Global stock markets and oil prices plunged Monday after a fight among major crude-producing nations jolted investors who already were on edge about the surging costs of a virus outbreak.
The main stock indexes in London and Frankfurt were down by almost 7 per cent. Tokyo closed down 5.1 per cent while Sydney lost 7.3 per cent and Shanghai was off 3 per cent.
Trading in Wall Street futures was halted after they fell more than the daily limit of 5 per cent. Bond yields hit new lows as investors bought them up as safe havens.
The benchmark U.S. crude price was down over 20 per cent to their lowest levels since 2016. They were down as much as 30 per cent earlier, deepening a rout that began when Saudi Arabia, Russia and other major producers failed to agree on cutting output to prop up prices. A breakdown in their co-operation suggested they will ramp up output just as demand is sliding.
Investors usually welcome lower energy costs for businesses and consumers. But it can also hurt producers, such as oil companies. The last time crude prices fell this low, in 2015, the U.S. saw a raft of bankruptcies by smaller energy companies.
The abrupt plunge in markets added to the anxiety over the coronavirus, rattling markets and sending investors in search of safe havens like bonds.
“A blend of shocks have sent the markets into a frenzy on what may only be described as `Black Monday,”‘ said Sebastien Clements, analyst at financial payments platform OFX.
“A combination of a Russia vs. Saudi Arabia oil price war, a crash in equities, and escalations in coronavirus woes have created a killer cocktail to worsen last week’s hangover.”
In Saudi Arabia, the Riyadh stock exchange suspended trading of state-owned oil giant Saudi Aramco after its share price sank by the daily 10 per cent limit at the opening.
Investors already were on edge about the mounting costs of the coronavirus outbreak that began in China and has disrupted world travel and trade.
Anxiety rose after Italy announced it was isolating cities and towns with some 16 million people, or more than one quarter of its population, in its industrial and financial heartland.
In Europe, London’s FTSE 100 tumbled 6.5 per cent to 6,039 after opening down by more than 8 per cent. Frankfurt’s DAX shed 6.2 per cent to 10,825 and the CAC 40 in France lost 6.7 per cent to 4,797. Italy’s FTSE MIB plunged 9.8 per cent to 18,755.
On Wall Street, trading in futures for the Dow Jones Industrial Average and the S&P 500 was frozen after both fell by more than 5 per cent, a daily limit. The last time they were frozen was just after U.S. President Donald Trump was elected in 2016.
Companies have been hit by travel and other controls that are spreading worldwide as the global number of coronavirus infections rose past 110,000 worldwide.
Tokyo’s Nikkei 225 fell to 19,698.76 after the government reported the economy contracted 7 per cent in the October-December quarter, worse than the original estimate of a 6.3 per cent decline. That was before the viral outbreak slammed tourism and travel but after a sales tax hike dented consumers’ appetite for spending.
Hong Kong’s Hang Seng sank 4.2 per cent to 25,047.42. The Shanghai Composite Index declined to 2,943.29.
The S&P-ASX 200 in Sydney retreated to 5,760.60. The Kospi in Seoul lost 4.2 per cent to 1,954.77.
India’s Sensex retreated 6.2 per cent to 35,255.73. Markets in Taiwan, New Zealand and Southeast Asia also declined.
Benchmark U.S. crude fell 21.9 per cent, or $9.03, to $32.25 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost 20.7 per cent, or $9.32, to $35.95 per barrel in London.
The International Energy Agency said in a report Monday that oil demand could fall this year for the first time since the global financial crisis in 2009.
“The oil price will stay low” in the $30s per barrel, IEA chief Fatih Birol said.
The dollar sank to 102.41 yen from Friday’s 105.29 yen. Investors in Asia often buy up the Japanese currency and bonds in times of volatility. The euro advanced to $1.1408 from $1.1289.
Chinese factories that make the world’s smartphones, toys and other consumer goods are gradually reopening but aren’t expected to return to normal production until at least April. That weighs on demand for imports of components and raw materials from China’s Asian neighbours.
Apple Inc. says slowdowns in manufacturing iPhones in China will hurt its sales totals. An airline industry group says carriers could lose as much as $113 billion in potential ticket sales.
Adding to pessimism, China reported Saturday that its exports fell 17 per cent and imports were off 4 per cent from a year earlier in January and February after Beijing shut factories, offices and shops in the most severe anti-disease measures ever imposed.
Central banks worldwide have cut interest rates. But economists warn that while that might help to encourage consumer and corporate spending, it cannot reopen factories that are due to quarantines or a lack of workers and raw materials.
Investors are looking ahead to a meeting Thursday of the European Central Bank, which is widely expected to announce new stimulus measures.
Already last week, global stocks were sinking as the spread of the virus prompted governments to follow China’s lead by imposing travel controls and cancelling public events.
The U.S. Federal Reserve’s emergency 0.5 per cent cut in its key lending rate failed to reverse the downturn and the yield on the 10-year Treasury, already at record lows, dipped under 0.40 per cent from 0.7 per cent late Friday.
The yield – the difference between a bond’s market price and what investors will receive if they hold it to maturity – is an indicator of the market’s outlook on the economy. Rising market prices that cause the yield to narrow indicate investors are shifting money into bonds as a safe haven.
“Global recession risks have risen,” Moody’s Investors Service said in a report. “A sustained pullback in consumption, coupled with extended closures of businesses, would hurt earnings, drive layoffs and weigh on sentiment.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
