September 28th, 2017


Daily Market Commentary


Canadian Headlines

  • Canadian stocks gained the most since May in a broad-based rally that saw rate-sensitive groups jump as bond yields hit their highest in three years. The S&P/TSX Composite Index added 136 points or 0.9 percent to 15,609.66, the highest close in more than four months. Canada’s oldest bank priced A$800 million ($626 million) of fixed and floating-rate five-year notes Thursday.
  • Bank of Canada Governor Stephen Poloz said he will proceed “cautiously” as he gauges the impact of two interest rate increases on the economy. Even amid the strongest growth spurt in more than a decade, Poloz said in a speech it’s still not clear whether the economy has run up against the sort of capacity constraints that would warrant higher borrowing costs from here, particularly with inflation and wage growth sluggish.
  • Bank of Montreal has sold its first Australian dollar bond, playing to investor hunger for new companies to sell debt in the South Pacific nation.
  • A private debt fund in Canada is betting that U.S. President Donald Trump’s push for more NATO defense spending will bring fortune north of the border as contractors seek high-yielding loans to fund their businesses. The Sprott Canadian Senior Debt Fund is targeting small-to-midsize Canadian companies that manufacture parts for defense giants like Lockheed Martin Corp.and Boeing Co. to make and distribute high-yield, first-lien secured loans. It aims to raise an initial C$500 million ($404 million) to chase deals from among a select set of about 800 companies in Canada.



