September 11, 2023
- Prime Minister Justin Trudeau and the Canadian delegation are stuck in New Delhi after his aircraft experienced technical issues, an inauspicious end to a trip that included criticism from the Indian government. Trudeau, government staff and journalists traveling with the prime minister were set to leave India on Sunday night after the Group of 20 leaders’ summit. It’s unclear when and how they will be able to depart the country. “These issues are not fixable overnight, our delegation will be staying in India until alternate arrangements are made,” a statement from Trudeau’s office said. Earlier, Prime Minister Narendra Modi leveled criticism at Canada for allegedly allowing Sikh secessionist groups to operate in the country. Modi conveyed “strong concerns about continuing anti-India activities of extremist elements in Canada,” India’s Foreign Ministry said in a statement after a sideline conversation between the two leaders.
- European stocks rose on Monday as comments from Treasury Secretary Janet Yellen raised hopes that the US economy is headed toward a soft landing. The Stoxx 600 Index gained 0.4% by 11:50 a.m. in London, led higher by miners which got a lift from rising metals prices, while other cyclical sectors such as banks and insurers also rose. Equities got a boost after Yellen said she’s increasingly confident that the US will be able to contain inflation without major damage to the job market. The region’s stocks have seen a testing start to the month as worries over higher interest rates have dented risk appetite, and luxury firms have come under pressure from worries over a slowdown in China. The gauge is down slightly in September, though remains 7.4% higher on the year.
- US index futures gained, led by tech stocks, as concerns about a hawkish Federal Reserve and Chinese economic risks eased. Contracts for the S&P 500 rose 0.4% as of 5:21 a.m. in New York, while the futures on the tech-heavy Nasdaq 100 advanced 0.5%. Tesla Inc. jumped 5.6% in premarket trading, leading gains for EV makers, after Morgan Stanley upgraded the stock to overweight from equal-weight.
- Asian stocks advanced as a jump in China’s credit data boosted onshore equities, while Japanese financial shares rallied on higher yields. The MSCI Asia Pacific Index climbed as much as 0.7%, set for its first gain in a week. MUFG and other Japanese financial stocks lent the biggest support as comments from the Bank of Japan’s governor pushed up yields, which in turn boosted lenders. The country’s broader equity benchmarks remained under pressure as the yen strengthened. Chinese stocks climbed to snap a four-day loss as sentiment was supported by a spate of positive news including better-than-expected credit data, easing deflationary pressure and the regulator pledging more measures to support capital markets. Stocks in Hong Kong slipped as the market reopened after Friday closure due to a heavy rainstorm. Alibaba was a major drag on key gauges after news of its former CEO’s departure.
- Oil declined after rallying almost 10% over the past two weeks, with technical indicators suggesting recent gains may have been overdone. West Texas Intermediate fell to about $87 a barrel after a 2.3% advance last week. Technical gauges including the relative strength index suggest futures remain overbought. Oil has surged by almost $20 a barrel since mid-June on production cuts from Saudi Arabia and Russia, which have now been extended through the end of the year. Despite Monday’s retracement, there’s still signs of oil market bullishness. Money managers hold the biggest net-long position in WTI for 15 months, while they also added to bets for Brent gains last week. That came as OPEC+ leaders Saudi Arabia and Russia pledged to extend supply curtailments.
- Gold rose on a weaker dollar as moves by Asia’s biggest central banks hurt the US currency after a long rally. The metal fell 1.1% last week as gold-backed exchange-traded funds saw the biggest weekly outflow since June. Investors are looking ahead to a US consumer-price index report due midweek, which will help inform the outlook on the Federal Reserve’s interest-rate path. Spot gold rose 0.4% to $1,926.56 an ounce as of 9:53 a.m. in London. The Bloomberg Dollar Spot Index fell 0.4%. Silver, platinum and palladium climbed.
- Germany may extend a tax-reduction program for energy-intensive companies by another year as the government seeks ways to revive industrial growth. Finance minister Christian Lindner floated the option as a cheaper alternative to rolling out a reduced power price for industry, according to an interview with newspaper Welt published Sunday. While the Economy Ministry continues to push for broader industrial relief, a spokesperson said it would “expressly welcome” the measure. The subsidy — which was already prolonged last year — currently reimburses about 90% of energy taxes for around 9,000 companies. The government’s budget plan for next year didn’t initially foresee prolonging the €1.7 billion ($1.8 billion) measure, prompting warnings from industry associations that full taxation would increase energy bills tenfold in an already tense situation.
