November 22, 2022
- Shaw Communications Inc. told Canada’s Competition Tribunal that it couldn’t compete effectively without merging with Rogers Communications Inc. “This isn’t the first time that we considered consolidation within the sector,” Trevor English, Shaw’s chief financial officer, said Monday in testimony. “This has been part of our process that’s been going on for many years, and we just didn’t see a viable path forward as a standalone company.” Since Shaw entered the wireless business by acquiring Wind Mobile, later renamed Freedom Mobile, the company has been struggling to keep up with its main competitor, Telus Corp., in Western Canada, English said. That also reflected in its share price underperformance over the past decade, which led to “difficult conversations” with investors, he said.
- European equities were led higher by a recovery in commodity shares, while traders considered potential monetary policy softening and risks to China’s economic reopening. The Stoxx Europe 600 Index was up 0.6% by 9:36 a.m. in London, restarting a five-week rally. Energy and miners outperformed after sliding yesterday as commodities rebounded, while consumer products stocks were laggards. Among individual moves, BP Plc led the gains in oil stocks after Citigroup Inc. upgraded it to buy. Vodafone Group Plc slipped after being double-downgraded at Credit Suisse Group AG. European stocks have recovered in recent weeks, when the 14-day relative strength indexes of both Euro Stoxx 50 and Stoxx 600 have crossed into overbought territory. On Friday, the blue-chip Euro Stoxx 50 gauge briefly rose 20% above this year’s low, before closing below the threshold. It would’ve been the second major European gauge to enter a bull market after the DAX did so last Tuesday.
- US equity futures wavered and European stocks rose as investors parsed comments from Federal Reserve officials for clues on the pace of interest rate hikes and assessed the impact of China’s widening Covid lockdowns. Contracts on the S&P 500 and the Nasdaq 100 were little changed after swinging between gains and loses. In US premarket trading, Zoom Video Communications Inc. fell after reporting slower sales and trimming its full-year revenue forecast.
- Asian stocks advanced as the yen’s recent weakness boosted Japanese exporters, offsetting losses in Chinese tech shares. The MSCI Asia Pacific Index gained as much as 0.7%, with Japanese firms Toyota, Sony and Mitsubishi helping lift the gauge along with Taiwan’s TSMC. Among sectors, energy and industrials advanced the most, while communication services and consumer discretionary shares edged lower. Chinese stocks in Hong Kong fell for another day, as a worsening outbreak on the mainland raised doubts as to whether authorities can hold on to their softer Covid Zero stance. A rally this month fueled by reopening hopes has now come to a halt as investors come to terms with China’s Covid reality.
- Oil futures were steady after a volatile run as investors juggled a clouded supply outlook and concerns over weaker demand in virus-hit China. West Texas Intermediate traded little changed around $80 a barrel after swinging in a $5 arc in the week’s opening session. Prices had plunged following a report that OPEC+ was considering an output increase, but then recovered to end little changed after Saudi Arabia pushed back against the suggestion. Kuwait also rejected the notion that the group is planning a production hike. Crude-consumption trends in China remain in the spotlight as repeated Covid-19 outbreaks prompt officials to press on with lockdowns and movement curbs. That’s hurting the outlook for demand just weeks after investors had speculated Beijing may be moving away from its zero-tolerance stance.
- Gold gained as the dollar edged lower and traders awaited Federal Reserve minutes due Wednesday for hints on the central bank’s monetary-policy tightening path. Bullion, which snapped a four-day retreat on Tuesday, has been pressured this year by the Fed’s aggressive rate hikes. On Monday, signs that China may implement further Covid Zero restrictions buoyed the dollar and pushed gold lower. Spot gold climbed 0.4% to $1,745.66 an ounce as of 8:30 a.m. in London, after ending the previous session down 0.7%. The Bloomberg Dollar Spot Index declined 0.3%. Silver, platinum and palladium advanced.
