September 19th, 2017


Daily Market Commentary


Canadian Headlines

  • Tax cuts for workers and businesses are looming in Quebec as the provincial government prepares to use its fiscal cushion to give voters relief ahead of planned elections in less than 13 months. A booming economy and a vibrant job market are putting Canada’s second-most populous province on track to post a third-consecutive year of budget surpluses.
  • Prime Minister Justin Trudeau says Canada won’t buy Boeing Co. fighter jets while the company pursues a trade challenge against Montreal-based Bombardier Inc. over its commercial aircraft.
  • Canadian stocks gained for a third day, hitting their highest in 6 weeks, as a risk-on mood propelled most sectors higher. The S&P/TSX Composite Index rose 64 points or 0.4 percent to 15,236.67, the highest close since Aug. 8. Consumer discretionary stocks paced the advance, rising 1.1 percent as Restaurant Brands International Inc. climbed 3.4 percent.



World Headlines

  • With only days to go before Germany’s general election, the nation’s stock market remains this month’s best performer in the developed world. At the same time, expectations for equity turmoil have plunged to levels not seen since March after the VDAX-NEW Volatility Index slid the most among European share-swings measures last week. The DAX Index has climbed 4.2 percent in September, heading for its biggest monthly advance of the year following three straight monthly declines.
  • Asian equities rose for a third straight session, tracking fresh records in U.S. stocks ahead of the Federal Reserve’s meeting this week. The MSCI Asia Pacific Index climbed 0.5 percent to 164.07, the highest level since December 2007, as of 4:28 p.m. in Hong Kong. Toyoto Motor Corp. provided the biggest boost as Japan returned from Monday’s holiday.
  • Oil extended gains above $50 a barrel in New York as Iraq raised the prospect of OPEC taking further steps to clear a global supply glut. West Texas Intermediate futures added 0.4 percent. Iraqi Oil Minister Jabbar al-Luaibi said there’s support in the Organization of Petroleum Exporting Countries to deepen output curbs by about 1 percent.
  • Gold holds near September low after U.S. equities notch fresh records and investors count down to Federal Reserve policy meeting this week. Bullion for immediate delivery +0.1% at $1,308.38/oz at 10:21am in London. Metal fell to $1,304.71 on Monday, lowest since Aug. 31
  • President Donald Trump will call on world leaders to confront North Korea and Iran in his first address to the United Nations on Tuesday, seeking a broad alliance against the two countries his administration considers the world’s gravest threats. With his remarks, Trump will emphasize that the peril posed by North Korean and Iranian weapons programs is too great for any country to remain on the sidelines, according to two U.S. officials who previewed themes of the address on Monday.
  • Toys “R” Us Inc., the once-dominant specialty retailer and ultimate toyland for a generation of post-war baby boomers, filed for bankruptcy thanks to a crushing debt load from a previous buyout and relentless competition from warehouse and online retailers.
  • Senate Republicans making one last-ditch effort to repeal Obamacare have the daunting task of assembling 50 votes for an emotionally charged bill with limited details on how it would work, what it would cost and how it would affect health coverage — all in 12 days.
  • Japanese shares surged to their highest level in more than two years as the yen weakened for a third day, bolstering appetite for electronics makers, autos and banks. Equities also gained on expectations Prime Minister Shinzo Abe will call a snap election.
  • Economists are gradually starting to buy what Mark Carney is selling. After Bank of England policy makers said last week that an interest-rate increase may be needed in coming months, 11 firms now expect a hike in the fourth quarter of this year, according to a Bloomberg survey.
  • Saudi Aramco plans to expand its trading business by buying and selling non-Saudi crude as the world’s biggest exporter prepares for what could be a record initial public offering. The state-owned company is putting crude marketing and refined-product trading under the same management, according to Ibrahim Al-Buainain, chief executive officer of Saudi Aramco Products Trading Co.. The enlarged unit will trade crude that it doesn’t own, helping Saudi Aramco supply refineries more efficiently and make more profit, he said.
