Jan 18, 2023
The Daily Chase: Regulators approve BMO-Bank of the West takeover; Price of oil climbs
First Look With Surveillance: BOJ Holds, Tech Job Cuts
Bank of Montreal is getting the green light for its US$16.3-billion acquisition of Bank of the West, clearing the final regulatory approval for its major U.S. expansion. BMO says it expects the deal – which will create the 15th-largest U.S. lender and expand its footprint into 32 states – will close Feb. 1 after the U.S. Federal Reserve signed off on the transaction. The Bank of the West deal is the largest ever acquisition of a U.S. firm in Canadian banking history, though it – in combination with rising capital requirements back here at home – prompted BMO to head to the market to raise $3.15 billion to shore up its reserves.
OIL HITS HIGHEST LEVEL SINCE EARLY DECEMBER
Oil prices are extending their gains, with U.S. benchmark West Texas Intermediate climbing above US$81 per barrel to hit the highest level since early December. Few things at play here, chief among them some optimism over a rebound in Chinese demand once the world’s second-largest economy makes it past the worst of its current COVID crisis, bringing buyers back into the fold. Earlier today, the International Energy Agency said that while oil markets are set to face a bigger surplus in the first quarter, things will tighten up in the back half of 2023, helping drive average demand to a new record high this year.
YEN PLUNGES AS BOJ JOLTS MARKETS
The Japanese Yen is under some significant pressure after the Bank of Japan stuck to its guns, announcing no changes to it yield curve control policy. The yen fell as much as two per cent in the wake of the decision – though has since recovered some of those losses – as the central bank retained its super-dovish tone in spite of some significant currency devaluation that has seen the yen fall to 130 per U.S. dollar. The BoJ has so far bucked the global trend of raising interest rates in a bid to control inflation, keeping itself out of lockstep with the likes of Canada, the U.S. and Europe.
OTHER NOTABLE STORIES
- Microsoft is reportedly planning another round of layoffs as revenue growth slows, potentially joining the ranks of other tech titans that have been slashing jobs over the past couple of months.
- MTY Food Group is returning more cash to shareholders, announcing it’s hiking it quarterly dividend 19 per cent to $0.25 per share in the wake of its recent acquisitions of BBQ Holdings and Wetzel’s Pretzels.
- Seems older Canadians are tapping into their home equity after the pandemic-fuelled run-up in prices – HomeEquity Bank says it booked more than $1 billion worth of reverse mortgages in 2022, up 30 per cent from a year prior.
- Shares of Moderna are rallying in the premarket – up about eight per cent – after the company said a respiratory vaccine it’s developing proved 84 per cent effective for older adults.
- Shares of United Airlines are also gaining in the premarket, up three per cent, after the company said its first-quarter profit will be more than double analyst expectations.
- Notable data: Industrial Product and Raw Materials Price Indices, U.S. Retail Sales, U.S. Producer Price Index, U.S. Industrial Production and Capacity Utilization, NAHB Housing Index, Business Inventories, Beige Book
- Notable earnings: Charles Schwab, Alcoa, Kinder Morgan