September 21st, 2018

Daily Market Commentary

Canadian Headlines

  • NAFTA talks have probably missed the latest in a string of deadlines, leaving all eyes on the U.S. over what will happen next. U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland met Thursday in Washington, negotiating while a prominent Canadian union leader stood outside and sounded the alarm over deal-breaker issues. Thursday was considered by some to be the deadline to get a deal to satisfy a target the U.S. has been shooting for.
  • Canada’s economic growth could be pared by about a quarter next year if the North American Free Trade Agreement collapses, and the drag will be extended if an automobile trade war emerges, according to a new Conference Board forecast. Failing to renew the trade pact, currently the subject of intense negotiations between the U.S. and Canada in Washington, would cut growth by 0.5 percentage points next year before the economy recovers in 2020, the Ottawa-based research group said Thursday in its autumn economic outlook.
  • PT Asuransi Jiwa Sequis Life, the insurer part-owned by Nippon Life Insurance Co., and billionaire Richard Li’s FWD Group are among suitors competing in the final bidding for Commonwealth Bank of Australia’s Indonesian life insurance arm, people familiar with the matter said. Canada’s Sun Life Financial Inc. and Singapore’s Great Eastern Holdings Ltd. have also been considering binding offers for CBA’s 80 percent stake in PT Commonwealth Life, which could fetch about $400 million, according to the people.
  • Canada’s export financing agency is raising a red flag on doing business with Saudi Arabia in the wake of a feud between Riyadh and the Trudeau government. Export Development Canada “is currently off cover on all products in the Kingdom of Saudi Arabia,” the agency said on its website’s Saudi country profile Thursday night. “EDC encourages exporters to exercise caution in shipping to Saudi Arabia.” It said it would continue to monitor the situation and advise customers accordingly.
  • Ontario’s finance minister will be providing an update on the state of the province’s books this morning. Vic Fedeli will be speaking to the Economic Club in Toronto, his first major address since becoming finance minister this summer. His speech is expected to include details on the findings of an independent commission that probed the former Liberal government’s spending.

World Headlines

  • European stocks opened higher Friday after U.S. markets continued to show strength. Brexit negotiations were in focus again, with U.K. Prime Minister Theresa May and French President Emmanuel Macron key characters. The Stoxx 600 Index rose 0.3% in early trading. Basic resources sector was the best performer on the index, with copper and nickel leading gains among commodities, boosting shares of miners.
  • Stocks in Asia are set to cap the strongest two-week rally since February as investors take in evidence that escalating trade tensions have yet to hurt global growth and China’s moves to support its expansion. The Bank of Japan cut its purchases of super-long bonds at an operation Friday, and Hong Kong’s dollar surged the most since 2003, thanks in part to the prospect for higher interest rates there. Japan’s Topix Index closed at the highest since May, and shares climbed from Seoul to Shanghai.
  • U.S. equity futures were little changed as investors studied the latest developments in the tariff spat with China. Treasury yields edged higher and the dollar steadied.
  • Oil headed for a second weekly advance as investors fretted over sliding Iranian flows and U.S. demand reached the highest in more than a decade. Futures in New York rose 0.7 percent, taking the week’s gain beyond 2 percent. Saudi Arabia is said to be comfortable with rising prices as looming American sanctions on Iran dent supply from the OPEC producer. Meanwhile, U.S. industry data showed petroleum demand in August climbed to the highest since 2007.
  • Gold heads for first weekly increase in four weeks as the dollar retreats, while Goldman Sachs Group Inc. sees prices increasing in coming months and traders remain bullish for a fifth week in Bloomberg survey. Silver, platinum and palladium all set for weekly gains too.
  • Euro-area expansion edged lower in September as manufacturing export orders slumped to the weakest in five years. IHS Markit’s composite Purchasing Managers Index slowed to 54.2 in September, down from 54.5 in August, and below economists’ forecast for no change. In manufacturing alone, a measure of growth declined to a 24-month low, while business optimism slumped to the weakest in almost four years.
  • Theresa May promised fresh plans to break the stalemate in Brexit negotiations after European Union leaders bluntly rejected her blueprint and warned that time is running out for striking a deal. A two-day summit in Salzburg, Austria, broke up without progress, and leaders piled more pressure on May to shift her stance. They said a special November summit to sign the divorce agreement will only go ahead if the U.K. makes more concessions next month.
  • The iPhone XS is up to $200 more expensive than last year’s already pricey iPhone X and represents one of the smallest advances in the product line’s history. But that means little to the Apple Inc. faithful or those seeking to upgrade their older iPhone. Hundreds of consumers lined up at Apple stores around the world either the day before or in the early hours before the iPhone XS and iPhone XS Max went on sale Friday.
  • Another Tesla Inc. vice president is leaving the company, according to people familiar with the matter, as Elon Musk struggles to contain an exodus of senior executives. Liam O’Connor, vice president of global supply management, has resigned from the electric-car maker, said the people, who requested anonymity because the information hadn’t been made public. Tesla representatives didn’t immediately respond to a request for comment. The stock fell in early trading.
  • U.S. President Donald Trump continued to hit out at China days after announcing another round of tariffs, signaling the trade war won’t end any time soon. “It’s time to take a stand on China,” Trump said in an interview late Thursday with Fox News. “We have no choice. It’s been a long time. They’re hurting us.”
  • Chinese regulators finally lost their patience with the shenanigans surrounding the country’s biggest competition for research analysts. Days after video of staff from one brokerage raucously partying with a client went viral, 30 securities firms responded to pressure from authorities to pull out of the country’s New Fortune rankings, people with knowledge of the matter said.
  • The Democrats’ House campaign arm raised more than its Republican counterpart for the seventh straight month in August as the two parties and their allied political committees furiously raise and spend money with the fight for control of Congress entering the homestretch. The Democratic Congressional Campaign Committee started September with $69.8 million in the bank after raising $15.4 million in August and spending $18.2 million, filings Thursday with the Federal Election Commission show.
  • New York City’s home sellers, tired of waiting for buyers, slashed prices on almost 800 listings in a single week this month, the most in at least 12 years. In the week through Sept. 9, there were 774 homes in Manhattan, Brooklyn and Queens that got a price cut, the most for any seven-day period in data going back to 2006, according to a report Friday by listings website StreetEasy. The previous weekly record was in March 2009, during the global recession, when 713 properties were reduced.

*All sources from Bloomberg unless otherwise specified