  • Norway’s central bank will look beyond below-target inflation as an economic recovery builds its case for higher interest rates. The bank will on Thursday keep its key rate unchanged at a record low of 0.5 percent, where it has been since March 2016, according to all 20 economists surveyed by Bloomberg.
  • Heineken NV shares fell as much as 4.3 percent after Mexican bottler Fomento Economico Mexicano SAB sold a stake in the brewer for 2.5 billion euros ($3 billion), sparking speculation further reductions may follow.
  • German investor confidence rose for the first time in four months in a sign that concern over the risk to growth from the strengtheningeuro is subsiding. The ZEW Center for European Economic Research’s index of investor expectations rebounded to 17.0 in September from 10.0 in August. The reading, days before the region’s largest economy holds elections, compares with a median estimate in a Bloomberg survey for an increase to 12.0.
  • Investors are about to lose their grip on some of the market’s highest-yielding bonds as an enduring rally makes it more likely companies will opt to repay debt early. About $345 billion of speculative-grade bonds can be called through year-end, according to a Bloomberg analysis of $1.7 trillion in junk debt.
  • Indian shares swung between gains and losses after the benchmark index capped its longest stretch of gains in two years on Monday. The S&P BSE Sensex was little changed at 32,408.70 as of 9:55 a.m. in Mumbai, holding within 0.5 percent of its Aug. 1 record. The benchmark Monday capped its longest winning streak since June 2015. Tata Motors Ltd. was the best performer on the Sensex after 1.12 percent of its shares traded in a single transaction. The NSE Nifty 50 Index fell 0.1 percent from yesterday’s record.
  • Bayer AG said its planned $66 billion takeover of seeds giant Monsanto Co. is likely to be delayed until early 2018 as talks with regulators intensify. The German conglomerate asked European authorities on Monday to extend the deadline for their review of the transaction to Jan. 22, according to a statement Tuesday.
  • Brooklyn may emerge as an attractive lure in New York City’s long-shot bid to become Inc.’s new home. The borough’s image as a hip hub for millennials could give it a leg up as the e-commerce giant hunts for the perfect locale for its second U.S. headquarters, according to Ofer Cohen, president of TerraCRG, a Brooklyn-based commercial-property brokerage. Brooklyn is in the midst of a building boom, with about 7 million square feet (650,000 square meters) of offices planned, as developers seek to leverage the area’s popularity with young people who have migrated across the East River to escape Manhattan’s sky-high rents.
  • The recently appointed head of the European Central Bank’s economics staff has just created a new hub devoted to the projections that underpin the institution’s policy making, expanding a revamp of his department begun in July. The Forecasting and Policy Modelling Division will report directly to Frank Smets, the ECB’s Director General for Economics and a former chief adviser to President Mario Draghi, a spokesman said on Monday.
  • Caribbean island nations still recovering from Irma are bracing for a third storm strike in two weeks as Maria charts a course toward the Virgin Islands and Puerto Rico. Hurricane Maria, which regained its Category 5 status with winds of 160 miles (260 kilometers) per hour, was about 65 miles west-southwest of Guadeloupe, the National Hurricane Center said in an advisory at 5 a.m. New York time. The storm had weakened to a Category 4 overnight, but returned to the strongest classification on the five-step Saffir-Simpson scale.
  • BASF SE agreed to buy a polyamides business from Solvay SA for 1.6 billion euros ($1.9 billion), adding a nylon plastics operation serving a range of industries from carmaking to construction. The German chemical maker is paying about eight times last year’s earnings before interest, taxes, depreciation and amortization, Brussels-based Solvay in a statement on Tuesday. Net sales at the asset were 1.32 billion euros in 2016, with profit of about 200 million euros, according to a BASF statement.



*All sources from Bloomberg unless otherwise specified