Are we Edging Closer to a US Debt Ceiling Deal?

May 19, 2023

Good Morning,

U.S. stocks closed higher for a second straight day on Thursday on mounting optimism that a U.S. debt ceiling deal could be reached within days, the National Party says it will repeal the Labour's removal of a $5 charge on medicine prescriptions if elected and deficit spending is set to continue, with a big $7.1 billion increase in this year’s deficit compared to forecasts, with the Government borrowing to fund the shortfall.

Let's jump in.

Before The Bell

Markets

  • U.S. stocks closed higher for a second straight day on Thursday on mounting optimism that a U.S. debt ceiling deal could be reached within days, with discount retailer Walmart Inc providing additional support after an upbeat annual sales forecast (RT)

  • European stocks closed higher on Thursday amid optimism the lawmakers will eventually reach an agreement on raising the U.S. debt ceiling (RTT)

  • British equities closed higher on Thursday as optimism grew around a nearing U.S. debt ceiling deal, while a tumble in BT Group and Burberry limited gains on the FTSE 100 (RT)

  • The South Korean stock market has increased in four straight sessions, collecting almost 40 points or 1.6 per cent. The KOSPI now rests just above the 2,515-point plateau and it's tipped to open in the green again on Friday (RTT)

Earnings and Data

  • Beef giant AACo has warned mass slaughters of US and South Korean cattle could result in a short-term glut of meat in some markets, but long-term rewards (AFR)

  • KMD chief executive Michael Daly revealed group sales in the three months to April 30 were 15.6 per cent higher, while revenue was up 27.7 per cent over the nine months year-to-date (AFR)

  • Investors wiped almost $800 million in value from wagering giant Aristocrat Leisure after a slowdown in local poker machine sales and softness in the online gaming market caused profits to slump across the two key divisions (AFR)

  • Budget 2023: The billions budgeted to maintain the status quo, and retain staff (Stuff)

  • Trans-Tasman retirement village operator Ryman Healthcare made an after-tax profit of $257.8​ million in the financial year ending March 31 (Stuff)

  • My Food Bag has reported a net profit of $7.9 million for its 2023 financial year, compared to $20m the year earlier, as customers adjusted to a cost-of-living crunch. The business has advised of its plans to delist from the ASX to save money (Stuff)

News Summary

  • Small caps investment house Eley Griffiths Group is so saddened to see its star stock picks sail away to bigger indices that it’s setting up a new fund to tag along for a ride (AFR)

  • Bad news for anyone who thought blockchain was private (AFR)

  • Forestry industry figures are “delighted” at the resumption of trade with China, but timber processors say Australia should only export what cannot be used locally as the country faces a housing shortage (AFR)

  • An economic boom in Western Australia will make it more difficult for the Reserve Bank to resist further interest rate increases, hurting businesses in other states, National Australia Bank has warned (AFR)

  • Queensland will offer landowners who agree to allow high-voltage transmission cables across their properties an average $300,000 per kilometre, making it Australia’s most generous payment scheme to accelerate the development of its energy transition (AFR)

  • Deficit spending is set to continue, with a big $7.1 billion increase in this year’s deficit compared to forecasts, with the Government borrowing to fund the shortfall (Stuff)

  • The National Party says it will repeal the Labour's removal of a $5 charge on medicine prescriptions if elected (Stuff)

  • Papua New Guinea says negotiations over a security deal with the United States will go ahead despite President Joe Biden cancelling his visit to the Pacific nation (Stuff)

  • Xero’s $77.9 million impairment of its Planday business is “disappointing”, according to new CEO Sukhinder Singh Cassidy, who described the recently-acquired workforce management platform as having gone through a year of transition (NBR)

  • Restaurant Brands remains committed to its Taco Bell brand in New Zealand and Australia, as the Mexican-inspired fast-food brand remains unprofitable in the domestic market and across the Tasman (NBR)

