Feb 6, 2023
The Daily Chase: Markets point to negative open; Newmont looks to buy Newcrest for US$17B
First Look With Surveillance: Biden Balloon, Dell Cuts
It's looking like there's little relief in sight for investors to start the week, with North American equity market futures pointing to further losses when the opening bells ring at 9:30 a.m. EST. At last check, it's more of the same we saw on Friday – the tech-heavy Nasdaq Composite Index is tracking for the largest losses, down about one per cent after Friday's 1.5 per cent decline, while the Dow Jones Industrial Average and S&P 500 are both pointing to about a 0.75 per cent decline. There are a few factors at play here. While today is relatively quiet on the earnings front, we are still in the thick of things when it comes to corporate results (and bets on how those will shake out), and we're awaiting a speech from U.S. Fed Chair Jay Powell tomorrow in Washington, where he's expected to lay out the central bank's thinking around the evolving inflation picture.
NEWMONT PURSUES NEWCREST WITH US$17B BID
Looks like Newmont Mining is seeking to entrench itself as the world's largest gold miner, bidding US$17 billion for Australia's Newcrest in what would create a precious metals behemoth. It's an all-stock proposal – 0.380 shares of Newmont for each share of Newcrest – which would result in Newcrest shareholders owning about 30 per cent of the combined entity. Now, the Canadian connection is clear on a whole host of fronts. First off, Newcrest's got a solid footprint in British Columbia, between the Brucejack mine (picked up in its US$2.8 billion acquisition of Pretium Resources last year) and its 70 per cent stake in Red Chris (which it added to the fold in a 2019 deal with Imperial Metals worth US$806.5 million). Secondly, you may recall that Newmont snapped up Goldcorp about four years ago for US$10 billion in an escalation of an arms race with Barrick to create the world's largest gold miner. And, third (just for good measure), let's not ignore the potential for an interloper like Barrick to decide it wants in on the action for Newcrest now that the company is in play.
FIRST QUANTUM-PANAMA STANDOFF ESCALATES
The temperature is rising in First Quantum's continued standoff with the government of Panama over the company's massive Cobre Panama operation in the country. First Quantum says loading operations at the mine's port have been suspended as the two sides stare one-another down over taxes and royalties for the copper operation (which accounts for some 1.5 per cent of total global output of the metal.) The two parties have been at loggerheads in recent months over those tax and royalty payments – First Quantum has said it is willing to play ball with Panama's demands for US$375 million worth of annual payments, though the company has been looking for some wiggle room in case the price of copper falls precipitously. In any case, First Quantum says that it may be forced to shut down the mine by mid-month if copper concentrate isn't allowed to leave the facility, due to limited storage capacity on site.
OTHER NOTABLE STORIES
- Sun Life has named former Rogers chief executive officer Joe Natale to its board of directors, a little over a year after he was ousted at Rogers in that power struggle over the future of the telco.
- Reuters is reporting Toronto-based AI company Cohere – a competitor to Microsoft-backed OpenAi, the folks behind ChatGPT – is in talks to raise hundreds of millions of dollars in a funding round that could value the firm at around US$6 billion.
- U.S.-listed Chinese ADRs are under some pressure – Alibaba down two per cent, JD.com off about three per cent, for example – as tensions rise over the American downing of a Chinese balloon over the weekend.
- Dell Technologies is slashing 6,650 jobs as the company faces plummeting demand for personal computers, marking just the latest in a round of tech-sector layoffs.
- Notable data: Ivey Purchasing Managers Index, U.S. Global Supply Chain Pressure Index
- Notable earnings: Tyson Foods, Take-Two Interactive Software, TMX Group, Chegg, Coveo Solutions, PrairieSky Royalty, TFI International, Activision Blizzard, Pinterest, Finning International