World Headlines

  • European stocks are little changed as investors assess the implications of U.S. President Donald Trump’s tax proposal. The Stoxx Europe 600 Index slips less than 0.1%, after five days of gains pushed it to a two-month high.
  • A global bond rout deepened amid growing optimism over the health of the U.S. economy and President Donald Trump’s tax-cut plan. Stocks were mixed as investors began to assess the implications of the much-anticipated tax proposal.
  • Asian markets slipped as they head to cap a third straight quarter of gains, the longest such winning streak since 2013. Japanese equities rose as the dollar strengthened, while Chinese shares fell ahead of a week-long holiday from Monday.
  • Oil rose in a bull market after data showed a surprise decline in U.S. crude stockpiles, taking OPEC and its allies closer to a goal of reducing a global glut. Futures added as much as 1.4 percent in New York after rising 0.5 percent Wednesday.
  • Gold traded near the lowest since August and headed for the biggest monthly loss this year as President Donald Trump’s plan to cut taxes kept the dollar buoyant. Bullion was little changed at $1,282.41 an ounce in London after earlier losing as much as 0.4 percent to the lowest since Aug. 25.
  • Iron ore’s on the back foot as the raw material closes out a brutal month. Futures in China sank to the lowest since June amid concern the market is getting caught between rising supply as miners crank up output and lower demand, with China enforcing mill closures to curb pollution.
  • The pound fell for the fifth day, its longest run of declines since March, as Bank of England Governor Mark Carney disappointed investors who were looking for fresh signals on the odds of a November interest-rate increase. Sterling fell as low as $1.3343 as the governor opted to focus on Brexit and the associated risks in a speech at a BOE conference, which seemed to strike a dovish tone.
  • Euro-area economic confidence surged more than economists forecast in September, giving European Central Bank policy makers more positive news to consider as they decide on the future of their bond-buying program. The index of industry and consumer sentiment increased to 113 in September from 111.9 the previous month, the European Commission in Brussels said on Thursday.
  • Big investment banks with their European headquarters in London are forging ahead with plans to create new trading hubs elsewhere in the region in preparation for Brexit despite the U.K.’s pledge to secure a two-year transition period after March 2019, according to people with knowledge of the situation.
  • China unveiled a comprehensive set of emission rules and delayed a credit-score program tied to the production of electric cars, giving automakers more time to prepare for the phasing out of fossil-fuel powered vehicles. Under the so-called cap-and-trade policy, automakers must obtain a new-energy vehicle score — which is linked to the production of various types of zero- and low-emission vehicles — of at least 10 percent starting in 2019, rising to 12 percent in 2020.
  • Chubb Ltd. said losses from Hurricanes Harvey and Irma could total as much as $1.3 billion after taxes. Harvey, which hit Texas in August and caused flooding in Houston, will cost the insurer about $520 million, the company said Wednesday in a statement.
  • Toshiba Corp. signed a final agreement to sell its flash memory chip business to a group led by Bain Capital for about 2 trillion yen ($18 billion), moving a step closer to completing the deal after months of contentious negotiations. The Bain consortium includes major technology players Apple Inc., Dell Inc., SK Hynix Inc. and Japan’s Hoya Corp., while Toshiba itself will maintain a stake, the company said in a statement Thursday.
  • Naspers Ltd. agreed to pay 660 million euros ($775 million) to boost its stake in Germany’s Delivery Hero AG as Africa’s biggest company increases its exposure to the online food-delivery market.
  • Turkey agrees to deal only with Iraq’s central government for all crude that the OPEC nation exports through a Turkish pipeline, the Iraqi prime minister said, days after Iraq’s self-governed Kurds, who ship their own oil via the same network, approved a referendum on independence. The comments suggest the Turks may be reviewing their policy of letting Iraq’s landlocked Kurds export oil independently through the Turkish-controlled pipeline.
  • India’s biggest oil and gas explorer Oil & Natural Gas Corp. expects to complete the purchase of a stake in state-run refiner Hindustan Petroleum Corp. by December, Chairman D.K. Sarraf said. The stake is valued at about 323 billion rupees ($4.9 billion), based on Thursday’s closing stock price.
  • STX Entertainment, the filmmaker and distributor backed by Chinese Internet giant Tencent Holdings Ltd., is planning to seek about $500 million in a Hong Kong initial public offering, a person with knowledge of the matter said.
  • Australia’s Beach Energy Ltd. agreed to buy Origin Energy Ltd.’s conventional oil and gas business, Lattice Energy, for A$1.59 billion ($1.25 billion) in a deal set to triple the Adelaide-based company’s reserves. Beach will fund the acquisition through a A$301 million share sale and a new A$1.58 billion debt facility, the company said in a statement Thursday.
  • Deutsche Boerse AG, the stock exchange operator seeking to boost growth after a failed merger, is close to taking a minority stake in big data company Trifacta Inc., according to people familiar with the matter.
  • Private equity firms Blackstone Group LP and Apollo Global Management LLC have teamed up to bid on Toshiba Corp.’s bankrupt nuclear power unit Westinghouse Electric Co. and others are considering offers, according to people familiar with the situation.
  • Two years after signing an agreement with General Electric Co. for a local diesel-engine factory, India said it is in talks to alter the contract as it favors electric locomotives. Railway Minister Piyush Goyal said the government is negotiating ways to tweak the agreement as the nation shifts to less-polluting modes of transportation. The two sides have considered options including exports of some of the engines and making them more fuel efficient to reduce pollution. The U.S. company doesn’t make electric locomotives.
  • Bank Islam Brunei Darussalam Bhd., the Southeast Asian sultanate’s biggest lender, has postponed a planned initial public offering that could raise as much as $500 million, people familiar with the matter said.
  • New Mountain Capital garnered $6.15 billion for its fifth private equity pool, the latest fund to exceed its target amid torrid investor demand. The firm topped the $5 billion goal it set when starting to market New Mountain Partners V early this year, according to a statement Thursday. New Mountain said it hit the $5.85 billion hard cap, the maximum amount of outside capital allowed by its agreement with investors, and added $300 million from employees and affiliated people.
  • Novartis AG is considering a deal for radiopharmaceutical company Advanced Accelerator Applications SA as the giant Swiss drugmaker seeks acquisitions to boost growth, according to people familiar with the matter.



*All sources from Bloomberg unless otherwise specified