September 13th, 2017


Daily Market Commentary


Canadian Headlines

  • U.S. Approves Possible Fighter Jet Sale to Canada. State Dept approves possible sale of 18 F/A-18E Super Hornet aircraft to Canadian govt, Defense Security Cooperation Agency says instatement. Potential sale, estimated at $5.23b in value, would also include radars, gun systems, radio systems, and other equipment. Principal contractors would be Boeing, Northrop Grumman, Raytheon, GE
  • As many as five issuers sold bonds in the Canadian dollar on Tuesday, making it the busiest day for debt sales in almost three months, as borrowers sought to lock in lower costs of funding amid an improvement in market sentiment.  Ford Credit Canada Co. priced a two-tranche offering of three-year and five-year bonds to sell C$1 billion ($821 million) in total, while Merrill Lynch Canada found buyers for over C$1 billion of mortgage-backed securities. Ontario reopened its benchmark 30-year bond, while the City of Montreal its 10-year bond.



World Headlines

  • Asian equities extended their longest rising streak in almost two months as continued gains in Japan and India offset the losses in Hong Kong. The MSCI Asia Pacific Index advanced 0.2 percent to 163.08 as of 4:34 p.m. in Hong Kong, with basic materials and consumer discretionary shares rising the most among industry groups. The five-day 1.9 percent gain, boosted the gauge’s relative-strength index above the overbought level of 70.
  • U.S. stock-index futures dipped, indicating a retreat from record levels, as Treasury Secretary warned on sanctions on China amid North Korea tensions while Apple fell after it announced its most expensive phone ever. S&P 500 advanced 0.3% on Tuesday to 2,496.48. Dow futures fall 0.1%, S&P 500 futures down 0.2%, VIX up 1.8% after falling in the previous two sessions.
  • European stocks snap their best winning streak in four months, led by declines in basic-resource shares. The Stoxx Europe 600 Index drops 0.2%, after rising for the past five sessions. A gauge of miners is down from a six-month high, tracking declines in metal prices. The exporter-heavy FTSE 100 Index slides 0.6% as the pound continues its advance against the dollar ahead of data on U.K. wages and unemployment.
  • Oil traded near $48 a barrel as the International Energy Agency forecast the strongest demand growth in two years, while OPEC was said to discuss prolonging output cuts further into 2018. Futures gained 0.2 percent in New York after rising 1.6 percent the previous two sessions.
  • Gold holds gain as North Korea threatens to accelerate nuclear plans in response to UN sanctions and European equities fall with the dollar. Bullion for immediate delivery little changed at $1,332.15/oz at 10:23am in London after +0.3% Tuesday.
  • European Commission President Jean-Claude Juncker pushed to expand Europe’s global economic footprint in a sign of growing confidence that the political threats posed by Brexit and populism can be curtailed. Juncker, who leads the European Union’s executive arm, proposed to start EU free-trade talks with Australia and New Zealand, give the bloc a role in screening foreign investments and deepen euro-area integration.
  • Secretary of State Rex Tillerson is consulting U.S. allies in Europe as he seeks a way to toughen restrictions on Iran’s nuclear program a month before President Donald Trump faces a deadline to decide whether to walk away from what he’s called “the worst deal ever.”
  • Pirelli & C. SpA , the tire maker that supplies Formula One race cars, is seeking an equity valuation of as much as 9 billion euros ($10.8 billion) in its initial public offering, implying a trading multiple in line with Finnish peer Nokian Renkaat Oyj, people familiar with the matter said.
  • For British workers, the lowest jobless rate in more than four decades isn’t enough to maintain their standard of living. Basic wages rose an annual 2.1 percent in the three months through July, unchanged from the second quarter and below market forecasts, Office for National Statistics figures Wednesday showed. Pay fell 0.4 percent when adjusted for inflation, which is now running just shy of 3 percent.
  • Steady U.S. economic growth helped household incomes climb to a record and reduced poverty last year, according to Census Bureau data released Tuesday. Yet inequality remained evident across income levels, race and gender, indicating there’s work to be done to improve the lot of all Americans. Median inflation-adjusted household income increased 3.2 percent from a year earlier to $59,039, the bureau said in an annual report. The poverty rate declined to 12.7 percent, representing 40.6 million Americans, from 13.5 percent in 2015.
