Financial Advisors Focus On Encana As Company Completes Buyback Program; Canada Authorizes Pipeline
The US stock market had a successful June with all three main indexes gaining quite a lot of ground. The S&P 500 appreciated by 7.19% and the Dow Jones Industrial Average advanced by 7.17%. During the same period, the NASDAQ Composite surged by 9.18%.
Among the main themes that dominated the market last month were trade, geopolitics, and interest rates.
Even though the US-China trade deal saw no conclusion this month, there were assurances from the White House that it’s almost complete. Treasury Secretary Steve Mnuchin said the deal was 90% complete towards the end of the month. Subsequently, President Trump met with Xi Jinping at the G-20 summit in Japan, where they agreed to restart trade negotiations and Trump said the US would pull back on restrictions on Huawei and delay installing new tariffs on Chinese goods. At the same time, China agreed to buy large amounts of US agricultural products.
On the other hand, good news came from the USA’s southern neighbor. On June 20th, Mexico ratified NAFTA’s replacement, USMCA trade deal, becoming the first country from the continent to do so. Earlier last month, the US and Mexico signed a deal that indefinitely suspended tariffs that the US wanted to impose, in exchange for Mexico taking measures to prevent the flow of migrants coming to the US southern border.
The second half of June saw an escalation of tensions between Iran and the US. After the Iranian forces shot down a US drone, President Trump ordered a strike on Iran, which was called off at the last minute. Instead of military intervention, the Trump administration ordered new sanctions against the assets of Ayatollah Ali Khamenei and a number of Iranian military commanders.
At the same time, Iranian and European diplomats met in Vienna on June 28th and established a mechanism that would facilitate trade (primarily of humanitarian goods) between the European Union and Iran, circumventing US sanctions and salvaging the remains of the 2015 nuclear deal, from which the US withdrew last year. Also, China said it would continue to buy Iranian oil, in defiance of sanctions.
One factor that kept investors bullish on the market last month was the potential of an interest rate cut by the Federal Reserve. A couple of Fed officials, including chairman Powell, hinted that a cut was in the cards during interviews. However, the FOMC decided to keep the rates unchanged and hinted that the Fed could ease policy in the near future. The Fed’s projections showed that almost half of the FOMC members anticipated two rate cuts this year and the Fed said in its statement that it would “act as appropriate” to maintain economic growth.
Bitcoin was also back in the spotlight last month amid news of Facebook’s plans to release a cryptocurrency, later revealed as Libra. On June 19th, the cryptocurrency broke past the $9,000 mark for the first time in more than a year. In the following days it climbed past $13,000, but then quickly slid back to $11,200 before settling at around $12,000.
Amid the news dominating the overall stock market, Financial Advisors focused on a slew of stocks that ranked as the most searched, according to data from TrackStar, InvestingChannel’s exclusive technology capturing and analyzing the trends of Financial Advisors.
For example, pharmacy chain and healthcare plans provider CVS Health Corp. (NYSE: CVS) ranked as the most-searched ticker amid a Federal judge conducting a two-day hearing on CVS’s acquisition of Aetna, completed last year. The judge did not set a date when he’ll rule on a Justice Department settlement greenlighting the deal, so the uncertainty surrounding the company could go on for a while.
CVS Health Corp. was followed by Precision Therapeutics, a healthcare stock. Last month, Precision Therapeutics announced the name change to Predictive Oncology Inc (NASDAQ: POAI) and a new ticker. The company said the move better reflects its strategic focus. Predictive Oncology aims to develop artificial intelligence-based solutions to precision medicine and drug discovery, with a focus on cancer.
However, the stock that was in the Financial Advisors’ spotlight the most last month was Encana Corp (NYSE: ECA). The Alberta, Canada-based oil company captured attention amid several developments. On June 10th, Encana said it would buy back up to $213 million in additional stock in July to complete its $1.25 billion stock repurchase program.
There also was some industry-wide news with potential implications for Encana. On June 13th, two tankers were attacked in the Gulf of Oman, which sent oil prices higher.
Less than a week later, the Canadian government greenlit the Trans Mountain pipeline expansion, which would provide relief to the country’s oil & gas industry. The expansion, expected to come online in 2022-2023, will triple the pipeline’s capacity, allowing it to carry 890,000 bbl/day from Alberta’s oil sands to the Pacific Coast.