- Apple Inc. is extending an agreement to get modem semiconductors from Qualcomm Inc. for three more years, a sign that its ambitious effort to design the chips in-house is taking longer than expected. The new pact will cover “smartphone launches in 2024, 2025 and 2026,” Qualcomm said in a statement Monday. The companies’ agreement had been set to end this year, and the latest iPhone — due on Tuesday — was expected to be one of the last to rely on the Qualcomm modem chip. Instead, Qualcomm will maintain its lucrative position within Apple’s supply chain. The iPhone maker is Qualcomm’s largest customer — accounting for nearly a quarter of revenue, according to data compiled by Bloomberg. And their relationship helps validate Qualcomm’s claim to having the best smartphone modem, a critical component that allows devices to connect to the internet and make calls. Starting with the iPhone 12 generation, the chip has supported speedier 5G networks.
- Instacart and its backers are seeking to raise as much as $616 million in what would be one of the biggest initial public offerings of the year, possibly opening the door to a rebound in US listings. The largest US online grocery delivery company will offer 14.1 million new shares for $26 to $28 each, it said in a filing Monday. Existing shareholders are selling 7.9 million shares at the same price. Instacart is seeking a valuation of about $7.7 billion at the top end of the range based on the current number of shares outstanding in its IPO filing. That’s before taking into account the potential settlement of restricted stock units granted to employees, which could push the valuation higher.
- Treasury Secretary Janet Yellen said she’s increasingly confident that the US will be able to contain inflation without major damage to the job market, hailing data showing a steady slowdown in inflation and a fresh influx of job seekers. “I am feeling very good about that prediction,” Yellen said Sunday when asked about her previous hopes that the US would avoid a recession while still reining in consumer-price gains. “I think you’d have to say we’re on a path that looks exactly like that.” Speaking in an interview on her aircraft en route back from attending the Group of 20 summit in New Delhi, the Treasury chief also played down any risk from China’s efforts to increase the sway from the separate BRICS grouping of major emerging nations. “The G-20 “remains the premier forum for global cooperation,” she said.
- Kingspan Group Plc made an informal approach to combine with Carlisle Cos., which rebuffed the move to create a building materials giant with a combined market value of almost $27 billion, people familiar with the matter said. The Irish insulation and construction products company proposed a deal in recent months, according to the people. Carlisle, which has a market capitalization of $12.5 billion, rejected the pitch but signaled it would be open to at least reviewing a more attractive offer, they said. Kingspan isn’t currently working on a formal takeover bid, some of the people said, asking not to be identified because deliberations are private. If Carlisle did explore a sale, it could trigger fresh interest from the Irish company as well as other building materials rivals, they said.
- Tesla Inc.’s Dojo supercomputer may add as much as $500 billion to the company’s market value through faster adoption of robotaxis and network services, according to Morgan Stanley. Dojo can open up “new addressable markets,” just like AWS did for Amazon.com Inc., analysts’ led by Adam Jonas wrote in a note, upgrading the stock to overweight from equal-weight and raising its 12-month price target to a Street-high $400 per share from $250. Shares of Tesla, which have already more than doubled this year, rose as much as 6.1% in US premarket trading Monday. The stock was on track to add about $46 billion in market value. Morgan Stanley is one of Musk’s key advisory firms, including on the $44 billion takeover of Twitter Inc., now known as X.
- US President Joe Biden announced a series of semiconductor, aerospace and infrastructure deals with business leaders in Vietnam, part of a push by the White House to deepen economic integration with Indo-Pacific nations that can provide a bulwark to China. Biden touted a “new stage” in the ties between the two countries to a meeting of officials and with executives from Vietnam and top US firms including Boeing Co., Intel Corp. and Marvell Technology Inc. in Hanoi. “My message today is quite simple: Let’s keep it up,” he said. The announcements are intended to solidify Vietnam’s decision a day earlier to upgrade its relationship with the US to a “comprehensive strategic partnership,” the same designation it uses for China and India. The hope in Washington is that by boosting ties with nations in Southeast Asia, the US can increase its influence in a region that sometimes chafes at Beijing’s assertiveness.
