U.S. stocks fell for a second day and Treasuries gained as signs of a gradual economic recovery added to investor anxiety over the level of stimulus.
The S&P 500 opened lower, weighed down by the technology, consumer discretionary and energy sectors. The tech heavy Nasdaq Composite fell more. Global equities were already in retreat after Federal Reserve Chair Jerome Powell highlighted risks to the recovery in the central bank’s policy decision Wednesday, the last before the U.S. presidential election on Nov. 3.
“The Fed’s enchantment of easy money remains — but markets are a feeling a bit lethargic,” said Yousef Abbasi, global market strategist at StoneX. “Is this just a bit of an FOMC hangover or does it signal the first signs of a loss of confidence in Fed policy? It is likely too early for the latter — but that is a scenario that will need to be closely monitored into year-end.”
The number of Americans applying for jobless benefits resumed its decline, while continuing claims fell by almost 1 million in the week ended Sept. 5.
Tech stocks slid as much as 2% in Europe after giants Apple Inc. and Facebook Inc. tumbled late Wednesday. Automakers slumped after data showed European car sales plunged by nearly a fifth in August. The dollar edged higher.
All eyes remain on central bankers and their role in propping up economies still reeling from the coronavirus shock. Bank of England policymakers said they were exploring negative rates to counter ongoing risks to the labor market after voting unanimously to maintain their key interest rate at 0.1%, causing the pound to slide to an intraday low. Earlier the Bank of Japan kept its asset-purchases and bond-yield targets in place.
Recent flare-ups of the virus and a fading post-pandemic recovery have renewed calls for more fiscal support as well. Fed officials have stressed in recent weeks that the U.S. recovery is highly dependent on the nation’s ability to better contain infections, and that further fiscal stimulus is likely needed to support jobs and incomes.
“Consumer sentiment data and the employment picture still reflect a fragile economic recovery,” said Matt Miskin, co-chief investment strategist at John Hancock Investments. “Powell did not bring up the need for further fiscal support multiple times yesterday just for the sake of it. Monetary policy has its limits, the lack of fiscal policy support leaves significant risks to this recovery.”
Meanwhile, the White House strongly signaled Wednesday that it is willing to increase its offer in talks with Democrats, and that Senate Republicans should go along in order to seal a stimulus deal in the next week to 10 days.
Elsewhere, WTI crude oil slipped to around $40 a barrel. Gold declined.
These are some of the main moves in markets:
Stocks
The S&P 500 Index decreased 1.6% to 3,333.36 as of 9:33 a.m. New York time, the lowest in more than a week.
The Dow Jones Industrial Average fell 1.3% to 27,667.31, the first retreat in a week.
The Nasdaq Composite Index declined 2% to 10,834.97, the lowest in five weeks on the largest fall in more than a week.
The Nasdaq 100 Index fell 2.2% to 11,012.04, the lowest in five weeks on the biggest fall in more than a week.
The Stoxx Europe 600 Index fell 0.9% to 369.75, the first retreat in a week and the largest fall in more than a week.
Currencies
The Bloomberg Dollar Spot Index advanced 0.1% to 1,165.93, the first advance in a week.
The euro fell 0.2% to $1.1794, the weakest in more than a week.
The Japanese yen appreciated 0.3% to 104.61 per dollar, the strongest in about six months.
Bonds
The yield on 10-year Treasuries declined four basis points to 0.66%, the lowest in almost two weeks on the largest fall in more than a week.
The yield on 30-year Treasuries declined five basis points to 1.41%, the biggest fall in more than a week.
Germany’s 10-year yield declined two basis points to -0.50%, the lowest in almost four weeks.
Commodities
West Texas Intermediate crude fell 0.8% to $39.81 a barrel.
Gold depreciated 1.1% to $1,936.55 an ounce, the weakest in more than a week on the biggest tumble in two weeks.
Copper declined 0.6% to $3.04 a pound.
–With assistance from Kamaron Leach and Claire Ballentine.
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.
