb amid improving outlook for the U.S. economy after damage from Hurricane Irma seen less than originally feared. Bullion for immediate delivery -0.1% to $1,326.30/oz by 10:30am in London. Price dropped 1.4% on Monday after reaching 1-year high last week
  • President Donald Trump plans an aggressive travel schedule, taking him to as many as 13 states over the next seven weeks, to sell the idea of a tax overhaul as the administration tries to avoid repeating the communications failures of its attempt to repeal Obamacare.
  • The request, made in a call with the president on Sept. 5, came as her government seeks to protect jobs at a Bombardier plant in Belfast, Northern Ireland. May’s government relies on votes from Northern Ireland’s Democratic Unionist Party to pass legislation through the House of Commons.
  • U.K. inflation accelerated more than forecast in August, pushing close to 3 percent again after the biggest surge in clothes prices in almost three decades. The jump to 2.9 percent from 2.6 percent in July puts the spotlight squarely back on one of the most prominent economic repercussions of the Brexit vote in 2016.
  • The United Nations Security Council approved new sanctions aimed at punishing North Korea for its latest missile and nuclear tests after the U.S. dropped key demands in order to win support from Russia and China. The resolution seeks to cut imports of refined petroleum products to 2 million barrels a year, ban textile exports and strengthen inspections of ships that are believed to be carrying cargo in breach of sanctions.
  • Teva Pharmaceutical Industries Ltd. agreed to sell its ParaGard intrauterine contraceptive device business to Cooper Cos. for $1.1 billion as the world’s largest maker of generic drugs works to reduce debt.
  • Premier Li Keqiang said China’s economy will maintain its momentum and that the leverage ratio has “decreased somewhat” as authorities push on with a drive to reduce financial risk. Cuts to excess capacity are exceeding expectations, while new growth drivers are replacing old ones at a faster pace, Li said Tuesday in Beijing after round-table talks on trade, finance and economic growth with heads of institutions including the International Monetary Fund.
  • Bunge Ltd., a U.S. agricultural trader and processor, agreed to acquire a controlling stake in palm-oil producer IOI Loders Croklaan for $946 million. Bunge will buy a 70 percent stake in Loders from IOI Corp, White Plains, New York-based Bunge said Tuesday in a statement. Loders supplies palm-oil and tropical-oil products used in confectionery, bakery and infant nutrition.
  • Theresa May’s plans for taking Britain out of the European Union remain on track after members of Parliament cleared the way for her Brexit law to advance — but threatened to re-write it later. In a vote after midnight, lawmakers agreed to allow the EU withdrawal bill to continue its progress through Parliament, by 326 votes to 290. The prime minister won after her government promised to discuss critics’ concerns before they have to vote again, and to consider allowing more time for the next stage of debates on the law.
  • Union hardliners made their push against President Emmanuel Macron’s landmark labor-market reform Tuesday with strikes and demonstrations across France. The CGT, the main union holdout against Macron’s plan to add flexibility to the labor code, says 180 demonstrations are planned nationwide and 4,000 strike notices have been filed.
  • Saudi billionaire Prince Alwaleed bin Talal will buy about half of Credit Agricole SA’s stake in Banque Saudi Fransi, in a deal valued at $1.54 billion, after the French lender initially sought a full disposal. Alwaleed signed an agreement through Kingdom Holding to buy 195.3 million Saudi Fransi shares at 29.5 riyals each ($7.87), according to a statement on the Saudi stock exchange Tuesday, an 11 percent discount to Monday’s closing price of 32.99 riyals.
  • As the Swiss franc weakens, the nation’s central bank must decide whether it can afford to relax a little. The currency’s 5 percent decline against the euro over the past three months is good news for the Swiss National Bank in its long-running bid to revive inflation.
  • Bond trading firms are making a last-minute plea to regulators, warning that unless tweaks are made to Europe’s MiFID II rules, business will flee to other regions. The firms, which included Michael Spencer’s NEX Group Plc, London Stock Exchange Group Plc unit MTS Markets, MarketAxess Holdings Inc. and Tradeweb Markets LLC said the European Union requirements for traders’ personal data clashes with practices in Singapore, Hong Kong and New York. The group sees a migration of capital markets activity away from regulated venues as a result.
  • OPEC’s estimate of its oil production is expected to show a decrease in August from July as the group’s biggest member Saudi Arabia pared output, according to a person familiar with the matter. The 12 members of the Organization of Petroleum Exporting Countries bound by its agreement to cut output pumped 30.004 million barrels a day in August, based on information from four of six secondary sources, according to the person, who asked not to be identified for lack of authorization to speak to media. OPEC produced 30.113 million barrels a day in July, according to all six external data sets known as secondary sources.
  • The request, made in a call with the president on Sept. 5, came as her government seeks to protect jobs at a Bombardier plant in Belfast, Northern Ireland. May’s government relies on votes from Northern Ireland’s Democratic Unionist Party to pass legislation through the House of Commons. The request, made in a call with the president on Sept. 5, came as her government seeks to protect jobs at a Bombardier plant in Belfast, Northern Ireland. May’s government relies on votes from Northern Ireland’s Democratic Unionist Party to pass legislation through the House of Commons.
  • Shandong Gold Group, one of biggest Chinese miners of the metal, is among firms considering bids for EMR Capital’s Indonesian gold and silver mine, people with knowledge of the matter said. China Gold International Resources Corp. is also exploring a possible bid for the Martabe mine in North Sumatra province, according to the people, who asked not to be identified because the details are private. EMR Capital, a resources-focused private equity firm, is weighing options including a sale of the asset, which could fetch as much as $1.5 billion, the people said.
  • Prime Minister Erna Solberg became Norway’s first Conservative Party leader in over three decades to be re-elected as a movement to stop further oil exploration in western Europe’s biggest petroleum producer fizzled.
  • Austria is poised to become the first euro member to issue a benchmark-sized century bond, allowing it to lock in some of the lowest-everfunding costs for the next 100 years. The country is selling the debt maturing in 2117 at between 50 and 55 basis points over its existing 30-year benchmark bond, inside an initial target of about 60. Investor orders for the notes have topped 11 billion euros ($13.15 billion), according to an email from Austrian treasury spokesman Christian Schreckeis.



*All sources from Bloomberg unless otherwise specified