The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.
1625 ET – Jones Act operator Crowley Maritime separates its shipping, fueling and services units in a move to boost its logistics business with the focus on big government clients. Defense Department has a $2.3B, multiyear contract with Crowley to provide freight, trucking and logistics services to 40 Army depots and the Federal Emergency Management Agency is using the company for relief supplies to Puerto Rico and the US Virgin Islands. The restructuring “better ties our markets, customers, processes and technology to be more responsive, efficient and cost effective,” Crowley says. ([email protected])
1615 ET – The Aussie dollar is ground back down to 0.7560 in New York as the risk-off tone to markets saw USD appreciate. ANZ says AUD is likely to trade on global risk factors in the session ahead. The US government continues to debate tax reform, the Brexit debate is getting heated and German coalition talks are ongoing. The US president’s stance on Jerusalem also raises political risk, ANZ adds. ([email protected]; @JamesGlynnWSJ)
1607 ET – WestJet, Canada’s No. 2 carrier, hopes US regulators will grant antitrust immunity so it can discuss fares and schedules with potential JV partner Delta Air Lines on cross-border routes, said Ed Sims, EVP of the Calgary-based discounter. The two carriers currently serve 60 trans-border routes in total and only overlap on two. American Airlines, another potential partner, has much more overlap, he said. WestJet also was drawn to Delta by its long track record of building tight joint ventures with overseas carriers, Sims said. Canada’s Parliament currently is entertaining a law that would allow such ventures to be judged not just on competition laws but on public interest considerations, he said. While WestJet assumes it will be approved, “we see nothing anti-competitive” in the proposed Delta arrangement.”
1605 ET – The Dow slides 0.2% to 24140, the S&P falls less than a point to 2629 and the Nasdaq rises 0.2% to 6776. Political uncertainty has resulted in mixed trading this week with Republicans hammering out differences in the House and Senate’s version of the tax bill, the possibility of a government shutdown looming and Trump recognizing Jerusalem as Israel’s capital disrupting the Middle East status quo. Tech shares are again the best performing S&P sector with Adobe gaining 3.6% and Facebook and Google up more than 1%. Energy shares fall sharply as oil prices plummet 2.9% to a three-week low of $55.96. The WSJ Dollar Index adds 0.2%, helped by a strong ADP jobs report. ([email protected]; @jonvuocolo)
1559 ET – Maersk looks to boost its transhipment volume in Singapore after the takeover of German container operator Hamburg Sud. Chief commercial officer Vincent Clerc told local media Hamburg Sud’s fleet may be re-flaged in Singapore and that he expects more cargo to go through the island state. Maersk’s transhipment volume through Singapore has gone up 69% over the past three years to more than 4.5 million containers. ([email protected])
1552 ET – Fonterra downgraded its farmgate milk price, but not by as much as some economists had expected and this is likely helping the Kiwi hold its own against the US dollar. Fonterra lowered the milk price to NZ$6.40 from NZ$6.75. Westpac, for example, has forecast it dropping as low as NZ$6.20, after whole milk powder prices fell around 16% to date from their peak in February this year. “The fact the kiwi is hanging in there despite a stronger USD may reflect Fonterra’s downgrade perhaps not being as large as feared and also better QV house prices,” ANZ economists say. “However, we suspect it is also reflects market positioning. It points to a decent base of support at present,” the bank says. The NZD/USD was at 0.6878 early in Asia on Thursday. ([email protected])
1529 ET – Food retailers expect to distribute any savings reaped from a tax bill moving through Congress across investors, consumers and employees, says Amin Maredia, chief executive of Sprouts Farmers Market, a fast-growing natural grocery chain. “The intent of the tax reform is to lift all boats,” Maredia tells investors at a Barclays Capital conference. “I think Sprouts would recommend something similar to our board.” Maredia says he’s had many conversations with CEOs lately about what they intend to do with cash freed up by the tax bill if passed, and others agree it should be spread out. “CEO’s are leading and talking to their boards about being more balanced,” he says. ([email protected]; @heatherhaddon)
1528 ET – David Rosenberg, the widely read chief economist at Gluskin Sheff, says the Bank of Canada has set a “very high” bar to move off the sidelines and raise rates again. He says in note to clients it will be “long time” before BoC raises rates again, adding a number of uncertainties covering Nafta, housing, mortgage-financing rules among other things, “are simply “far too wide.” Higher interest rates “would do more to compound these uncertainties that Poloz et al are concerned about than alleviate them.” He also takes aim at economists indicating Canadian monetary policy might be too loose, saying raising rates now would trigger recession risks. He says he expects further weakness for C$, with a wait-and-see BoC and the Federal Reserve intent on raising rates. ([email protected]; @paulvieira)
1349 ET – Google scored a small victory this week when a California state judge dismissed class-action claims that the internet company pays women less than men and doesn’t give women equal opportunity for career advancement. Superior Court Judge Mary Wiss in San Francisco said the lawsuit was too broad because it was brought on behalf of all women who worked for Google in the state. Three women sued the company in September for unfair pay and promotion practices at the company. But Google’s win may be short lived. James Finberg, a lawyer for the three women, said he will file an amended complaint by Jan. 3 “that addresses the court’s concerns and makes clear that Google violates the California Equal Pay Act by paying women less than men for substantially equal work in nearly every job classification.” ([email protected])
1323 ET – Belgian stocks decline, with the Bel-20 falling 0.5% to 3979.75 in line with other regional markets. The session’s worst performers were Anheuser-Busch InBev, which closed down 1.4% at EUR95.64, and KBC Groupe, which ended at EUR68.43, 1.2% lower. Eight shares end higher, helped by a late-session rally after US markets opened. Ontex closes up 1.2% at EUR28.34 and Colruyt gains 0.6% to EUR44.88. ([email protected]; @laurnorman)
1308 ET – Analysts say UnitedHealth is paying at the high end for DaVita’s medical group, based on its disappointing recent results, but they argue the deal makes strategic sense and the asset is a rare one. JPMorgan says the $4.9B price is around 14 times its estimate for the medical group’s 2018 EBITDA, but the shift away from paying medical providers fees for each service “places material strategic value on integrated (and particularly capitated) medical groups” like DaVita’s. Matt Borsch at BMO Capital Markets says “the seemingly lofty multiple that UNH will pay to acquire…is distorted by the earnings improvement potential we see under UNH,” both in the medical group’s own results and the related benefits to UnitedHealth’s Medicare Advantage performance. ([email protected]; @annawmathews)
1304 ET – Bank of Nova Scotia economist Derek Holt tells clients the uncertainty over Nafta is weighing heavily on Bank of Canada policymakers, and perhaps moreso than Wednesday’s rate-policy decision is letting on. BoC remains on hold when it comes to rates, Holt says, and is more mindful of the tenuous state of Nafta talks relative to economic data. Holt says BoC is likely more focused on the risk of raising rates based on economic data, only to find out later Trump makes good on his threat to begin the Nafta withdrawal process. “There is obviously a limit to the point to which monetary policy can be put on hold by never ending uncertainties, but I simply don’t buy that the data is screaming out that this limit is being breached now,” Holt tells clients. ([email protected], @paulvieira)
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