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Financial Services Roundup: Market Talk

16 Sep 2017 8:20 am

The latest Market Talks covering Financial Services. Exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

2057 GMT - Net bullish bets on oil prices fell in the week ended Tuesday to 157,891 according to the latest data from the CFTC. Long positives have declined as short positions increased in the weeks following Hurricanes Harvey and Irma, which ignited concerns over steady demand for US oil. Recently prices have begun to recover on strong demand forecasts from the IEA and reports that output from OPEC has fallen. US crude prices gained 5.1% this week to $49.89 a barrel. (stephanie.yang@wsj.com)

2022 GMT - Hedge funds and other speculative investors boosted bets against the dollar for the fourth consecutive week, CFTC data shows. Bearish bets on the dollar stood at $12.5B in the week through Sept. 12, up from $12B the prior week. Investors turned bearish on the dollar in July and have been steadily building up bets against the currency amid political and economic uncertainty. In other currencies, investors pared bets against the Japanese yen and grew less bullish on the euro. (chelsey.dulaney@wsj.com)

1901 GMT - We have dueling estimated insured losses. Who will be proved right? Catastrophe-modeling firm AIR Worldwide just released an estimate of industry insured losses for Irma for the US and the Caribbean of combined $32B to $50B. Of that, the US portion is $25B to $35B. That is higher than estimates two days ago by Karen Clark & Co. with combined estimated insured losses of $25B, of which the US portion is $18B. Estimates exclude National Flood Insurance Program. (leslie.scism@wsj.com)

1639 GMT - Belgian stocks close down 0.5% at 3967.52 in line with lower European equity indices. Of the three Belgian stocks suffering the biggest losses, financial services provider ING drops 1.3% followed by beverage giant AB InBev, which dips 1.2%. Meanwhile on the upside, pharmaceuticals company UCB rises 1.9% followed by hygiene product manufacturer Ontex, which bounces 0.9%. (julia.verlaine@wsj.com)

1622 GMT - Bank of Montreal (BMO) CEO Bill Downe says negotiations of the financial services section of Nafta are going well. He says the 3 countries agree they must update the trade agreement, particularly as financial services and data markets have evolved since the 1994 treaty was negotiated. "I look at Nafta as an opportunity to modernize," Downe says. The CEO is an adviser to Canada's foreign affairs minister Chrystia Freeland on the trade renegotiation. (vipal.monga@wsj.com; @vipalmonga)

1547 GMT - Bank of Montreal announces a C$21M donation to 7 Toronto hospitals, the largest philanthropic commitment in the bank's 200-year history. The donation, to be spread out over 10 years, comes ahead of CEO Bill Downe's retirement. Downe steps down at the end of October. The money will go towards hospitals associated with the University of Toronto and help fund research in diabetes, cancer and mental health. BMO helped develop the programs it is funding, Downe says. (vipal.monga@wsj.com; @vipalmonga)

1451 GMT - There's a reason the European Central Bank could cut purchases of corporate bonds less than other assets under its quantitative easing program: It's done it before. While the bank reduced its monthly buying rate by 25% to EUR60 billion from EUR80 billion effective April 2017, corporate bond purchases declined by just 17%, based on calculations by LBBW. Analysts in general expect the ECB to announce tapering later this year and implement it in 2018. (tasos.vossos@wsj.com, @tasosvos)

1409 GMT - NordLB downgrades Munich Re to sell, after the company said it may incur a loss in the third quarter due to damages by storms Irma and Harvey. Further stock losses in the coming weeks are likely, as the extent of damages will become more apparent, NordLB says and adjusts its price target to EUR158 down from EUR167. Apart from the hurricane season's impact, Munich Re has to deal with existing challenges such as low interest rates, excess capacities in some market sectors and the restructuring of its direct insurance unit, analysts with NordLB note. Shares trade down 0.2% at EUR175.75. (Max.Bernhard@dowjones.com;@mxbernhard)

1329 GMT - Issuance of new euro corporate bonds is a bigger immediate risk for prices in the secondary market than the anticipated announcement of European Central Bank tapering, UBS strategists say in a note. Supply has certainly picked up in September, with more than EUR20 billion of new corporate debt already sold this month. Analysts generally expect the ECB to announce QE tapering this year and implement it in 2018. UBS expects implementation to start in January with a first cut in the monthly run rate to EUR40 billion from EUR60 billion. (tasos.vossos@wsj.com, @tasosvos)

1314 GMT - Greek banks do not need to conduct an asset quality review, as a broader European Union-wide stress test is planned for 2018, European Central Bank Executive Board member Benoit Coeure says. Only the ECB, the supervisor of the four biggest Greek banks, could require such a review, Mr. Coeure adds. His comments come a day after International Monetary Fund spokesman Gerry Rice reiterated that the Fund believes Greek banks should undertake an AQR and stress test before the end of Greece's bailout "to ensure that the resources set aside for bank rehabilitation in this program are utilized in a timely manner, if needed". In its own calculations, the IMF sets aside a EUR10 billion buffer for any future bank-recapitalization requirements. This may complicate discussions about the Greek bailout, since both the European creditors and the Greek government strenuously oppose the IMF's suggestion for a specific Greek AQR. (nektaria.stamouli@wsj.com)

1238 GMT - Evercore ISI anticipates more charges ahead for long-term-care insurers following a mention by General Electric in its 2Q call of "adverse claims experience" in a portion of an old portfolio of LTC insurance. GE was the parent of Genworth Financial, among other reasons it has LTC reserves on its books. GE said it would review its LTC reserves in 4Q. Evercore ISI thinks "an outsized charge by GE may result in a negative read" for many other insurers with LTC blocks on their books. "It is also worth pointing out that with GE's $200B plus market cap plus $74B of shareholders' equity, the fact that the company has flagged this review suggests to us that it is more likely in the billions than something smaller." (leslie.scism@wsj.com)

1036 GMT - Potential scarcity of government bonds eligible for European Central Bank purchases may increasingly concern market participants, but shouldn't be a problem in the corporate bond space, according to Raiffeisen. The ECB doesn't hold any stakes in corporate bonds amounting to more than EUR100 billion, analyst Eva-Maria Grosse says. The ECB has purchased almost EUR110 billion of bonds since its so-called corporate sector purchase program, or CSPP, began in June 2016. (tasos.vossos@wsj.com, @tasosvos)

(END) Dow Jones Newswires

September 16, 2017 04:20 ET (08:20 GMT)

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