April 19, 2023
- Glencore Plc said it’s willing to raise its bid for Teck Resources Ltd. in the latest attempt to sway shareholders and pressure Teck’s board, with just one week to go before a pivotal vote on the Canadian miner’s future. The companies have spent the past few weeks in a bruising fight to win over Teck investors, after its board and controlling shareholder publicly rejected Glencore’s proposal. The Swiss commodities giant offered to buy Teck for $23 billion and then create two new companies combining their respective metals and coal businesses. Teck is pressing ahead instead with an earlier plan to spin off its own coal mines — with an investor vote scheduled for April 26 — while raising the possibility of a sale afterward. With the prospect of a higher bid, Glencore is hoping to convince enough shareholders to either reject the split or pressure Teck’s board to delay the vote and enter talks. Glencore is prepared to raise its offer, the company said on Wednesday, but believes any improvement should come after discussions with the board.
- More than 155,000 federal workers in Canada went on strike after wage talks with Prime Minister Justin Trudeau’s government failed. The labor disruption is expected to impede government functions including the release of economic data from Statistics Canada, passports and immigration applications. More than 35,000 of the workers are employed by the Canada Revenue Agency, the country’s tax-collection body. However, the government has said it doesn’t plan to extend the May 1 deadline for filing personal income taxes. Workers walked off the job at 12:01 a.m. Ottawa time on Wednesday. “We truly hoped we wouldn’t be forced to take strike action, but we’ve exhausted every other avenue to reach a fair contract,” Public Service Alliance of Canada President Chris Aylward told reporters Tuesday night.
- European stocks edged lower as UK’s inflation exceeded expectations, fueling bets on another rate hike, and as investors monitored corporate earnings reports. The Stoxx 600 Index dipped 0.4% by 10:57 a.m. in London. Miners and real estate led the declines, while defensive sectors like food and utilities, outperformed. The FTSE 100 fell 0.4% and the more domestically-focused FTSE 250 dropped 0.7% as UK Consumer Prices Index rose 10.1% from a year ago, driven by the strongest increase in food prices in more than four decades. European shares have recovered from the banking-led March declines and the main regional benchmark recently reached the highest level since February 2022. Investors are now turning their attention to the earnings season with guidance for the rest of the year in focus amid a looming recession.
- US equity futures retreated along with European stocks while bond yields rose as traders assessed the latest corporate earnings reports against the backdrop of yet another hot inflation print from one of the world’s major economies. Contracts on the rates-sensitive Nasdaq 100 fell about 0.8%, while those on the S&P 500 were down 0.5% ahead of the next batch of earnings reports by US banks. Tesla Inc. dropped in premarket trading after the electric-vehicle maker cut prices on some models ahead of first-quarter results due later Wednesday. Netflix Inc. slipped after missing subscriber estimates. The Treasury 10-year yield rose 4 basis points. A gauge of the dollar gained.
- Asian stocks fell as Chinese shares struggled to find footing after mixed economic data released Tuesday, while investors parsed the latest comments from Federal Reserve officials on interest-rate hikes. The MSCI Asia Pacific Index dropped as much as 0.9%, led by consumer discretionary and technology shares. Hong Kong and Chinese benchmarks led losses around the region, while South Korea edged closer to a bull market. Australia also advanced. The latest set of Chinese economic data showed an uneven recovery picture, while hopes for further stimulus have been dampened. That has kept a lid on investor enthusiasm as it signals China’s recovery will likely be gradual, even though the worst may be over after its reopening from Covid Zero
- Oil fell as concerns over an uneven demand recovery and slowing economic growth due to monetary tightening offset signs of shrinking stockpiles. West Texas Intermediate dropped below $80 a barrel after closing little changed Tuesday. The recovery in fuel consumption has been uneven as Asia grapples with a flood of Russian oil into an already well-supplied market. Refiners in the region are mulling run cuts as profits from turning crude into products such as diesel plunge, while timespreads for benchmark Dubai grade weakened. Crude recently rebounded after tumbling to a 15-month low in mid-March following turmoil in the banking sector. A surprise announcement by OPEC+ on production cuts and curbed Iraqi flows have underpinned some of the gains. After oil inventories crept up over the past year, the producers’ group is looking to force consumers to take oil out of storage, helping underpin prices even amid tentative demand growth.
- Gold fell below $2,000 an ounce, under pressure from the strengthening dollar, as traders focused on the Federal Reserve’s next move. The metal fell as much as 1.4% on Wednesday after finishing higher in the previous session. Treasury yields and the greenback both rebounded, putting pressure on non-interest bearing bullion. Gold is still holding much of its rally since early March, even as traders price in further monetary tightening in the US this year with inflation remaining above target. A report Tuesday showed strong wage gains now outpacing spiraling prices in the economy, giving the Fed reason to hike rates further. Spot gold fell 1.3% to $1,978.92 an ounce as of 10:13 a.m. in London, after gaining 0.5% Tuesday. The Bloomberg Dollar Spot Index strengthened 0.2%. Silver, platinum and palladium fell.
