Cathie Wood Exits Chinese Stocks as Beijing Cracks Down
The stock market rout hitting Chinese stocks continued overnight, with every group in Shanghai Composite Index closing lower and the Hang Seng tumbling more than four per cent for a second consecutive session. Fear of the unknown in how far Beijing’s regulatory crackdown will extend is surely at play. And our Bloomberg partners are also pointing to a single trader who said there’s speculation that U.S. investment funds are backing away from China and Hong Kong as a driver for today’s plunge. In addition to market commentary lined up today, it’s a great day to speak with Margaret McCuaig-Johnston from the University of Alberta’s China Institute, who should have some insightful perspective on the outlook for Canadian companies operating in China. She joins Bloomberg Markets at 2:20 p.m.
It’s the Super Bowl for The Close today, with the Apple, Alphabet and Microsoft reporting after the bell; we’ve got reaction lined up in the 4 p.m. hour with a portfolio manager and an analyst.
We’ll also track market reaction to Tesla’s US$1 billion in net income, revenue that nearly doubled, and surprising free cash flow in the second quarter. If we're hunting for blemishes, the company was forced to book a US$23 million Bitcoin impairment and confirmed it's delaying the launch of its semi truck until next year due to supply chain bottlenecks.
At home, Teck Resources’ adjusted second-quarter profit nearly quadrupled to $339 million as the miner benefitted from dramatically higher prices for the commodities it produces. Its stake in the Fort Hills oil sands mine is an ongoing source of disappointment, however: Teck cut that asset’s production forecast “due to a series of operational issues” that have postponed the ramp-up to two production trains.
SPLIT SUPPORT FOR ENBRIDGE'S LINE 5 PIPELINE
A new Angus Reid Institute survey suggests that slightly less than half of adults in Michigan (48 per cent) and Ontario (49 per cent) want to keep Enbridge's controversial pipeline in service. This obviously makes you wonder about the consequences if Michigan Governor Gretchen Whitmer gets her way and eventually halts the key conduit for propane. Despite lukewarm support for Line 5, 76 per cent of Ontario respondents said they think the Energy East pipeline should be reconsidered if Line 5 is shut down.
BROOKFIELD MAKES CLIMATE SPLASH
Brookfield Asset Management announced this morning that it has pulled together US$7 billion for its global transition fund, which it claims is the world’s largest such fund focused on the pivot to a net-zero economy and could eventually expand to US$12.5 billion. Brookfield has some major institutional backers on the endeavour: Temasek, the Ontario Teachers’ Pension Plan, PSP Investments and the Investment Management Corporation of Ontario are all on board. In a release, Brookfield Vice-Chair Mark Carney said “investable opportunities are expanding faster than originally expected.”
OTHER NOTABLE STORIES
- U.S. House Transportation Committee Chair Peter DeFazio has come out against Canadian National Railway’s application for a voting trust, which is critical to its planned takeover of Kansas City Southern, and is calling on the U.S. Surface Transportation Board to concur. Canadian Pacific Railway touted DeFazio’s opposition by publishing his full letter to the STB in a press release yesterday evening.
- General Electric shares have been up more than three per cent in pre-market trading after the industrial giant hiked its free cash flow forecast for the year.
- One of the world’s biggest miners has its eye on Ontario’s Ring of Fire. BHP announced today that one of its subsidiaries has reached a friendly agreement to buy Noront Resources for 55 cents per share.
- Shares of United Parcel Service fell almost 10 per cent in early trading. Seems as though the big profit beat is being overshadowed by concerns buried in the numbers -- perhaps including the outright declines in average daily package volume in its major units.
- Notable data: U.S. durable goods orders
- Notable earnings: Teck Resources, Intact Financial, First National Financial, Element Fleet Management, Trican Well Service, Apple, Alphabet, Microsoft, Advanced Micro Devices, Visa, Starbucks, Ovintiv, General Electric, United Parcel Service, 3M, JetBlue Airways, Mondelez
- 9:00: International Monetary Fund releases World Economic Outlook update
- 10:00: Prime Minister Justin Trudeau makes vaccine announcement in Moncton, N.B. (plus avail)
- 10:00: U.S. Senate Commerce, Science and Transportation Committee hearing "Pipeline Cybersecurity: Protecting Critical Infrastructure"
- 10:00: U.S. Senate Banking Committee holds hearing "Cryptocurrencies: What are they good for?"
- 10:00: U.S. House Financial Services Committee holds hearing "The Promises and Perils of Central Bank Digital Currencies"
- 11:00: Procurement Minister Anita Anand and Health Minister Patty Hajdu "highlight a major milestone in Canada's COVID-19 response" (plus avail)
- 15:30: Prime Minister Justin Trudeau makes announcement in Charlottetown (plus avail)