Stock markets rallied on Monday as the Bank of Japan added more stimulus to cushion the impact of the coronavirus and investors cheered news more countries were easing lockdowns, though the oil price took another tumble with storage running short.
The Bank of Japan matched market speculation by pledging to buy unlimited amounts of government bonds and sharply raising purchases of corporate and commercial debt, the latest in a raft of vast central bank stimulus plans that have helped propel a near 25% rally in global stock markets.
The Federal Reserve and the European Central Bank meet later in the week, with the latter likely to do more bond buying.
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Chris Scicluna, head of economic research at Daiwa Capital Markets, said while he expected both meetings to focus chiefly on implementing current commitments, “there might well be tweaks… to their various purchase and liquidity programmes”.
The Euro STOXX 600 rose 1.8%, following on from decent gains on Asian markets. Germany’s DAX rose 2.37%, France’s CAC 40 1.93% and Britain’s FTSE 100 1.66%.
Wall Street also looked set to open higher, with S&P futures 0.7% ahead.
The MSCI world equity index, which tracks shares in 49 countries, rose 0.78%. The index is now up 25% from its low point on March 23, but is still some 22% off the highs in February before panic over the virus caused markets to tank.
Around 173 companies in the S&P 500 will report earnings this week, including Apple, Amazon, Facebook , Microsoft, Caterpillar, Ford, General Electric and Chevron.
Analysts expect a 15% decline in S&P 500 first-quarter earnings, with profits for the energy sector estimated to have slumped more than 60%, raising fears of debt defaults.
The United States and European Union both release first-quarter economic growth numbers this week, while the U.S. will also unveil the influential ISM survey on manufacturing.
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But not everyone thinks the current crop of data is as relevant for markets, which have recently shrugged off huge rises in U.S. jobless claims to focus on how quickly economies will rebound as government-imposed lockdowns are lifted.
“I don’t know why people pay so much attention to today’s data. We know it’s all bad. The new information will come in the summer,” said Stephen Jen, co-founder of hedge fund Eurizon SLJ Capital.
He said the “tug of war” between those predicting a sharp v-shaped rebound and those expecting a slower recovery would not begin in earnest until May’s data.
More U.S. states prepared to ease restrictions on commerce this week despite health experts warning that there is still too little testing in place, while some European countries further eased their lockdowns.
OIL DROPS, ITALY GETS REPRIEVE
Oil prices weakened sharply again and looked set for another volatile week.
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Crude prices have fallen in eight of the last nine weeks, with U.S. crude even trading below zero last week as demand collapsed due to the pandemic and supply cuts failed to keep up, leaving more oil than could be stored.
U.S. crude slid $2.29 to $14.65, while Brent crude futures slipped $1.1 to $20.34 a barrel.
Italian government bond yields dropped between 14 and 17 basis points after S&P Global late Friday left the country’s credit rating in investment grade territory.
Investors had feared the ratings agency would cut heavily-indebted Italy to ‘junk’.
Benchmark German 10-year bond yields were little changed, while U.S. Treasury yields rose marginally.
The U.S. dollar dipped as the broader upbeat mood encouraged investors to move back into other currencies. The euro inched higher to $1.0833, while sterling gained 0.3% and the Japanese yen a similar amount.
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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.