  • Horticulture company and fruit grower T&G Global expects a significant net loss following Cyclone Gabrielle and has implemented a cost-reduction programme to lower costs (NBR)

  • Qatar's sovereign wealth fund, Credit Suisse's second-largest investor, has explored seeking redress for losses incurred by the bank's takeover, two people familiar with the matter said, as legal challenges to Switzerland's state-backed rescue mount (RT)

Deal Flow

Investments / M&A

  • PEP, Igneo power up $400m LMS Energy auction (AFR)

  • Lithium veteran Ken Brinsden welcomes Thursday’s announcement of $50 million of government grants to 13 companies involved with critical minerals processing, describing it as “constructive” (AFR)

  • ANZ’s proposed $4.9 billion acquisition of Suncorp’s bank faced Senate suspicion on Thursday about whether regional bank branches could be closed soon after the merger (AFR)

  • Global mining giant Rio Tinto has taken a punt on Brisbane-based battery company Graphene Manufacturing Group, signing a $6 million deal to develop and use its next-generation graphene aluminium-ion batteries in mining trucks and for energy storage at its mines (AFR)

  • A major shareholder in gold miner St Barbara has urged the board to open up the sale process for its flagship Gwalia mine to a wider range of suitors, including Silver Lake Resources, which it has already rebuffed (AFR)

  • Brisbane-headquartered Medtech ImpediMed was drumming up interest in a $20 million placement on Thursday morning, cashing in on changes to cancer care guidelines in the US (AFR)

  • Andrew Forrest’s partner in a proposed Australian nickel and cobalt refinery will be among the recipients sharing $50 million of federal funding designed to stoke more onshore minerals processing and take the nation closer to making batteries (AFR)

  • Korean Air Lines Co. was handed a warning from European Union regulators that its plan to acquire smaller South Korean rival Asiana Airlines Inc. for 1.8 trillion won ($1.4 billion) would harm competition unless the firms allay antitrust concerns (BBG)

  • Shell Plc is seeking to sell French floating wind developer Eolfi, a potential retreat from one element of its renewable power plans as new Chief Executive Officer Wael Sawan pushes to deliver greater value to shareholders (BBG)

  • The national kapa haka organisation, Te Matatini, has received a $17 million per year increase in funding in the Budget (Stuff)

  • British events organiser Informa said on Thursday it will acquire business-to-business events, data, and media group Winsight for $380 million, in a bid to strengthen its position in the specialist food-service market (RT)

Equity Raises

  • Alibaba Group Holding Ltd. will explore initial public offerings for its logistics and grocery arms while hiving off its $12 billion cloud business, kicking off the first phase of a much-anticipated breakup to try and revive anemic revenue growth (BBG)

  • Pfizer Inc is planning to raise $31 billion through its largest debt offering to finance its proposed acquisition of Seagen Inc (SGEN.O), the drugmaker said late on Tuesday (RT)

Debt

  • Billionaire Anil Agarwal’s Vedanta Group is looking to free up cash and raise funds, possibly via a loan, as its $500 million junk-rated bond matures at the end of this month (BBG)

  • Wall Street Fears $1 Trillion Aftershock From Debt Deal (BBG)

Daily Picks

  • A flurry of trades more than five hours before the US stock market opened in New York on Thursday seemingly wiped out more than $22 billion in value for an information technology company in another case of mistaken identity (BBG)

Job Board

New Zealand

  • ASB rural banking graduate - Apply here

  • Waterman Capital investment analyst - Apply here

Australia

  • Citadel Securities graduate and intern roles - Apply here

  • Goldman Sachs Investment Banking Intern - Apply here

  • IMC graduate and intern roles - Apply here

  • Jarden

    • Graduate role - Apply here

    • Summer internships - Apply here

  • Macquarie graduate roles - Apply here

  • Optiver

    • Graduate role - Apply here

    • Internships - Apply here

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