September 14, 2022
- The Canadian government has declared Monday a federal holiday for the funeral of Queen Elizabeth II, but financial markets will function normally. TMX Group Ltd., operator of the Toronto Stock Exchange, said the main exchange, the TSX Venture Exchange and TSX Alpha Exchange will follow normal trading hours on Sept. 19. Payments Canada, which runs the country’s payment clearing and settlement infrastructure, said it will be fully operational on the day. The Bank of Canada, however, is rearranging its bond auction schedule. A planned 10-year bond auction on Monday will be moved to Sept. 22. A scheduled 5-year bond auction on Sept. 22 will be held Sept. 26. All other operations that support financial markets will run normally on Monday, the central bank said in a statement.
- Home Capital Group Inc. announced today the preliminary results of its substantial issuer bid to repurchase for cancellation up to C$115,000,000 of its common shares. In accordance with the terms and conditions of the Offer and based on a preliminary count by Computershare Investor Services Inc., Home Capital expects to take up and purchase for cancellation 1,547,296 Shares at a purchase price of C$28.60 per Share. The Shares expected to be purchased under the Offer represent approximately 3.87% of the Shares issued and outstanding (undiluted) as at September 13, 2022. After giving effect to the Offer, 38,397,442 Shares are expected to be issued and outstanding. Shareholders had the opportunity under the Offer to tender Shares until 5:00 p.m. (Eastern time) on September 13, 2022. The Offer was made by way of a “modified Dutch auction” with Offer prices ranging from C$25.20 to C$28.60 per Share. Based on preliminary results, approximately 1.55 million Shares were tendered under the Offer (including Shares tendered by notice of guaranteed delivery).
- Toronto is now on Michelin’s starred map, alongside such cities as Paris, New York, Singapore, and Miami. On Sept. 13, the enduring guide awarded stars to 13 restaurants across the city in its first foray into Canada. Only one restaurant earned two stars: Sushi Masaki Saito, where the seasonally focused omakase meal goes for C$680 ($523) and features fish flown in daily from Japan, served fresh and aged. It’s run by chef Masaki Saito, who used to operate the counter at New York’s two-star Sushi Ginza Onodera.
- European equities extended losses, tracking a plunge in US stocks after a hotter-than-expected inflation print rattled financial markets and stoked concerns about the Federal Reserve’s hawkish policy. The Stoxx Europe 600 fell 0.7% by 12:12 p.m. in London as food and beverages as well as utilities lagged. Retail outperformed as Inditex SA jumped after reporting first-half sales and earnings that topped estimates. The European benchmark dropped 1.6% on Tuesday after a US consumer price index reading dashed hopes of peaking inflation and a less aggressive Fed, with the S&P 500 and Nasdaq 100 seeing their worst day since 2020. European stock investors are grappling with sticky inflation, hawkish central banks and an energy crisis that could lead to gas rationing. The likelihood of a recession is growing in the region, and France already lowered its economic growth forecast for next year due to these many headwinds.
- A semblance of calm returned to markets on Wednesday after the carnage sparked by hotter-than-expected American inflation that prompted investors to reassess the outlook for interest rates and economic growth. US equity-index futures rallied before paring the advance in nervous trading ahead of American producer-inflation data due later Wednesday. Shares had their biggest drop in more than two years Tuesday, with the S&P 500 falling more than 4% and the Nasdaq 100 sliding more than 5%. A gauge of the dollar retreated after jumping the most in three months on Tuesday. The 10-year Treasury yield ticked higher, hovering near a decade-peak. While the magnitude of Tuesday’s equities rout was impressive, the S&P 500 only reversed gains made in the previous four sessions that had been fueled by expectations of cooling inflation that would give the Federal Reserve room to temper its tightening path. The lack of a surge in the VIX index — known as the “fear gauge” — suggests that the selloff was a recalibration of those expectations rather than panic selling.
- Asian stocks fell as hotter-than-expected US inflation data fueled bets on outsized interest rate increases by the Federal Reserve. The MSCI Asia Pacific Index slumped as much as 2.3% Wednesday, the most in two weeks, following the steepest drop in US shares in more than two years. Almost all markets in the region were down, led by Japan, Australia and Hong Kong. A gauge of technology stocks dropped about 3%. The risk-off mood continued in Asian hours, with headwinds including a stronger dollar and higher Treasury yields weighing on sentiment. Still, the region held up better than the US, helped by lower valuations, a rosier growth outlook for some Asian markets and expectations for Chinese efforts to support its economy.
