September 27, 2022

Daily Market Commentary

Canadian Headlines

  • The Ontario Municipal Employees Retirement System hired advisers to approach lenders to test the appetite for financing a leveraged buyout of French calibration company Trescal, Bloomberg reported. The pension fund, which bought Trescal in 2018, is sounding out financing sources in the early stages, since the availability of debt can make an asset more attractive to buyers.
  • Ontario Teachers’ Pension Plan Board has opened its third office in the Asia Pacific region in Mumbai which will be led by Deepak Dara. Dara, who has been appointed as senior managing director of the local outfit, joined the pension fund as chief of staff to the CIO in 2020; he will take on his India role in early 2023.
  • A consortium led by former Berkshire Hathaway Inc. executive David Sokol and Canadian investment group Fairfax Financial Holdings Ltd raised its offer to buy Atlas Corp., the holding company that controls shipping firm Seaspan Corp., to $4.4 billion.  The cash bid increased to $15.50 from $14.45 a share, a 14.6% premium to Friday’s closing price. The shares jumped as high as $15 in premarket trading in New York.


World Headlines

  • The S&P 500 was poised to open higher amid dip-buying after the index wiped out more than $2 trillion over the last five sessions on fears that the Federal Reserve’s tight monetary policy would crush economic growth. Contracts on the S&P 500 rose 0.7% at 5:54 a.m. in New York after the underlying gauge hit the lowest since December 2020 on Monday. Nasdaq 100 futures gained 0.9% after a five-day losing streak for the main gauge that’s made up of growth stocks that are especially affected by higher rates. Tech giants including Apple Inc., Inc. and Alphabet Inc. advanced more than 1% in premarket trading as the yield on the 10-year Treasury retreated.
  • European stocks rebounded on Tuesday as investors were lured by cheaper valuations after the benchmark index hit its lowest level since December 2020 on recession fears. The Stoxx 600 Index was up 1.2% by 8:48 a.m. in London after three straight days of declines, which took valuations to their lowest in a decade. Travel and leisure stocks and automakers outperformed along with technology.
  • Asian stocks rose from their lowest level in more than two years as equities in China and Japan advanced. The MSCI Asia Pacific Index added as much as 0.5%, poised to snap four-days of losses. Consumer staples and materials led the measure higher as Meituan, BHP and Toyota gave the biggest boosts to the measure.
  • Oil rebounded after hitting the lowest level since early January as a rally in the dollar paused, buoying crude even as concerns remain about tighter monetary policy and weakening demand. West Texas Intermediate climbed back toward $78 a barrel after sinking more than 8% over the previous two sessions. A gauge of the US currency eased from a record, with crude gaining alongside other commodities as a global selloff halted.
  • Gold rose from its lowest level in more than two years, as the dollar slipped after hitting a fresh record. The dollar’s advance stalled on Tuesday, providing relief for the non-interest bearing metal. While gold is seen as a traditional haven in times of economic distress, fears of a global recession stoked by central banks’ monetary tightening has instead triggered big gains in the greenback.
  • The economic damage from the shutdown of Russian gas flows is piling up fast in Europe and risks eventually eclipsing the impact of the global financial crisis.  With a continent-wide recession now seemingly inevitable, a harsh winter is coming for chemical producers, steel plants and car manufacturers starved of essential raw materials who’ve joined households in sounding the alarm over rocketing energy bills.
  • European natural gas surged after four days of losses as damages reported at the shuttered Nord Stream pipeline added to uncertainty over future Russian supply. Benchmark futures rose as much as 12%, after dropping to a two-month low earlier this week. Two lines of the key Nord Stream link to Germany and one line of the idled Nord Stream 2 reported drops in pressure on Monday, with gas leaks identified by Swedish and Danish authorities in the Baltic Sea.
  • Germany suspects the damage to the Nord Stream pipeline system used to transport Russian gas to Europe was the result of sabotage. The evidence points to a violent act, rather than a technical issue, according to a German security official, who asked not to be identified because the matter is being probed. In response to the pipeline leaks in the Baltic Sea, Denmark is tightening security around energy assets.
  • The pound headed for its biggest rally in months and UK bonds recovered ground after a historic selloff, as some investors scooped up the country’s battered assets.
  • Deutsche Bank AG’s chief economist said he expects the UK to enter a “deep and long” recession as the Bank of England plays catch up to control inflation.  “We’re thinking in terms of a recession that will be deep and long,” David Folkerts-Landau said in a Bloomberg Television interview. “That’s the price we have to pay for financial stability and getting on the right track.”
  • Goldman Sachs Group Inc. and BlackRock Inc. are turning more bearish on equities for the short term, warning that markets are yet to price in the risk of a global recession. Flagging rising real yields as a major headwind, Goldman strategists cut equities to underweight in the US investment bank’s global allocation over the next three months while staying overweight cash. BlackRock is advising investors to “shun most stocks,” adding that it is tactically underweight developed-market shares and prefers credit in the short term.
  • Virgin Atlantic Airways Ltd. is set to join the SkyTeam global alliance, according to people with knowledge of the plans, bringing billionaire Richard Branson’s carrier into a global grouping that includes Delta Air Lines Inc. and Air France-KLM. Confirmation of the decision may come as soon as Tuesday, the people said, asking not to be named ahead of an official announcement.
  • Vice President Kamala Harris is planning a trip to the Demilitarized Zone dividing the Republic of Korea and North Korea, in a high-stakes visit that comes as the US is confronting fresh provocations from Pyongyang while seeking to reassure regional allies concerned by deteriorating relations between Washington and Beijing. The trip on Thursday will focus the world’s attention on the vice president, who has sought to burnish both US influence — and her own foreign policy credentials — with a trip through Asia emphasizing the Biden administration’s commitment to the region’s security.
  • Senior House Democrats are poised to introduce long-promised legislation to restrict stock ownership and trading by members of Congress, senior government officials and Supreme Court justices. The bill would apply to the spouses and dependent children of those officials, according to an outline sent to lawmaker offices last week by House Administration Chair Zoe Lofgren (D-Calif.). The restrictions also cover “commodities, futures, cryptocurrency, and other similar investments,” according to the outline.
  • Senate Democrats released a short-term government funding bill late Monday that included a measure to speed up energy project permits that’s opposed by most Republicans and some Democrats.


*All sources from Bloomberg unless otherwise specified