A rally on Wall Street evaporated after the price of crude oil took a sudden turn lower, deflating gains in the energy sector. Major indexes ended slightly lower Tuesday after being up more than 3 per cent earlier. The market was coming off an even bigger gain of 7 per cent the day before. The rally faded after the price of U.S. oil flipped from a gain to a steep loss of more than 9 per cent.
It had otherwise been an ebullient day for markets worldwide following encouraging signs that the coronavirus pandemic may be close to levelling off in some of the hardest-hit areas of the world.
The late sell-off dampened what had been an ebullient day for markets worldwide, following up on Monday’s 7 per cent surge for the S&P 500 on encouraging signs that the coronavirus pandemic may be close to levelling off in some of the hardest hit areas of the world.
Even though economists say a punishing recession is inevitable, the stock market this week has been looking ahead to when economies will reopen from their medically induced coma. A peak in new infections would offer some clarity about about how long the recession may last and how deep it will be.
Investors could then, finally, envision the other side of the economic shutdown, after authorities forced businesses to halt in hopes of slowing the spread of the virus. In the meantime, governments around the world are approving or discussing trillions of dollars more of aid for the economy.
Many professional investors say they’ve been wary of the recent upsurge and expect more volatility ahead. Those concerns were borne out Tuesday, when the S&P 500 swung up, down, up, down and back up again through the day. It is nevertheless on track to eke out one of the few back-to-back gains for the market since the coronavirus outbreak caused it to start selling off in mid-February.
“We are still in what you would call the relief rally off of the prior low,” said Sam Stovall, chief investment strategist at CFRA. He noted that this kind of a rally is common within deep bear markets, Wall Street-speak for when stocks decline 20 per cent or more from a peak.
“There’s no guarantee that the worst is behind us, yet traders believe that at least there is some short-term money to be made,” Stovall said.
The Dow Jones Industrial Average closed down 26 points after leaping 900 points at opening.
In Toronto, the TSX eked out a small gain of 21 points, after earlier having been up by as much as 450 points.
Oil plunges again
Oil prices have been even more volatile than the stock market in recent weeks as demand dries up for energy amid a global economy weakened by the coronavirus outbreak. Russia and Saudi Arabia have also been locked in a price war, refusing to cut production even as the world is awash in excess oil.
President Donald Trump said last week that he hoped and expected the two sides could agree on production cutbacks, which helped prices spurt higher temporarily. But investors still aren’t convinced they can reach a deal, and benchmark U.S. crude oil fell $2.45, or 9.4 per cent, to settle at $23.63 per barrel.
Oil from Canada’s oilsands lost more than half it’s value, closing down $5 a barrel to $3.92.
Earlier in the trading day, stock markets in Europe and Asia climbed before oil’s downward shift.
They rallied after China, the first country to lock down wide swaths of its economy to slow the spread of the virus, authorities reported no new deaths over the past 24 hours. Many experts, though, are skeptical of China’s virus figures.
Investors also see signals that the number of daily infections and deaths may be close to peaking or plateauing in Spain, Italy and New York. The number of daily deaths rose in New York, the centre of the U.S. outbreak, but other statistics were more encouraging, including the average number of people hospitalized each day.
Experts say more deaths are on the way due to COVID-19, which has already claimed at least 76,000 lives around the world. The U.S. leads the world in confirmed cases with more than 369,000, according to a tally by Johns Hopkins University.
More economic misery is also on the horizon. Economists expect a report on Thursday to show that 5 million Americans applied for unemployment benefits last week as layoffs sweep the country. That would bring the total to nearly 15 million over the past three weeks. Analysts also expect big companies in upcoming weeks to report their worst quarter of profit declines in more than a decade.
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.
