September 24th, 2018
Daily Market Commentary
- Canadian stocks barely climbed on Friday, rising to their highest since the end of August, as negotiations for a U.S. trade deal continued. The loonie weakened, snapping a three-day advance against the greenback. The S&P/TSX Composite Index rose less than 0.1 percent, with real estate and industrial companies leading gains. Healthcare names fell the most, declining 2.2 percent, as pot stocks pressured the benchmark. The massive swings in cannabis-related stocks continued as Tilray Inc. saw its biggest two-day drop since coming public.
- Canada’s Barrick Gold Corp. agreed to buy Randgold Resources Ltd. in a deal valuing the combined company at $18 billion, creating a gold mining behemoth with a focus on Africa. The all-share transaction values Randgold at $5.4 billion, making it the biggest gold mining deal of the past three years. The deal will help Barrick boost output at a time when its stock has been punished for a stagnant pipeline. The company’s shares have about halved from a February 2017 peak.
- Carmakers, heavily exposed to global trade, were among the biggest laggards in the Stoxx Europe 600 Index, with futures on the S&P 500 and Dow also pointing to a weaker open. The dollar held steady while Treasuries declined with European sovereign bonds. The pound strengthened on increasing talk of a second U.K. referendum on the final Brexit deal.
- U.S. equity futures and European stocks edged lower as China canceled trade talks with American officials after the country imposed new tariffs on $200 billion of Chinese goods. Oil rose after OPEC gave a tepid response to President Donald Trump’s calls to boost supply.
- Asian stocks fell for the first time in five sessions as the trade conflict between the U.S. and China showed no signs of improvement as new tariffs came into effect Monday. Markets in Japan, South Korea, China and Taiwan are closed for holiday. The MSCI Asia ex-Japan Index fell 1.1 percent as of 4:26 p.m. in Hong Kong, led by financials and health care discretionary shares.
- Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as OPEC and its allies struggle to compensate for U.S. sanctions on Iran’s exports. With Brent crude already jumping to an almost four-year high on Monday, that’s exactly the kind of price surge President Donald Trump has been seeking to prevent by pressuring the Organization of Petroleum Exporting Countries to raise production. Yet the cartel and its allies gave mixed signals at a meeting in Algiers on Sunday, ultimately showing little sign they would heed U.S. demands to rapidly push down crude prices.
- Gold trades near $1,200/oz as U.S.-China trade war escalates, with Washington imposing fresh tariffs on Monday, and as investors count down to Federal Reserve’s policy-setting meeting this week.
- China dashed prospects for a near-term resolution to the trade war with the U.S., warning President Donald Trump his threats of further tariffs are blocking any potential negotiations. The response, which came just over an hour after the U.S. imposed new duties on $200 billion in Chinese goods on Monday, underscores a deepening gulf between both governments in a dispute that observers say is less about a row over a bilateral goods deficit and increasingly about a U.S. desire to put the brakes on China’s economic ascent.
- Sirius XM Holdings Inc. said it will acquire Pandora Media Inc. in a $3.5 billion deal, helping the satellite-radio company expand into online music. The all-stock transaction values Pandora at $10.14 a share, about 12 percent more than the company’s closing price on Friday. Sirius already has a 15 percent stake in Oakland, California-based Pandora, the companies said in a statement Monday.
- Digital Realty’s Brazilian subsidiary Stellar Participações to buy Ascenty, a leading data center provider in Brazil, from private equity firm Great Hill Partners in a transaction valued at about $1.8 billion.
- India is planning to sell its stake in SJVN Ltd. and Power Finance Corp. to other government-controlled companies in deals that may fetch the federal government about 200 billion rupees ($2.8 billion), helping it to rein in the fiscal deficit amid growing risks of a slippage, people with knowledge of the matter said. The government plans to sell its 63.8 percent stake in hydropower producer SJVN to NTPC Ltd., the nation’s largest thermal power producer, to garner about 80 billion rupees, the people said, asking not to be named as the information isn’t public.
- Sky Plc shares jumped as much as 8.7 percent in London, gracing the per-share offer from Comcast Corp. that beat a competitor to acquire the British broadcaster with a knockout $39 billion bid. Sky traded at 17.22 pounds as of 8:18 a.m. in London, just shy of the 17.28 pound per-share offer from Comcast, signaling investor optimism with the bid. Comcast trumped by 10 percent a rival proposal from 21st Century Fox Inc., backed by Walt Disney Co., in a Saturday auction overseen by U.K. regulators. That all but assures that investors in London-based Sky will tender their shares to the Philadelphia-based cable carrier.
- As Denmark comes to grips with its role in one of Europe’s worst dirty money sagas, its parliament is working overtime to stop the nation’s credit rating from being dragged down by the scandal. Danske Bank A/S has admitted that about $234 billion flowed through a tiny unit in Estonia between 2007 and 2015, and is treating a “large” share of that amount as “suspicious” transactions. Chief Executive Officer Thomas Borgen has resigned and several employees have been reported to the police. Criminal investigations are ongoing and the government says Danske may face a $630 million fine.
- Handbag maker Michael Kors Holding Ltd. is nearing an agreement to buy Gianni Versace SpA after the iconic Italian fashion house drew interest from several suitors, people familiar with the plans said. Michael Kors may announce a deal as early as this week that values Versace at about $2 billion, said the people, who asked not to be identified as the discussions are private. The Versace family will continue to have a role in the company under any agreement, they said. While talks are advanced, no final agreements have been reached, the people said.
- President Donald Trump risks politicizing antitrust enforcement and violating the First Amendment should he sign a draft executive order targeting social media companies that’s under consideration at the White House. The order, first reported Friday by Bloomberg News, instructs federal antitrust agencies to open probes into the practices of tech giants like Alphabet Inc.’s Google and Facebook Inc. That would challenge the traditional independence of the Justice Department even if investigations were warranted, several antitrust experts said.
- Russia will provide advanced S-300 missile systems to Syria and directly link up with the air-defense network of its Middle Eastern ally, stepping up support for the regime of President Bashar al-Assad after the downing of a reconnaissance plane last week. Moscow blamed the shoot-down of the aircraft, which killed 15 Russian servicemen, on Israel, whose planes were attacking targets in Syria at the same time. Israel has long called on Russia not to provide the S-300 system to Syria and in 2013, the Kremlin agreed to put a deal to deliver them on hold.
*All sources from Bloomberg unless otherwise specified