September 5th, 2017


Daily Market Commentary


Canadian Headlines

  • The latest Nafta talks are nearing conclusion without a major breakthrough or agreements on even the least-contentious topics, officials familiar with the negotiations say, fueling doubts among observers that a deal can be reached this year. U.S. Trade Representative Robert Lighthizer is scheduled to speak publicly alongside Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland Tuesday to conclude the second round of talks toward a new North American Free Trade Agreement. Their appearance will cap a five-day session in Mexico City.
  • No one doubts the Bank of Canada will raise interest rates again soon. The country’s economy has turned out to be much stronger than anyone was predicting only a few months ago, giving policy makers scope to bring rates back up to more normal levels. The only debate is whether Governor Stephen Poloz will move at Wednesday’s meeting or wait until October, and whether current projections for as many as three more rate increases by the end of 2018 are too conservative.
  • Canadian Natural Resources in pact to acquire assets in Greater Pelican Lake region and other miscellaneous assets in northern Alberta for gross cash consideration C$975m.



World Headlines

  • Stoxx 600 trades little changed, trimming an advance of as much as 0.5%, as euro claws back drop against dollar. European traders haven’t been quite so fortunate, with the Stoxx Europe 600 Index up just 4.1 percent in euro terms.
  • U.S. investors aren’t done with European equities even after enjoying their best returns in eight years. Those who bought European stocks in dollars have already seen gains of about 17 percent this year, and the prospect of another leg up is keeping them hooked. The two largest U.S. exchange-traded funds tracking the region have attracted $8.7 billion, recouping most of the money they bled in 2016.
  • Asian shares fell, posting a second consecutive day of declines, after North Korea’s nuclear test on Sunday rattled global equity markets. The MSCI Asia Pacific Index fell 0.1 percent to 160.04 as of 4:31 p.m. in Hong Kong. For every two stocks that dropped, one rose. Japan’s Topix slid 0.8 percent as declines in telecommunication companies’ shares offset automakers’ gains.
  • Gasoline fell to the lowest in more than a week as Gulf Coast refiners continued their recovery from the devastation of Hurricane Harvey. Futures in New York have lost 4 percent since Friday’s settlement.
  • Gold holds near an 11-month high as U.S. President Donald Trump agreed to support billions of dollars in new weapon sales to South Korea, following North Korea’s nuclear test.
  • Euro-area economic growth remained solid in August even as services activity slowed, according to IHS Markit. A composite Purchasing Managers’ Index held at 55.7 last month, slightly below an Aug. 23 flash estimate of 55.8. IHS Markit said on Tuesday that although the region’s services sector expanded at the weakest pace since January, gross domestic product is poised to increase 0.6 percent in the third quarter, setting the stage for the best annual performance in a decade.
  • Japan Post Holdings Co. will announce plans for a share sale by the government as early as Sept. 11, almost two years after the postal and financial-services giant was listed, people with knowledge of the matter said. The Ministry of Finance plans to offer about 1 trillion yen to 1.4 trillion yen ($9.1 billion to $12.8 billion) of Japan Post Holdings shares to local and overseas investors by the end of September.
  • After two failed attempts in as many years, Schneider Electric SE is betting a deal to combine its industrial software business with the U.K.’s Aveva Group Plc will create a market leader in programs to design and operate power plants and factories. Schneider and Aveva unveiled on Tuesday an agreement by which the French company will receive a 60 percent stake in Cambridge, England-based Aveva, valued at about 1.7 billion pounds ($2.2 billion).
  • Special counsel Robert Mueller and key congressional committees are tightening their focus on some of President Donald Trump’s family members and campaign associates as probes into Russia’s interference with the 2016 election enter a new and more aggressive phase. Even fired FBI Director James Comey is aware that he may return to Capitol Hill to follow up on his explosive testimony from earlier this year, according to a source familiar with his thinking. Comey, who was dismissed by Trump in May, has not received a subpoena or any official indication he’ll be summoned to again testify.
  • United Technologies Corp. agreed to buy Rockwell Collins Inc. for about $23 billion, creating an aerospace behemoth that can outfit jetliners and warplanes from tip to tail. The transaction, one of the biggest in aviation history, creates an aircraft-parts giant better positioned to withstand the squeeze from planemakers Boeing Co. and Airbus SE for pricing discounts and higher output.
  • Angry Birds maker Rovio Entertainment Oy plans to sell shares in a Helsinki initial public offering, seeking funds to support its resurgence seven years after releasing its best-selling mobile-game title. Main owner Kaj Hed, 62, and some other holders will sell shares, and Rovio will offer about 30 million euros ($36 million) of new stock, the company said Tuesday, without providing a total value for the sale. The IPO could value the maker of the Angry Birds mobile games and movie at about $2 billion.
  • Tronc Inc., owner of newspapers including the Los Angeles Times, Baltimore Sun and Chicago Tribune, agreed to pay $1 and assume pensions and liabilities for the New York Daily News and to expand its digital business and add coverage of the biggest media market in the U.S. Chicago-based Tronc assumed operational and pension liabilities for the New York Daily News in a deal that includes 100 percent ownership of the New York newspaper’s printing facility in New Jersey, Tronc said in a statement late Monday.
  • Lego A/S plans to cut 1,400 jobs as the Danish toymaker struggles with weak demand for a new line of “Batman” play sets that’s contributing to its worst downturn in more than a decade. The company said it would reduce its workforce by 8 percent after a decade of rapid expansion more than doubled it to the current level of about 18,200. The move came after Europe’s largest toymaker said Tuesday that sales in the first half fell 5 percent to 14.9 billion kroner.
  • Symantec isn’t done making deals. The 35-year-old cybersecurity company, which completed two multibillion-dollar acquisitions over the past 14 months, is open to another large purchase after a period of paying down debt and proving to Wall Street it can meet growth targets, Chief Executive Officer Greg Clarksaid.
  • Noble Group Ltd., the commodity trader struggling to avoid a default, said it expects to find a buyer for its oil business by the end of September, and get an extension on its debt covenant waivers beyond October, but conditions are still very difficult. The company foresees reaching terms with one preferred bidder before the end of the month, Chairman Paul Brough told reporters in Singapore after a Special General Meeting, which approved the sale of its gas and power business to Mercuria Energy Group Ltd.
  • Nets A/S, a Nordic payments firm that has been the subject of takeover speculation, was hit by a sudden selloff in Copenhagen on Tuesday, driving the company’s shares down as much as 15 percent at one point. The stock recouped most of the decline, and traded 2.8 percent lower at 154 kroner as of 9:35 a.m. in the Danish capital. Earlier in the day, Nets shares could be bought for as little as 134.80 kroner.
  • Chancellor Angela Merkel renewed her pledge to avoid diesel driving bans, arguing the technology will be needed for decades to come to reduce carbon dioxide emissions as automakers develop electric vehicles. “This doesn’t mean we don’t have to address unforgivable mistakes – we can’t go back to the regular agenda,” Merkel said in a speech to the German lower house of parliament on Tuesday. “But that also doesn’t mean that we have to rob the whole industry of its future.”



*All sources from Bloomberg unless otherwise specified