- Oil fluctuated after the International Energy Agency trimmed its estimates for global demand, while the US mulled when to refill its strategic oil reserve. West Texas Intermediate traded above $87 a barrel after swinging between gains and losses. The IEA sees global oil consumption rising by about 110,000 barrels a day less than its previous forecast this year, though it still anticipates a 2 million barrel-a-day increase. The report followed a bumpy 24 hours. On Tuesday hotter-than-expected US inflation prompted investors to bank on a continued path of sharp interest rate hikes. Meanwhile the US was said to be mulling buying oil below $80 to refill its strategic oil reserve after releases this year, while an industry survey pointed to a hefty expansion of separate commercial stockpiles.
- Gold held steady after closing down the most in two months on higher-than-expected US inflation data. Bullion ended 1.3% lower Tuesday after the consumer-price index figures were released, spurring gains in the dollar and Treasury yields. Markets rapidly priced in another 75 basis point increase, with others speculating an even larger move may be in the cards. The metal edged higher on a weaker dollar Wednesday, gaining ground above the $1,700-an-ounce mark, which some analysts see as a floor. Prices had been trending upward as the greenback unwound gains after touching a record last week. The Fed’s aggressive monetary tightening has caused the precious metal to trend lower this year as higher interest rates put pressure on non-yielding assets. Persistent outflows from gold-backed exchange-traded funds have also acted as a headwind.
- The specter of US interest rates at 4% or even higher is bringing into sharper focus the question of when and how investors should really get back into bonds after Treasury markets suffered one of their worst beatings in decades. Hotter-than-expected inflation means traders are now betting the Federal Reserve will lift its benchmark as high as 4.5% early next year as officials seek to tame price pressures. If that comes to pass, it could help pull large parts of the Treasury curve back up to levels unseen in more than a decade and offer a tempting running yield at a time when riskier assets such as stocks could be coming under additional pressure. Yet just how to play the market while yields are still rising, how high rates might go before they plateau or fall, and whether bonds will witness increases across the whole curve are all key questions to be resolved as investors try to navigate the landscape.
- The Biden administration will announce Wednesday an expanded $3.5 billion commitment for pilot projects that could cut carbon emissions from farming, tripling the funding levels announced earlier this year. Many of the 70 initial test projects the US Agriculture Department has approved focus on measuring carbon reductions from climate-friendly farming practices, gauging consumer demand for products made with reduced emissions and connecting farmers with private carbon markets. That’s in keeping with a Biden administration approach to climate policy that in the politically sensitive farming sector so far has focused on voluntary incentives and private markets rather than new regulations.
- US stocks are nursing losses of $7.6 trillion this year, but if history is any guide, they’re likely in for even more declines before the bear market is over, according to Sanford C. Bernstein quantitative strategists. An analysis of the 15 major routs since 1937 shows peak-to-trough price drops averaged 28%, deeper than the current drawdown of 20%, the team led by analyst Ann Larson wrote in a note on Sept. 13. The average bear market lasted seven-to-eight months and included three rallies with returns of 9% and lasting about 22 days on average — in line with this year, they said. “We believe this bear market has more room to run because most major global synchronized selloffs have ended with a moderate inflation/low growth regime, and we are not there yet,” Larson said.
- Volkswagen AG has lined up commitments from anchor investors including the Norwegian sovereign wealth fund as it pushes ahead with a listing of its Porsche AG unit, people with knowledge of the matter said. Norges Bank Investment Management has agreed to buy stock in what’s set to be one of Europe’s largest initial public offerings, the people said. VW is discussing seeking a valuation of around 70 billion euros ($70 billion) to 85 billion euros, the people said, asking not to be identified because the information is private. At the top end of that range, Porsche would be valued at almost as much as VW. Preference shares in Europe’s biggest carmaker have fallen by roughly 23% over the last 12 months, giving it a market value of 89 billion eur
- The looming US rail strike threatens to push inflation even higher across the country after prices jumped more than expected last month. About 125,000 workers could walk off the job if a deal isn’t reached by Friday’s deadline, with talks between rail companies and unions not showing signs of progress. The stoppage would be the largest of its kind since 1992, and it would snarl a wide range of goods transported by rail, from food to metal and auto parts. The White House is considering an emergency decree to keep key goods flowing. A strike would place new strains on US supply chains and add to price pressures that aren’t easing as much as forecasters had hoped. A government report on Tuesday showed consumer prices unexpectedly climbed in August, with annual inflation at 8.3%. Food prices, which are vulnerable to a holdup in rail deliveries, were one of the main contributors to the headline rate, while prices for clothing and new cars also advanced from the previous month.