  • UBS Group AG sees bank profits under pressure as European regulations force lenders to charge for research, breaking apart a decades-old business model that’s prompted a race to provide the cheapest offering. The revised Markets in Financial Instruments Directive is causing tumult as banks and money managers struggle to price research previously bundled with other services.
  • The euro was higher for a second day as profit-taking on long positions eased amid broad dollar weakness before the release of U.S. inflation data on Thursday. Some short-term names that sold the euro earlier this week on a take-profit basis have returned to bid, said the traders, who asked not to be identified as they weren’t authorized to speak publicly. The common currency tested offers near the $1.20 handle, where range-seeking names looked for dollar weakness to fade.
  • PT BFI Finance Indonesia’s biggest shareholder, a private equity consortium backed by TPG, is seeking a buyer for its stake in the Jakarta-based consumer lender, according to people with knowledge of the matter. Trinugraha Capital has hired advisers to work on a sale of its 43 percent holding in BFI Finance, according to the people, who asked not to be identified because the information is private. The shares are worth about 3.8 trillion rupiah ($287 million) based on the company’s Wednesday close in Jakarta, data compiled by Bloomberg show.
  • Aluminum Corp. of China Ltd. will raise 10 billion yuan ($1.53 billion) to fund key projects, amid a broader restructure of the company’s assets. The nation’s largest state-owned smelter, known as Chalco, will join withChina Pacific Insurance Group Co. to raise the money in the form of perpetual debt, according to a statement on Chalco’s website dated Sept. 12.
  • Postal Savings Bank of China Co. may price the single biggest dollar bond sale from the Asia ex-Japan region this year after appointing banks this week to lead the offering, according to people familiar with matter, who asked not to be identified. The state-run Chinese lender, which boasts half a billion retail customers, has hired nine banks including China International Capital Corp., Goldman Sachs Group Inc., and JPMorgan Chase & Co. as global coordinators for the sale, the people said. Postal Savings Bank proposed a deal of as much as 50 billion yuan ($7.7 billion) equivalent earlier this year.
  • Toshiba Corp., struggling to complete the sale of its chip unit, has signed a memorandum of understanding with Bain Capital with the goal of reaching a final agreement by the end of the month.
  • Shares of Apple Inc.’s suppliers across Greater China greeted the company’s latest product line-up, including its most-expensive ever iPhone, with losses. Hong Kong-listed Cowell e Holdings Inc. — a maker of iPhone cameras that derives about 81 percent of its revenue from Apple, according to data compiled by Bloomberg — tumbled as much as 6.6 percent, while Taiwan’s Catcher Technology Co. slid the most since November.
  • Vikram Pandit, who ran Citigroup Inc. during the financial crisis, said developments in technology could see some 30 percent of banking jobs disappearing in the next five years. Artificial intelligence and robotics reduce the need for staff in roles such as back-office functions, Pandit, 60, said Wednesday in an interview with Bloomberg Television
  • Bayer AG raised 1.2 billion euros ($1.44 billion) from the sale of a stake in chemical maker Covestro AG as it works toward full separation from the business it spun off two years ago. The conglomerate sold the shares to institutional investors at 63.25 euros apiece, the Leverkusen, Germany-based company said in a statementWednesday. The price is 3.7 percent below Covestro’s close Tuesday.
  • Copper may extend its slide from a three-year high because there’s no real scarcity in supply and no tightness in the market, according to a veteran trader who’s tracked metals for about two decades. Copper has soared 15 percent in the past three months on mounting optimism about consumption in China and forecasts output will struggle to meet demand. Barclays Plc has warned output shortfalls are “over-hyped” and Goldman Sachs Group Inc. has said the metal’s about 10 percent above fair value.
  • China’s yuan fixing is back in focus, with a run of surprises moving the market in recent days. The central bank set its reference rate — which limits onshore moves to 2 percent on either side — at a weaker than expected level for the third day in a row Wednesday. The rates, and the removal of a reserve requirement rule on the trading of foreign-exchange forwards, are fueling bets that authorities want to limit gains after the onshore yuan surged more than 4 percent against the dollar in the three months through Sept. 7.



*All sources from Bloomberg unless otherwise specified