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At the open: TSX rises on COVID-19 vaccine hopes – The Globe and Mail



Canada’s main stock index opened higher on Tuesday after a long holiday weekend, as positive results from an early stage trial of a COVID-19 vaccine and steady oil prices lifted investor sentiments.

At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 295.48 points, or 2.02%, at 14,934.38.

U.S. stocks opened slightly lower on Tuesday, as investors booked profits following the S&P 500’s best day in six weeks in the previous session.

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The Dow Jones Industrial Average fell 19.89 points, or 0.08%, at the open to 24,577.48. The S&P 500 opened lower by 5.32 points, or 0.18%, at 2,948.59, while the Nasdaq Composite dropped 7.37 points, or 0.08%, to 9,227.46 at the opening bell.

The S&P 500 jumped more than 3% on Monday, boosted by promising early stage data for a potential COVID-19 vaccine and Federal Reserve Chair Jerome Powell’s pledge to support the economy as needed until the current crisis has passed.

Trillions of dollars in stimulus has already helped the benchmark index rebound more than 34% from its March lows. Although it is now just about 13% below its record high, the pace of the rally has slowed in May owing to uncertainty over the outbreak and rising U.S.-China tensions.

“The S&P 500 is testing a key battleground zone that halted the recovery since March and much will be decided by whether the bulls are rejected again or whether they overcome it,” said Marios Hadjikyriacos, investment analyst at online broker XM.

The euro and Italian government bonds continued on Tuesday to cheer German- and French-led plans for a 500 billion euro EU coronavirus recovery fund, though stock markets were suffering fatigue after their best day in months.

There was still a sense of optimism after Monday’s news that early-stage tests on a possible COVID-19 vaccine had also proved encouraging, but the momentum had shifted.

Europe’s STOXX 600 index gave up an early rise to slip 0.7% after surging 4% in the previous session, oil began to tread water and safe-haven U.S. government bonds were making ground again in the debt markets.

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“The Franco-German proposals are ambitious, targeted and, of course, welcome,” European Central Bank President Christine Lagarde said of Monday’s plan, which would move the EU in the direction of a so-called ‘transfer union’.

The euro was buying $1.0950, up more than 1% against the dollar since the plan was announced. It was also up near a two-month high against the Swiss franc, and options markets showed fewer traders were now betting against it.

After a sizeable drop in Italian borrowing costs, Spanish and Portuguese yields led the charge on Tuesday. Morgan Stanley’s economists called the Franco-German proposal a “powerful common response, helping to mitigate the risk of a southern slump.”

The Spanish 10-year yield fell 9 basis points to 0.715%, the lowest since early April, Portuguese yields hit their lowest since late March at 0.78% and Italy’s briefly dipped under 1.6% at one point.

“It was a meaningful breakthrough but it is not going to be plain sailing from here,” said Vasileios Gkionakis, Global Head of FX Strategy at Lombard Odier, cautioning that a number of northern EU countries had voiced resistance to the proposal.

Germany’s monthly ZEW survey showed investor sentiment rebounding more quickly than expected though there were separate warnings that the German economy will slump over 7% this year.

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Britain’s pound shrugged off the UK’s highest unemployment claims figures in nearly a quarter of a century, and a near 80% plunge in European new car sales in April contributed to 1.8% fall in auto sector shares.

Asia’s overnight moves had seen MSCI’s broadest index of Asia-Pacific shares outside Japan jump 1.8% to two-week highs and Japan’s Nikkei had added nearly 2% as the region followed Wall Street and Europe rallies.

Data from the first COVID-19 vaccine to be tested in the United States had shown it produced protective antibodies in a small group of healthy volunteers.

In the commodity markets, profit-taking saw Brent prune gains though the rally looked broadly intact amid signs that producers will stick to plans to cut output when global demand picks up.

Brent stood at $35.10 a barrel, more than double where it was in mid April, and U.S. crude was at $32.70 a month on from its collapse into negative territory.

“A powerful cocktail made of bullish ingredients have been supporting the oil market for a month … Demand is improving, supply is decreasing,” said oil broker PVM’s Tamas Varga.

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With Twitter deal on hold, Musk says a lower sale price isn't 'out of the question’ – Engadget



Billionaire Elon Musk is continuing to clash with Twitter over the accuracy of its bot count, and hinted today that he may try to renegotiate the $44 billion deal. Musk told attendees at a Miami conference that a deal at a lower price wasn’t “out of the question,” reported Bloomberg. Musk’s potential bid for a lower price is an unexpected twist, given that the SpaceX exec agreed to pay a 38 percent premium on Twitter when he reached a deal with the company’s board back in April.