- Flights are packed. Airport parking lots are filling up. Tickets are expensive. In short, Thanksgiving travel is getting back to normal, for better or worse. The Transportation Security Administration expects travel volumes this week could approach prepandemic levels, with 2.5 million passengers or more passing through U.S. airports on the busiest days. Daily airport volumes have neared that level several times in recent months, but they haven’t surpassed it since the Covid-19 pandemic wiped out travel demand in 2020. The crowds began to build late last week, with over 2 million travelers each day since Thursday. On Sunday, the more than 2.3 million people the TSA screened topped the total for the same day in 2019. The numbers the TSA is predicting this year would still fall short of the busiest day in its history, the Sunday following Thanksgiving 2019, when nearly 2.9 million passengers passed through U.S. airports.
- The cost of a five-year fixed-rate mortgage has fallen below 6% for the first time in almost seven weeks, providing a glimmer of hope for Britons affected by the UK’s home loans crunch. The average five-year fixed-rate mortgage fell to 5.95% on Tuesday, according to Moneyfacts Group Plc. That’s the first time it has dropped below the threshold since Oct. 5 when key mortgage rates were spiraling toward 14-year highs. The average two-year fixed rate deal also fell to 6.13%, the lowest it has been since Oct. 6. Meanwhile, a crucial rate used by British lenders to price mortgages has fully recovered from the leap triggered by then-Prime Minister Liz Truss’s mini-budget in September. The two-year swap-curve reference rate for UK banks’ home loan pricing has reversed after rising 1.5 percentage points during Truss’s tenure, according to a Bloomberg Intelligence report.
- An FTX Group bankruptcy filing showed that the fallen cryptocurrency firm and a number of affiliates had a combined cash balance of $1.24 billion — more than debtors had identified a few days ago. A string of high-profile crypto crises could set the industry back by almost a decade, according to the co-founder of Three Arrows Capital, whose June implosion was one of the largest hedge-fund trading busts. Separately, crypto brokerage Genesis warned of the risk of bankruptcy amid contagion from FTX. The fall of other parts of Sam Bankman-Fried’s empire, including Alameda Research, is contributing to reduced liquidity in crypto markets. Bitcoin is trading below $16,000, near the lowest since November 2020.
- Chinese solar power equipment company Longi Green Energy Technology Co. has selected China International Capital Corp. for a sale of global depository receipts in Switzerland, according to people familiar with the matter. The Shanghai-listed firm could sell GDRs in Zurich as soon as in the first half of next year, the people said, asking not to be identified as the information is private. Longi, the world’s biggest solar company by market capitalization, said in an exchange filing last month that it could sell the GDR equivalent of as much as 8% of its outstanding shares, which would be nearly $4 billion worth, according to Bloomberg calculations.
- Volta Trucks AB raised additional funds at a valuation of roughly €600 million ($616 million) as the Swedish electric-truck startup prepares to ship first vehicles to customers next year. The Stockholm-based company got €60 million from existing investors in an extension of its most recent funding round, it said Tuesday. Production of its Volta Zero battery truck will start next quarter and the startup is targeting an initial public offering in 2024, according to Chief Executive Officer Essa Al-Saleh. Persisting supply-chain issues, shortages of key parts and the turmoil at Nikola Corp. have tainted investors’ outlook for the industry. While Nikola’s market value briefly eclipsed that of Ford Motor Co. despite having no revenue, the stock has since come crashing down after its founder was found guilty of defrauding investors. Volta is among several Swedish startups trying to lead on sustainable transport in a country where Volvo AB and Volkswagen AG’s Scania have a long history.
- Wall Street’s waning conviction in Coinbase Global Inc. has done little to deter Cathie Wood. Instead, she’s been scooping up shares of the struggling cryptocurrency exchange in the wake of the collapse of Sam Bankman-Fried’s FTX. Wood’s Ark Investment Management funds have bought more than 1.3 million shares of Coinbase since the start of November, worth about $56 million based on Monday’s trading price, according to data compiled by Bloomberg. The shopping spree, which started just as FTX’s demise began, has boosted Ark’s total holdings by roughly 19% to about 8.4 million shares. That equates to around 4.7% of Coinbase’s total outstanding shares. Ark funds have also been adding to stakes in other cryptocurrency-related assets, namely Grayscale Bitcoin Trust and shares of crypto bank Silvergate Capital Corp. in recent weeks. The increased buying from Wood bucks the broad crypto selloff this year, including slides in tokens such as Bitcoin and Ether.
