Market Analysis & News: Sept 13th, 2024

Global Markets

Canada

Canada’s TSX rose due to rising gold prices, which lifted the resource sector, especially mining stocks. However, the positive stock market performance contrasts with broader economic concerns. Recent data revealed that Canada is falling behind its G7 counterparts in terms of economic performance, highlighting potential challenges for the Canadian economy. The federal government also announced that it would not intervene in an upcoming strike by Air Canada’s pilots. This strike could significantly disrupt the economy, given the critical role of Air Canada in transportation and tourism.

USA

US Markets gained, but there remains considerable uncertainty regarding the Federal Reserve’s plans for future interest rate cuts. The U.S. dollar dropped to its lowest point this year against the yen, while gold reached a record high. This followed a significant shift in investor expectations regarding a substantial Federal Reserve interest rate cut next week. Traders have increased their bets on a large rate cut, with the likelihood of a 50-basis point reduction now at 41%, up from 14% just a day earlier.

Europe

European markets posted gains, largely driven by the strength in mining stocks. In the UK, stocks also rose, even as the pound strengthened. A stronger pound typically puts pressure on export competitiveness, but the UK market’s rise suggests that investors are optimistic about other aspects of the economy.

Japan

Japan’s Nikkei index fell as the yen continued to appreciate. A stronger yen makes Japanese exports more expensive for foreign buyers, which can hurt the profitability of export-oriented companies.

China

Chinese stock markets dropped as investors took profits following a recent rebound. This pullback is typical as traders reposition themselves before the Mid-Autumn Festival holidays, reflecting a period of reduced trading activity and increased caution. The drop suggests that market participants are consolidating gains and preparing for potential shifts in market conditions during the holiday period.

Corporate Stock News

• Aclara Resources Inc: The company plans to request an environmental permit in Brazil early next year, aiming to start production by 2027, two years earlier than initially planned. The project could produce about 13% of China’s 2023 rare earth output.
• Adobe Inc: Adobe forecasted lower-than-expected fourth-quarter earnings due to intense competition and soft demand for its AI-integrated tools. Shares fell in extended trading.
• Alimentation Couche-Tard Inc: Japanese retail giant Seven & i Holdings, which recently rejected Couche-Tard’s $38.5 billion buyout offer, has been classified as “core” to national security, raising questions about potential hurdles to the acquisition. However, this classification does not add new obstacles to the bid.
• Amazon.com Inc & Walmart Inc: An Indian lawmaker and key retailers’ group are calling for a suspension of Amazon and Walmart’s Flipkart operations in India over alleged antitrust breaches that are harming the manufacturing sector.
• Arm Holdings plc: Arm announced that Young Sohn, a senior adviser at Samsung Electronics, will rejoin its board, bringing valuable experience as the company diversifies its business.
• Bank of Montreal: The Canadian lender successfully overturned a $564 million jury verdict related to its role in a Ponzi scheme, potentially reversing a significant loss provision and boosting its fourth-quarter profits.
• Blackstone Inc: Blackstone is considering selling its majority stake in visa application services firm VFS Global, which could be valued around $7 billion. Preliminary discussions are ongoing.
• Boeing Co: Boeing’s West Coast factory workers have gone on strike, impacting production of the company’s best-selling jet and potentially delaying its recovery and affecting its stock.
• Ericsson: Ericsson has formed a joint venture with several telecom operators to sell network software tools, aimed at enhancing its offerings in the telecom sector.
• First Quantum Minerals Ltd: The company is progressing with drilling at its Peru copper project, La Granja, and expects updated results by mid-2025, with feasibility studies to follow by 2028.
• Ford Motor Co: Ford plans to restart a manufacturing plant in Tamil Nadu, India, for exports, re-entering a market it exited three years ago.
• Flutter Entertainment plc: Flutter will acquire a 56% stake in Brazilian gaming group Betnacional for about $350 million and merge it with its existing Betfair Brazil brand.
• Goldman Sachs Group Inc: Goldman Sachs has hired Melissa Goldman as a partner and global head of technology engineering, marking the fourth return of a former employee as a partner this year.
• Intel Corp: Poland is set to provide over $1.91 billion in state aid to support Intel’s chip plant, pending legislative approval, with hopes to start construction this year.
• National Grid plc: The UK energy firm agreed to sell its Electricity System Operator to the UK government for $827.95 million, aiming to establish an independent National Energy System Operator.
• Neurocrine Biosciences Inc: The company will halt development of its schizophrenia drug, luvadaxistat, after it failed to meet primary goals in a mid-stage trial.
• Occidental Petroleum Corp: Occidental’s carbon capture unit, 1PointFive, secured up to $500 million from the U.S. Department of Energy to develop its South Texas Direct Air Capture Hub.
• United States Steel Corp: The company and Nippon Steel have sent a letter to President Biden about their $15 billion merger, amid reports that the deal might face a block.
• Vodafone Group Plc: The UK-based telecom firm’s proposed merger with Three UK could be approved if they can demonstrate benefits for consumers and network quality, though the Competition and Markets Authority has expressed concerns.
• Zenas BioPharma: The company raised $225 million in its U.S. IPO, pricing shares at $17 each. Zenas plans to use the proceeds to advance its lead candidate for immunology and inflammation diseases.