(Bloomberg) — U.S. index futures indicated a positive start for the week, with contracts rebounding after the Bank of Japan issued an emergency statement to support market stability.. Shares in Europe climbed, oil jumped while the U.S. dollar traded lower.
Following a decline of more than 2% earlier, contracts on the S&P 500 quickly erased the plunge and rallied as much as 2.2%, with investors drawing optimism from the BOJ comment that it will provide “ample liquidity” through market operations and asset purchases. The move came after the Federal Reserve issued an unscheduled statement on Friday, opening the door for a rate cut this month.
Significant bad news was been priced into equities during a seven-day retreat that included the worst week since the Financial Crisis, as investors assess impact from the coronavirus on travel and supply chains. The news got worse since markets were last open, though calls for a Fed rate-cut intensified, with President Donald Trump saying the central bank should act.
“The unknown hit to growth aside, Fed Chair Powell signaled the FOMC’s willingness to ease policy in response to the outbreak, which is consistent with the Fed’s primary goal of easing financial conditions to extend the cycle,” Dennis Debusschere, head of portfolio strategy at Evercore ISI, wrote in a note. “They will use every tool possible to achieve that goal.”
The volatility highlighted the fragility of investor confidence as the virus outbreak worsens. Expectations for Fed intervention boosted spirits into the close on Friday, when investors poured into stocks to cut a drop that reached 4% to just 0.8% after Chairman Jerome Powell opened the door to a reduction by issuing a rare statement pledging to “act as appropriate” to support the economy.
“News from the Fed on Friday is being seen as one of the catalysts for the move,” said Nick Twidale, general manager of IC Markets in Sydney. “It’s going to be a battle between any further bad news on the coronavirus spread and central bank reaction this week for traders and investors, and this will probably lead to increased volatility as uncertainty continues to reign.”
The Stoxx Europe 600 Index advanced 2% as of 8:39 a.m. in London, with energy and food and beverage shares rising the most among sectors. Indexes in Tokyo, Hong Kong, Shanghai and Seoul also climbed.
Calls for an emergency cut mounted over the weekend, and President Donald Trump said the Fed should lower rates. Bank of America now expects the central bank to shave 50 basis points at its March meeting. Bank of Japan quickly showed what kind of action it would take by offering to buy 500 billion yen ($4.6 billion) of government bonds with a repurchase agreement to provide liquidity to market participants.
Doubt persisted that rate cuts will actually be able to stimulate activity amid a health emergency that threatens to reduce both supply and demand in the economy. China’s manufacturing sector saw activity contract sharply in February, with the official gauge hitting the lowest level on record, highlighting the devastating impact of the coronavirus on the economy.
“The China PMIs were expected to be really bad, but they were off the charts bad,” said Nathan Thooft, Manulife Asset Management’s head of global asset allocation. “Unfortunately the news on a U.S. death seemed inevitable. Human tragedy, but expected. From an investment and consumer sentiment perspective, it’s another level of worry that will be on people’s minds.”
Goldman Sachs economists now expect the virus to inflict a “short-lived global contraction” on the world economy that forces the Fed to slash rates in the first half.
Trump said Saturday that investors should take solace from the strength of the American consumer, even as his virus task force warned the number of cases would likely rise.
“The markets will all come back,” Trump said. “The markets are very strong, the consumer is unbelievably strong, the companies are very strong. It’s certainly not a good situation, when you lose travel that’s a big part of market.”
While the virus broke out in China in late January, the threat to American markets didn’t register until Feb. 19 — three days after Apple Inc. warned that its sales would be hampered by the outbreak. The S&P 500 closed at a record that day. Since then, the number of companies cutting revenue and profit targets has surged. Stocks have plunged 13%, leaving the bull market’s vitality in jeopardy.
“The problem is people faded this right out of the gate, and now it’s not going away overnight,” Dan McMurtrie, founder and portfolio manager at Tyro Partners, said by phone. “People trying to buy the dip are getting run over.”
–With assistance from Luke Kawa, Claire Ballentine, Vildana Hajric, Lu Wang, Jackie Edwards and Filipe Pacheco.
To contact the reporter on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Naoto Hosoda, Lianting Tu
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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.