- US mortgage rates increased last week by the most in two months to 6.43%, denting already sluggish demand. The contract rate on a 30-year fixed mortgage rose 13 basis points, abruptly ending a five-week slide in borrowing costs, Mortgage Bankers Association data showed Wednesday. The group’s index of mortgage applications for home purchases dropped 10% in the week ended April 14, the steepest decline in two months. High borrowing costs — now even higher — have not only stifled buyer activity over the past year but also discouraged many Americans from listing their homes in the first place, straining inventory and further limiting sales. With the Federal Reserve set on taming inflation, and potentially raising interest rates even higher, it’s not clear when the housing market will manage to regain momentum.
- Goldman Sachs Group Inc. has been hit by additional departures in its Asia equities team, with key exits in Tokyo and Hong Kong to rival banks and hedge funds. Among those that left recently are managing directors Fredrik Grunberger in Hong Kong and Tomiyuki Oji and David Williams in Tokyo, according to people familiar with the matter. Oji is poised to join Nomura Holdings Inc., the people said, asking not to be identified as the details are private. Goldman has seen a wave of departures of veterans in its Asia equities business. Among those was Canute Dalmasse, the firm’s co-head of equities distribution and execution for Asia-Pacific. Four other senior executives also left over the past 12 months.
- Britain’s inflation rate remained stubbornly high in double digits in March, another surprisingly strong reading that will strengthen the case for more interest rate rises at the Bank of England. The Consumer Prices Index rose 10.1% from a year ago, driven by the strongest increase in food prices in more than four decades, the Office for National Statistics said Wednesday. Economists had expected a slowdown to 9.8%. Investors quickly moved to price in further rate hikes from the Bank of England, continuing the quickest tightening cycle in four decades. Policy makers led by Governor Andrew Bailey had signaled a pause was possible if inflationary pressures subsided, but today’s reading suggests that prices in the UK have more momentum than in the US or eurozone.
- CK Hutchison Holdings Ltd. is set to fetch about €3 billion ($3.3 billion) from the sale of a majority stake in its Italian network infrastructure portfolio to private equity firm EQT AB, people with knowledge of the matter said. The conglomerate is putting the finishing touches on a deal to spin off the infrastructure assets of its Italian unit, Wind Tre SpA, into a new company and sell a 60% stake to EQT, the people said, asking not to be identified because the information is private. Final terms of the transaction could be announced as soon as the next few days, according to the people. Shares of CK Hutchison were up 0.1% at 3:29 p.m. Wednesday in Hong Kong, giving the company a market value of $24.8 billion, while the city’s benchmark Hang Seng Index was down 1.2%.
- Tesla Inc. shares fell after the carmaker cut prices in the US for the second time this month, further demonstrating Elon Musk’s willingness to sacrifice profitability for demand. The Austin, Texas-based company marked down each version of its Model Y sport utility vehicle by $3,000. It also cut the cost of the base Model 3 by 4.7% to less than $40,000 for the first time in years. This is Tesla’s second price cut in the US this month after several quarters of deliveries fell short of some analysts’ expectations. The company is in the rare position among EV makers of having profit margins to work with, as incumbents including Ford Motor Co. and newer entrants like Rivian Automotive Inc. and Lucid Group Inc. struggle to make money at lower volumes.
- JPMorgan Asset Management is warning investors against complacency, saying that markets appear to be overbought and the risk of a US recession has yet to be priced in. “We are being cautious and defensive in our strategies, staying high quality and staying away from the US regional banks,” Jonathan Liang, JPMorgan Asset’s head of investment specialists for Asia excluding Japan, said in a Bloomberg Television interview. “People should not be too complacent and we do feel that the market currently is a little overbought,” he said, adding that the Federal Reserve’s emergency lending program has reduced volatility in equities and bonds. Equities are leading the advance in risk assets this year after cross-asset volatility dropped to a 14-month low as the Fed provided a lending program in response to turmoil in the US financial system and Switzerland’s government backed UBS Group AG’s rescue of Credit Suisse Group AG.
- Netflix Inc. will begin cracking down this quarter on US viewers who share someone else’s account, predicting plans to charge such customers will boost growth in the second half of the year. The company, which reported a lower-than-expected subscriber gain for the first quarter, has been testing ways to reduce account sharing in Latin America, and rolled out a plan to charge such users in four additional territories in the first quarter. Netflix estimates that more than 100 million people use an account they don’t pay for, and analysts see paid sharing as a large potential source of new customers or sales. The company had planned to begin charging for password sharing in the US in the first three months of 2023. Now it says it will do so in the next couple months.