- Google lost most of the first round of its battle to topple a record 4.3 billion-euro ($4.3 billion) European Union antitrust fine that struck at the heart of the US tech giant’s power over the Android mobile-phone ecosystem. In a boost for EU antitrust chief Margrethe Vestager, judges upheld the vast majority of the European Commission’s arguments, but cut the penalty to 4.1 billion euros after finding faults in some of the regulator’s analysis and that Google’s right to a fair hearing had partly been infringed. “The General Court largely confirms the commission’s decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine,” the Luxembourg-based EU tribunal said in a statement.
- The US will put $3.5 billion in Afghanistan’s central bank reserves under the control of a Swiss-based oversight board to pay for limited financial services in the country while ensuring the Taliban regime doesn’t get access to the money, the US Treasury Department said. The funds, which the US froze after the Taliban takeover of Afghanistan last year, will be held at the Bank for International Settlements and distributed with the consent of a four-member board — one from the US, one from Switzerland and two Afghans not associated with the Taliban. The funding will support Afghanistan’s macroeconomic and financial stability, two senior Treasury officials told reporters on condition of anonymity.
- BNP Paribas SA, Commerzbank AG and ING Groep NV are emerging as major indirect beneficiaries of the backstops given by European governments to energy companies, with the aid helping stave off a potential wave of defaults. Those banks are the only ones to have extended revolving credit lines to all four energy companies that have received state aid, including Germany’s Uniper SE, according to data compiled by Bloomberg. Together, a total of about 30 lenders have committed financing worth some 11 billion euros ($11 billion) to the troubled firms. As the region’s governments have made tens of billions of euros available in recent weeks to energy firms hit by price spikes due to Russia’s curtailing of gas supplies, the sector’s bankers face less need to put cash aside against expected defaults. The German government is even open to nationalizing Uniper, Bloomberg reported Wednesday, underlining the extent to which the energy sector is seen as too-important-to-fail.
- The relative cost of diesel is plunging around the world as traders weigh the impact of a potential new quota for Chinese fuel exports. Europe’s ICE gasoil crack, which measures the price of diesel futures relative to crude oil contracts, tanked to its lowest in more than a month earlier on Wednesday. Margins for diesel-type fuel also fell sharply in the US and Singapore. China’s Ministry of Commerce may issue a fuel export quota of 1.5 million tons in a fourth batch allocation, industry consultant OilChem earlier said. It is unclear how much of this fuel quota would be diesel.
- The yen rebounded from near a 24-year low on signs the Bank of Japan is preparing an intervention to prop up the currency. The central bank conducted a so-called rate check in the currency market, meaning officials called asking for an indicative price at which it could intervene, according to a person with direct knowledge of the events. The yen climbed 0.8% to 143 against the dollar as of 7:29 a.m. in New York. A breach of 145 would bring 146.78 into play, the level reached before a joint Japan-US intervention to support the yen back in 1998. Japanese authorities have been stepping up verbal warnings with the yen down almost 20% against the dollar this year, but these have failed to turn the tide. The actions on Wednesday, which included stern comments from both the finance minister and the nation’s top currency official, come as traders question how effective any intervention would be, especially if it was unilateral and without the backing of the US.
- London is missing out on the biggest surge in UK house prices for almost 20 years. Property prices in the capital rose 9.2% from a year ago in July, the least of any part of the country, the Office for National Statistics said Wednesday. That trailed the 15.5% gain seen across the UK as a whole, the most since 2003. The figures were inflated by base-effects, with prices falling a year ago after a break on tax purchases was scaled back. London long has had the most expensive property in the UK, and has suffered since Covid-19 lockdowns prompted people to seek bigger houses outside city centers where they could work from home.
- Investors withdrew a net $5.98 billion from State Street’s SPDR S&P 500 in the latest session, reducing the fund’s assets by 1.7 percent to $351.2 billion, the lowest level since July 15, according to data compiled by Bloomberg. This was the biggest one-day decrease since April 1. The fund has suffered net outflows of $1.5 billion in the past year.
- A majority of companies might soon include salary information as part of US job postings even where it’s not required by law, according to data released Wednesday, as competition for new workers increases pressure to be transparent on pay. About 19% of companies surveyed by consulting companyWillis Towers Watson Plc are planning on giving pay range details in job listings and another 43% are considering it, the research showed. Some 17% of companies already provide the information across US locations that don’t have legal requirements to do so. WTW surveyed 388 executives in June and July, representing companies that employ 7.5 million workers.
*All sources from Bloomberg unless otherwise specified