- BMW AG will invest in the 110-year-old plant where the Mini brand was born to make electric models, tapping the UK government for support in the fight to prop up the country’s flagging automaking industry. The company’s more than £600 million ($751 million) outlay averts what would have been a disaster for the UK, where car production slumped last year to the lowest since 1956. The Oxford factory employing more than 3,400 people was dealt a setback 11 months ago when BMW announced it was shifting electric Mini output to China. Any fears that the plant may not continue into the EV age were put to rest Monday. BMW announced that it will make models powered by combustion engines until 2026, when it will add production of the next-generation electric Mini Cooper hatchback and Aceman crossover. From 2030 onward, the factory will shift to all-EV production.
- UBS Group AG is cutting Asia wealth-management jobs in the low hundreds, just months after completing its takeover of rival Credit Suisse as the bank responds to muted client activity and China’s slowing economy. Switzerland’s largest bank reduced some overlapping roles in the past months and further cuts are expected through November, according to people with knowledge of the matter, who asked not to be identified as the plans are private. At least 100 positions could go, one of the people said. The lender is set to eliminate roles that include relationship managers in Hong Kong and Singapore, the majority within teams newly acquired from Credit Suisse, the people said. The number of cuts hasn’t been finalized, they said. The lender plans to keep the majority of private bankers in Australia and India for now, one of the people said.
- After staving off recession for longer than many thought possible, the US consumer is finally about to crack, according to Bloomberg’s latest Markets Live Pulse survey. More than half of 526 respondents said that personal consumption — the most important driver of economic growth — will shrink in early 2024, which would be the first quarterly decline since the onset of the pandemic. Another 21% said the reversal will happen even sooner, in the last quarter of this year, as high borrowing costs eat into household budgets while Covid-era savings run down. The finding is at odds with the optimism that’s permeated US equity markets for most of the summer, as cooling inflation and low unemployment bolstered hopes for a so-called soft landing. Should the economy stop growing — a scenario that’s quite likely if consumer spending contracts — it could mean more downside for stocks, which have already slipped from late-July highs.
- Moderna Inc. agreed to pay German biotechnology company Immatics NV as much as $1.8 billion in a broad-ranging, multiyear collaboration on developing cancer therapies using messenger RNA and other technologies. Moderna will pay Immatics $120 million upfront and up to $1.7 billion if the work hits certain goals, according to a statement Monday. The companies will collaborate on a variety of products, including antibodies produced through mRNA, cancer vaccines and cell-therapy products, most of which have yet to be tested in people. Moderna has been seeking new ways to deploy its mRNA technology that quickly generated effective vaccines against the coronavirus. Cancer is one of the most promising potential applications, and the company is already working with Merck & Co. on a personalized cancer vaccine for melanoma and other tumors, but testing could take years to complete.
- Morocco began allowing teams from Spain, the UK and two Arab countries to assist in earthquake rescue efforts, as public anger grows over the domestic response to the nation’s deadliest natural disaster in six decades. With the death toll now around 2,500 people, rescuers are racing against time as they search the hundreds of remote villages dotting the High Atlas mountains near the epicenter of Friday’s quake. Local media carried numerous reports of stricken Moroccans demanding much quicker help. “People are still under the rubble and debris,” one resident from the village of Tafegaghte told local outlet Alyaoum 24. “My brother and I dug through the rubble with our own hands to extract our deceased parents,” she said, blaming local officials for standing aside.
- Investors should focus on a “late-cycle portfolio” of defensive stocks, industrials and energy, according to Morgan Stanley strategists led by Michael Wilson. The market is in a late-cycle backdrop — a time when the Federal Reserve is expected to pause or reverse its hawkish policy stance — and more conservative equity factors, like high cash and low debt, have started to outperform, Wilson wrote in a note on Monday. He reiterated his view that stock markets are not yet reflecting the risk of a recession. “As is typical in such periods, multiple expansion has moved ahead of where macro fundamentals dictate fair value to be, placing the burden on a growth re-acceleration and/or incremental policy support,”wrote Wilson, whose negative outlook on stocks hasn’t materialized yet this year.