- Best Buy Co. raised its profit forecast, surprising Wall Street with an upbeat outlook even as US shoppers rein in spending on discretionary goods. Adjusted operating income will amount to “slightly higher than 4%” of sales in the current fiscal year, the consumer-electronics retailer said in a statement Tuesday as it reported third-quarter results. That’s up from the previous forecast of 4%, although it’s still lower than the company’s expectations early this year. The improved outlook underscores the retailer’s ability to navigate waning US appetite for televisions, computers and appliances amid soaring inflation. The company has been paring jobs to cut costs as higher prices for basic goods have forced consumers to pull back on discretionary goods.
- Malawi became the first low-income nation to receive financing from the International Monetary Fund under a new tool intended to help countries cope with global food price shocks. “Malawi is facing a challenging economic and humanitarian situation, with foreign-exchange shortages and an exchange rate misalignment leading to a sharp decline in imports including fuel, fertilizer, medicine, and food,” the IMF said. Annual food inflation has more than doubled to 34.5% since Russia invaded Ukraine in February. The Washington-based institution agreed to lend the southern African nation $88.3 million to “address urgent balance-of-payments needs and mitigate the impact of the food shock,” according to a statement.
- Germany will introduce a cap on gas and electricity prices for companies and households next year as Europe’s largest economy seeks to contain the fallout from Russia’s moves to slash energy supplies. The package of measures, which will cost the government about €54 billion ($55.5 billion), will go into effect on March 1, according to government officials. The subsidies will be paid retroactively for January and February, and gas consumers will also receive a one-time state subsidy for December, said the officials, who asked not to be identified in line with briefing rules. The aid for power bills will be partly financed by a windfall tax on electricity profits, which the government expects to raise a double-digit billion-euro amount, the officials said on Tuesday. Almost all forms of power generation, including renewables, will be charged with the exception of gas and hard coal. Many companies have warned that the tax, which will be imposed retroactively to September, could impact investments in the sector.
- Norway will add a new natural gas field in the Norwegian Sea from 2026 in a push to bolster supplies to continental Europe as the EU rushes to replace Russian flows. Equinor ASA will lead the development of the Irpa gas discovery in the northern reaches of the Norwegian Sea to unlock an estimated 20 billion standard cubic meters of recoverable reserves, Norway’s Petroleum and Energy Ministry said in a statement on Tuesday. Investments will total 14.8 billion kroner ($1.4 billion), with production planned for the fourth quarter of 2026. Petroleum and Energy Minister Terje Aasland received the development plan as Europe faces years of uncertainty over gas supplies after flows from Russia were cut in the aftermath of the invasion of Ukraine. Norway has sought to boost production in an attempt to offset some of that decline.
- Enel SpA plans to sell assets worth as much as €21 billion ($22 billion) to cut its record debt pile, leading to exits from markets in South America and Europe. Italy’s biggest utility, which issued a profit warning earlier this month, is struggling with rising debt after an acquisition spree to boost renewable energy production. Enel has also in the past few years been hurt by soaring costs amid the energy crisis, droughts cutting hydro power output and lower demand because of the pandemic. There are still challenging times ahead, Chief Executive Officer Francesco Starace said Tuesday at a strategy presentation, citing both high gas prices and government action to deal with the crisis. He said he’s expecting “at least a couple of years of turbulence,” and as a result, the firm is “taking a more conservative approach.”
- China’s crude buyers have paused purchases of some Russian oil as they wait for details of a US-led cap to see if it presents a better price. Several cargoes of Russian ESPO crude for December-loading remain unsold and there’s hesitation among sellers and Chinese buyers to close deals before more clarity on the exact price cap level is known, according to traders with knowledge of the matter. More details on the measure are expected soon. The price limit is set to be implemented alongside European Union sanctions on Russian crude on Dec. 5, with those adhering to the measure gaining access to insurance, banking and shipping services from the bloc. The cap is designed to keep crude flowing from the OPEC+ producer to prevent a global supply shock but crimp the Kremlin’s revenues as it wages war in Ukraine.
