Equities and oil prices fell through the floor again on Thursday after Donald Trump banned all travel from Europe to the US for a month to fight the coronavirus, ramping up fears the global economy will careen into recession.
As the disease showed no signs of abating, claiming more lives and infecting more people around the world, the US president said in a rare address to the nation that the ban would be in place for 30 days.
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The news came after the World Health Organization officially labelled the outbreak a pandemic and hit out at “alarming levels of inaction” for its spread.
Asian equity markets, already deep in the red in reaction to the WHO announcement, cratered after Trump’s address.
Tokyo, Hong Kong, Seoul, Singapore and Jakarta all lost more than three percent, while Sydney, Manila and Mumbai plunged more than six percent and Bangkok collapsed more than eight percent.
Wellington was five percent down and Taipei gave up more than four percent. Shanghai was down 1.5 percent.
The Japanese yen, a key haven in times of crisis and economic turmoil, jumped more than one percent against the dollar.
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“Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell… after a massively negative signal from trading in US markets it just fell in your lap,” said AxiCorp’s Stephen Innes.
The losses followed another brutal session on Wall Street, with wave after wave of bad news, including Hilton withdrawing its earnings forecast and Boeing saying it would suspend most hiring and overtime pay.
The Dow fell into a bear market having lost more than 20 percent since its recent high, and futures pointed Thursday to another rout in New York and Europe.
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The coronavirus outbreak has left virtually no sector untouched, though travel and tourism have been particularly hard-hit as countries institute travel bans and quarantine requirements, with Italy in a country-wide lockdown.
The number of cases across the globe has risen to more than 124,000 with 4,500 deaths, including a jump in fatalities particularly in Iran and Italy, according to an AFP tally.
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In announcing the Europe ban — which excludes Britain — Trump said the continent had seen a surge in new cases because governments failed to stop travel from China, where the COVID-19 epidemic began.
He said the prohibitions would also “apply to the tremendous amount of trade and cargo,” and “various other things as we get approval”.
However, the White House afterwards clarified that “the people transporting goods will not be admitted into the country, but the goods will be”.
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Oil prices were also hammered, with both main contracts falling around six percent at one point before edging back slightly. The oil market was already under pressure after Saudi Arabia and Gulf partner UAE stepped up a price war with plans to flood the global markets.
“We are now staring at the whole world going into a lockdown,” Vandana Hari, of Vanda Insights, said. “Oil demand can be expected to crash through the floor and all previous projections on oil consumption are now out the door.”
The Saudi move was the latest escalation of a fight among oil producers after Russia balked at an OPEC-backed plan to cut production in response to lost demand because of the coronavirus.
“Markets are crying out for a co-ordinated response to COVID-19 headwinds and a lack of concrete US policy action is rattling markets,” said Tapas Strickland, senior analyst at National Australia Bank.
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Trump’s address included several measures intended to ease the financial burden particularly for small business, including payroll tax relief and deferred tax payments.
But he did not unveil any large-scale tax cuts, which OANDA’s Jefrey Halley said “has probably disappointed markets more than anything”.
Katrina Ell, senior Asia-Pacific economist at Moody’s Analytics, said the overall economic toll of the crisis has yet to be determined.
“While a health epidemic typically brings a strong revival in activity after containment, the COVID-19 outbreak has not reached that point, and the economic toll has increased,” she said in a note.
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The bloodbath across global trading floors has come despite a raft of measures by governments worth at least $150 billion to offset the impact of the disease, while central banks will be called upon to cut already low interest rates and introduce other fiscal measures.
German Chancellor Angela Merkel has said she will do “whatever is necessary” to help the economy, while the European Central Bank is to hold a policy meeting later in the day at which it is under pressure to open up the taps.
Tokyo – Nikkei 225: DOWN 3.7 percent at 18,687.12
Hong Kong – Hang Seng: DOWN 3.5 percent at 24,351.78
Shanghai – Composite: DOWN 1.5 percent at 2,925.24
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Brent North Sea crude: DOWN 4.6 percent at $34.16 per barrel
West Texas Intermediate: DOWN 4.6 percent at $31.48 per barrel
Dollar/yen: DOWN at 103.90 yen from 104.54 yen
Euro/dollar: UP at $1.1300 from $1.1276 at 2100 GMT
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Pound/dollar: DOWN at $1.2814 from $1.2825
Euro/pound: UP at 88.15 pence from 87.91 pence
New York – Dow: DOWN 5.9 percent at 23,553.22 (close)
London – FTSE 100: DOWN 1.4 percent at 5,876.52 (close)
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.