“Currently what I’m being told is that there’s just no way to know the number of bots,” Musk said at the conference. “It’s like, as unknowable as the human soul.”

Musk’s potential bid for a lower price is an unexpected twist, given that the SpaceX exec agreed to pay a 38 percent premium on Twitter when he reached a deal with the company’s board back in April. 

Last Friday, Musk had announced that a buyout of Twitter was “temporarily on hold” due to concerns that the number of bots on the platform was much higher than the company estimated. The billionaire tweeted that his team would do an independent analysis on bot count and also tried to crowdsource bot estimates from his own followers. Musk was later reprimanded by Twitter’s legal team for revealing — in a tweet, of course — the company’s methodology for estimating the proportion of bot accounts across the platform.

Earlier today, Twitter CEO Parag Agrawal explained in a series of tweets that external estimates of bots are likely wrong, since the platform includes private data in its count.

“Unfortunately, we don’t believe that this specific estimation can be performed externally, given the critical need to use both public and private information (which we can’t share),” tweeted Agrawal.

Musk responded to Agrawal’s explanation with a series of his own tweets, one that included a single poop emoji. Musk also suggested that Twitter verify whether users are human or not by calling them on the phone.

Tesla expert Dan Ives — an analyst at financial advisory firm Wedbush Securities — put the chances of Musk going through with the deal at under 50 percent. If Musk chooses to walk away, he’ll be subject to a $1 billion “kill fee”. But according to legal experts who spoke to The Washington Post, Twitter could sue Musk for the financial damages inflicted on the company due to the hasty reversal of the deal.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.

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Did Elon Musk violate Twitter's NDA agreement? Former SEC Chair Jay Clayton weighs in – CNBC Television



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Ukraine war: McDonald's to sell its Russian business – CTV News



More than three decades after it became the first American fast food restaurant to open in the Soviet Union, McDonald’s said Monday that it has started the process of selling its business in Russia, another symbol of the country’s increasing isolation over its war in Ukraine.

The company, which has 850 restaurants in Russia that employ 62,000 people, pointed to the humanitarian crisis caused by the war, saying holding on to its business in Russia “is no longer tenable, nor is it consistent with McDonald’s values.”

The Chicago-based fast food giant said in early March that it was temporarily closing its stores in Russia but would continue to pay its employees. Without naming a prospective Russian buyer, McDonald’s said Monday that it would seek one to hire its workers and pay them until the sale closes.

CEO Chris Kempczinski said the “dedication and loyalty to McDonald’s” of employees and hundreds of Russian suppliers made it a difficult decision to leave.

“However, we have a commitment to our global community and must remain steadfast in our values,” Kempczinski said in a statement, “and our commitment to our values means that we can no longer keep the arches shining there.”

As it tries to sell its restaurants, McDonald’s said it plans to start removing golden arches and other symbols and signs with the company’s name. It said it will keep its trademarks in Russia.

Western companies have wrestled with extricating themselves from Russia, enduring the hit to their bottom lines from pausing or closing operations in the face of sanctions. Others have stayed in Russia at least partially, with some facing blowback.

French carmaker Renault said Monday that it would sell its majority stake in Russian car company Avtovaz and a factory in Moscow to the state — the first major nationalization of a foreign business since the war began.

For McDonald’s, its first restaurant in Russia opened in the middle of Moscow more than three decades ago, shortly after the fall of the Berlin Wall. It was a powerful symbol of the easing of Cold War tensions between the United States and Soviet Union, which would collapse in 1991.

Now, the company’s exit is proving symbolic of a new era, analysts say.

“Its departure represents a new isolationism in Russia, which must now look inward for investment and consumer brand development,” said Neil Saunders, managing director of GlobalData, a corporate analytics company.

He said McDonald’s owns most of its restaurants in Russia, but because it won’t license its brand, the sale price likely won’t be close to the value of the business before the invasion. Russia and Ukraine combined accounted for about 9% of McDonald’s revenue and 3% of operating income before the war, Saunders said.

McDonald’s said it expects to record a charge against earnings of between US$1.2 billion and $1.4 billion over leaving Russia.

Its restaurants in Ukraine are closed, but the company said it is continuing to pay full salaries for its employees there.

McDonald’s has more than 39,000 locations across more than 100 countries. Most are owned by franchisees — only about 5% are owned and operated by the company.

McDonald’s said exiting Russia will not change its forecast of adding a net 1,300 restaurants this year, which will contribute about 1.5% to companywide sales growth.

Last month, McDonald’s reported that it earned $1.1 billion in the first quarter, down from more than $1.5 billion a year earlier. Revenue was nearly $5.7 billion.


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