- Chinese authorities are planning to impose a fine of more than $1 billion on Jack Ma’s Ant Group Co., paving the way for the ending of a regulatory overhaul of the financial technology firm, Reuters reported, citing people familiar with the matter. The central bank is preparing the penalty, which could land in the second quarter of next year, the news agency said, adding that the regulator has been in touch with Ant about the plans. Ant and the central bank didn’t respond to Reuters’ requests for comment. The firm also didn’t immediately respond to a request for a comment from Bloomberg News. A yearslong crackdown on the private sectors that included the halt of Ant’s massive initial public offering in 2020, is now showing signs of winding down. President Xi Jinping recently issued market friendly policies by relaxing inbound travel restrictions and rolling out a package of measures to support the property market.
- Societe Generale SA agreed to merge large parts of its equities business with AllianceBernstein, intensifying the French bank’s bid to eclipse BNP Paribas SA in share trading. The Paris-based bank and AllianceBernstein will unite their cash equities trading and research units in a joint venture. SocGen will hold 51% and have the option in five years to buy the whole business, which will be run out of London under the Bernstein name. The venture signals ambitions to take on BNP Paribas’ strengthened equities offer after the rival French bank took full control of its trading unit Exane and added businesses from retreating rivals. The move will also aid Slawomir Krupa, who is set to become SocGen chief executive officer next year, in lowering reliance on the volatile business of equity derivatives which had handed the bank heavy losses during the pandemic.
- Wait times for Apple Inc.’s most expensive smartphones are rising to what analysts say are record levels as the holiday shopping season kicks off, threatening to curb sales at the company’s busiest time of year and derail a rally in the stock. Customers in the US who placed an order Tuesday would get an iPhone 14 Pro delivered in New York on Dec. 30, after Christmas, according to Apple’s website. The wait was about 34 days as of last week, near the highest ever, according to UBS Group AG. The delays, resulting from Covid lockdowns around a Chinese plant run by a contract manufacturer of iPhones, could cause analysts to trim their earnings estimates for this quarter, which accounts for 35% to 40% of iPhone unit sales. That in turn could further pressure Apple’s stock price, which has been a relative haven in this year’s tech meltdown.
- The rapid selloff in Tesla Inc. shares has left most price targets from ever-bullish Wall Street analysts seemingly obsolete. The yawning gap means Tesla shares need to rally a whopping 80% to hit the median analyst target price — the second widest on the Nasdaq 100 Index, just behind Baidu Inc. The Elon Musk-led firm’s stock has slumped 52% this year to $167.87, while analysts have a median 12-month target price of $302. Tesla has been facing a host of issues including Musk’s shift-in-focus on turning around Twitter Inc. to China’s return to Covid Zero curbs. Adding to that are supply-chain snarls, rising raw-material costs and buyers feeling the squeeze of stubborn inflation and rising interest rates.
- Even after years of division and vitriol, it seems like Britain still needs to talk about Brexit. More than six years after voting to leave the European Union, the UK is facing a prolonged recession, a deep cost-of-living crisis and a shortage of workers. Last week’s Autumn Statement heralded years of higher taxes and cuts to public spending. The gloomy prognosis has re-opened the debate over Brexit, previously the deadly third rail of Conservative Party politics, which many thought ended for good with the signing of a free trade deal at Christmas 2020.
- Dick’s Sporting Goods Inc. boosted its forecast for a second-straight quarter even as inflation dents discretionary spending in other retail categories. Dick’s said Tuesday that it attracted more shoppers in the three months ended Oct. 29 and they also shelled out more money. Comparable-store sales increased 6.5% in the period, while analysts had been looking for a 3.1% decline. The results suggest athletic apparel is more resilient than other goods as higher prices for essential items such as food and housing take up more of shoppers’ budgets. Dick’s earlier this year slashed its sales and profit forecasts, with executives attributing the move to an abundance of caution about the health of US consumers, though at the time no slowdown had materialized. The company had raised its outlook on both metrics last quarter.
*All sources from Bloomberg unless otherwise specified