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Stocks, Futures Drop; Bonds Steady Post-Powell: Markets Wrap – Yahoo Canada Finance

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(Bloomberg) — Stocks fell with U.S. and European equity futures Wednesday as investors balanced the risk of stronger inflation driving global rates higher against the Federal Reserve’s pledge of continued policy support.

A gauge of Asian shares slid the most in almost a month, with Hong Kong equities tumbling on the city’s plan to raise stamp duty on stock trading for the first time since 1993. Chinese gauges retreated for a third day.

The S&P 500 Index reversed losses Tuesday to close in the green following Fed Chair Jerome Powell’s message that the central bank was nowhere close to unwinding its easy policy. Cyclicals outperformed, while the tech heavy Nasdaq 100 closed lower despite a late rally.

Ten-year Treasury yields held just below the one-year high reached Monday. The dollar dipped. The New Zealand dollar advanced even as the central bank said “prolonged” stimulus was needed. Oil declined after an industry report pointed to the first gain in U.S. crude stockpiles in five weeks.

Powell voiced cautious expectations for a return to more-normal activity later this year and said that higher bond yields reflected economic optimism, not inflation fears. While that helped assuage some investors betting on a global recovery spurred by vaccines and fiscal aid, there are also lingering concerns that stock valuations are stretched.

“The market — while applauding impending fiscal largesse, stronger economic growth, and a markedly more positive earnings outlook — can’t help but wonder whether inflationary pressures will remain ‘transient,’ to use Fed Chairman Jerome Powell’s favorite word,” said Quincy Krosby, chief market strategist at Prudential Financial.

A vote on President Joe Biden’s $1.9 trillion Covid-19 relief bill is due to be held in the House of Representatives on Friday. Money-market traders have pulled forward their rate-hike expectations since the start of this year, and now see the Fed raising interest rates a quarter point by the middle of 2023.

Commodities stabilized after their recent run-up, with the Bloomberg Commodity Spot Index just shy of its highest level since 2013. Elsewhere, Bitcoin rallied and hovered around $50,000 after a bout of volatility highlighted lingering doubts about the durability of the token’s gains.

Some key events to watch this week:

EIA crude oil inventory report is out Wednesday.Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.

These are some of the main moves in markets:

Stocks

S&P 500 futures fell 0.4% as of 7:06 a.m. in London. The S&P 500 index rose 0.1% on Tuesday.Japan’s Topix index dipped 1.8%.South Korea’s Kospi index fell 2.5%.Australia’s S&P/ASX 200 Index shed 0.9%.Hong Kong’s Hang Seng Index tumbled 3%.Shanghai Composite Index fell 2%.Euro Stoxx 50 futures lost 0.1%.

Currencies

The yen fell 0.3% to 105.51 per dollar.The offshore yuan was at 6.4599 per dollar.The Bloomberg Dollar Spot Index shed 0.1%.The euro bought $1.2159, rising 0.1%.The pound jumped 0.6% to $1.4198.

Bonds

The yield on 10-year Treasuries held at about 1.34%.Australia’s 10-year bond yield rose five basis points to 1.61%.

Commodities

West Texas Intermediate crude fell 0.4% to $61.40 a barrel.Gold was up 0.1% at $1,807.35 an ounce.

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Japan’s SoftBank returns to profit after gains at Vision Fund and other investments

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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.

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Yuri Kageyama is on X:

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Trump campaign promises unlikely to harm entrepreneurship: Shopify CFO

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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.

Companies in this story: (TSX:SHOP)

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RioCan cuts nearly 10 per cent staff in efficiency push as condo market slows

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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.

Companies in this story: (TSX:REI.UN)

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