- Walt Disney Co. plans to cut thousands of jobs next week, including about 15% of the staff in its entertainment division, according to people familiar with the plans. The cuts will span TV, film, theme parks and corporate teams, affecting every region where Disney operates, said the people, who asked not to be identified because the details aren’t yet public. Some affected workers will be notified as early as April 24. The company declined to comment. Shares were down 0.6% at $100.35 in pre-market trading amid a broader decline in stocks. Disney said in February it planned to eliminate 7,000 positions from its workforce of more than 220,000, part of an overall strategy to shave $5.5 billion in annual costs. Cuts are being carried out across the company, the people said, including at Disney Entertainment, a unit created in a restructuring this year as a home for the company’s movie and TV production and distribution businesses including streaming.
- Ukraine’s Black Sea crop shipments resumed on Wednesday, following another brief halt that sparked fresh worries about future cargoes from the key exporter. Inspections of vessels under a safe-passage corridor are again taking place after a two-day stoppage, according to Ukraine and the joint coordination center which oversees the checks. Kyiv has blamed the disruption to the initiative — which has been crucial for bringing down global food-commodity costs from records reached after Russia’s invasion — on Moscow. Wheat futures declined. The shipping resumption is good news for both Ukraine and developing nations that import its grain. But the latest halt — which followed a similar one last week — highlights uncertainty over the grain-export deal that Russia has threatened to quit if its issues regarding its own grain and fertilizers aren’t resolved by mid-May.
- For decades London was the main nexus of European finance, melding continental money with transatlantic ideas of what to do with it. But two years after Brexit became a reality, there’s been a clear shift across the Channel. The spoils are being shared by European Union cities, creating a more fragmented landscape. It’s one where banking of various stripes gets done in Paris, shares trade in the Netherlands, and corporate lawyers and accountants pore over the details in Frankfurt. Dublin, Milan, Madrid and Warsaw are playing important supporting roles. The city’s allure may have been tarnished this year by protests against President Emmanuel Macron’s plans to raise the retirement age, which led to nationwide strikes and images of burning garbage in the streets. But the numbers working at the offices of Wall Street titans point to a new European banking reality, one that won’t easily shift back after a mammoth relocation of money and brains.
- The investment arm of BNP Paribas SA is looking into how many of the ESG fund downgrades it recently pushed through could now be reversed, as it digests new guidance from the European Union around passive strategies. BNP Paribas Asset Management, which removed the EU’s highest environmental, social and governance fund designation — known as Article 9 — from €15.6 billion ($17 billion) worth of client assets, told Bloomberg that clarifications from the European Commission published April 14 mean it’s now reassessing those moves. BNP currently lists the funds as Article 8, which is the EU’s less stringent ESG fund category. The downgrades were part of a mass wave of fund reclassifications that have swept through Europe, as firms including BlackRock Inc. and Amundi SA stripped the bloc’s most coveted ESG tag from tens of billions of dollars worth of assets. The upheaval triggered deep frustration across the industry, and forced the European Commission to address widespread confusion relating to a number of key planks of its ESG investing rulebook, the Sustainable Finance Disclosure Regulation.
- Multiple airstrikes and heavy fighting rocked Sudan’s capital after a proposed cease-fire to halt days of clashes between the army and a paramilitary group failed to hold. The attacks posed a fresh obstacle to regional leaders who’ve attempted to travel to Khartoum this week to help negotiate a truce between military head Abdel Fattah al-Burhan and Rapid Support Forces leader Mohamed Hamdan Dagalo. Clashes that erupted in the North African nation on April 15 have left more than 270 people dead and at least 2,600 others injured, according to the World Health Organization. The army headquarters, the RSF’s offices and the densely populated Amarat area in Khartoum were targeted on Wednesday morning, with shelling continuing for several hours, residents said. Amged Farid, who served as an adviser to former Sudanese Prime Minister Abdalla Hamdok, said he heard jets flying overhead and very loud explosions “since the early hours of the morning.”
- Traders ramped up bets on further interest-rate hikes from the Bank of England after UK inflation unexpectedly remained in double digits, a wake-up call for investors who thought the tightening cycle was close to over. Data showed consumer prices rose 10.1% in March from a year earlier, driven by the biggest increase in food costs in more than four decades. That follows strong wage growth reported Tuesday, adding to concerns that UK inflation is proving stickier than anticipated. The market is now fully pricing two consecutive 25 basis-point BOE hikes in May and June, with a further increase expected later in 2023 that would take the key rate to 5% by September, the highest anticipated by traders this year. Government bonds slid as traders readjusted their expectations.
- Bitcoin dropped back below the closely watched $30,000 level amid a wider retreat in cryptocurrencies, as stubbornly high UK inflation fanned fears of higher-for-longer interest rates. The largest token fell as much as 4.5% before paring some of the slide to trade at about $29,175 as of 11:50 a.m. in London on Wednesday. Ether shed 6% and smaller tokens like Solana and Avalanche suffered steeper declines. European stocks and US equity futures also slipped. UK consumer-price data on Wednesday showed inflation remained above 10% in March, adding to recent signs that central banks will have to keep lifting borrowing costs. That’s giving traders pause after Bitcoin surged about 80% this year, a rally driven in large part by speculation that rate cuts were imminent.