Investors’ summer optimism gives way to insecurity as curfews and lockdowns return
Stock markets in the US and Europe fell sharply oas investors focused on signs that rich countries’ efforts to contain the coronavirus pandemic were foundering.
In Europe, the Stoxx 600 index lost 1.8% after heavy falls in German blue-chip stocks. In the US the Dow Jones industrial average closed 2.3% down at 27685.38, while the benchmark S&P 500 fell 1.9% to 3400.97.
Continue reading...Financial technology firm will list on Shanghai and Hong Kong stock markets in snub to US
Chinese billionaire Jack Ma’s financial technology firm is aiming to raise more than $34bn (£26.15bn) in the world’s biggest initial public offering, valuing the business at more than $313bn.
Ant Group, which on Monday set the price for its much anticipated flotation and is expected to start trading early next month, will beat the record $25.6bn sold by state-backed oil giant Saudi Aramco in its flotation last December.
Continue reading...Investors scramble to buy shares in Big Hit Entertainment amid speculation that the boy band members could be allowed to defer military service
The management company behind the popular South Korean boy band BTS has scored a huge hit on the country’s stock market after its shares doubled on their first day of trading.
Investors scrambled to buy into the success story of Big Hit Entertainment amid speculation that the South Korean government could allow K-pop and other celebrities to defer their military service, citing their huge contribution to the country’s economy and international reputation.
Continue reading...Rolling coverage of the latest economic and financial news, as The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is awarded
Earlier:
In the 1960s, Robert Wilson began to investigation auctions with a common value - one that is unknown beforehand, but is the same to all bidders, the Academy continues.
That could be bidding for fishing quotas - where the value is determined by not only the quota, but the future value of the fish. Bidders need to estimate that value, so they could potentially overpay.
This is something known as the Winner’s Curse.
Auctions are everywhere. People use auctions to buy and sell items on internet sites, explains the Royal Academy.
Electricity markets are organized as auctions. Financial assets, CO2 emissions allowances and radio spectrum are all organised as auctions.
The auction theory provided by Paul Milgrom and Robert Wilson is key for understanding how these objectives can be reached.
Continue reading...It’s a myth that Republicans handle the economy better – US recessions almost always occur under the GOP
Joe Biden has consistently held a wide polling lead over US President Donald Trump ahead of November’s election. But, despite Trump’s botched response to the Covid-19 pandemic – a failure that has left the economy far weaker than it otherwise would have been – he has maintained a marginal edge on the question of which candidate would be better for the US economy. Thanks to Trump, a country with just 4% of the world’s population now accounts for more than 20% of total Covid-19 deaths – an utterly shameful outcome, given America’s advanced (albeit expensive) healthcare system.
The presumption that Republicans are better than Democrats at economic stewardship is a longstanding myth that must be debunked. In our 1997 book, Political Cycles and the Macroeconomy, the late (and great) Alberto Alesina and I showed that Democratic administrations tend to preside over faster growth, lower unemployment and stronger stock markets than Republican presidents do.
Continue reading...Carmaker’s value plunges after failing to make S&P 500 listing as all major US stock markets fall
The US tech sell-off on Wall Street extended to a third day on Tuesday, with electric carmaker Tesla among the biggest fallers suffering its worst day in nearly six months.
The tech-heavy Nasdaq stock market dropped close to 3% in morning trading, following similar falls on Thursday and Friday. Wall Street was closed on Monday for the Labor Day holiday.
Continue reading...Zhong Shanshan’s net worth rises to $51bn as Nongfu Spring shares launch in Hong Kong
The stock market flotation of China’s biggest bottle water company has made its founder the country’s third-richest man, as shares in his company rocketed on their debut in Hong Kong.
At one point the paper fortune of Zhong Shanshan, the biggest shareholder in bottled water company Nongfu Spring, briefly surpassed that of China’s two richest men, Alibaba founder Jack Ma and Tencent founder Pony Ma.
Continue reading...US stock market is suffering its worst day since June, as Apple and Tesla lead stock markets into the red
Earlier:
US traders can now catch their collectives breath after the choppiest trading session in several weeks.
It wasn’t as dramatic as the massive selloffs back in February and March (which still give me the shivers), but certainly a volatile day.
Related: Coronavirus live news: Robert Pattinson 'tests positive for Covid-19, halting Batman production'
Today’s losses mean the Dow is slightly negative for 2020, while the tech-heavy Nasdaq Composite index is still up 27% since January.
Continue reading...Rolling live coverage of business, economics and financial markets as investors anticipate new approach to inflation
Something to sink your teeth into before lunch: more discounts on dining out.
Related: Eat out to help out scheme to be extended by some restaurants
Mark Haefele, chief investment officer, UBS Global Wealth Management, said:
While we expect the Fed to shy away from more radical easing measures, such as explicit controls on government bond yields, we believe Powell will likely outline other dovish measures. These could include a move toward average inflation targeting, giving the central bank more leeway to allow inflation to overshoot the 2% target while keeping rates pegged close to zero.
Maybe the age of the independent, activist central bank head is also coming to an end. Fiscal policy is more powerful and monetary policy needs to work in harmony with it. Monetary policy is being asked to do things (like tackle economic inequality) that it really isn’t suited to. But, here we are, waiting for Jay Powell to turn up at Grafton’s Saloon. He’s already done everything he can, he’s almost out of bullets and he may even have already won the fight, but we have placed our faith in him and desperately want fresh encouragement.
Continue reading...Surge in shares contrasts with Covid-related downturn and growing unemployment
The economic collapse in Britain during the second quarter of 2020 was the most brutal on record. Unemployment is forecast by the Bank of England to soar to 2.5m by Christmas. The Brexit cliff edge approaches. Yet in the City, the FTSE 100 has been on the up.
Never has the disconnect between financial trading and economic fundamentals appeared so extreme. What explains surging asset prices (the FTSE jumped 2% on the same day it was revealed the economy had slumped by 20%) when the outlook for many workers is so grim?
Continue reading...S&P edges towards all-time record with oil prices and hospitality stocks rising as investor optimism rebounds
US stock markets moved closer to record highs on Tuesday after investors bet on a fresh round of government spending to lift the economy and counter the effects of the Covid-19 pandemic.
The S&P 500, seen as the broadest measure of US investor sentiment, raced to a 10-point gain by mid afternoon to leave it just 16 points short of the all-time high reached in February.
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Here in Britain, roughly one in three furloughed workers returned to work in the first two weeks of July, when pubs, bars, restaurants and hotels reopened, official data from the Office for National Statistics showed today.
Businesses surveyed between 29 June and 12 July said 7% of their staff had returned from furlough within the past fortnight, while 17% remained on leave. The government-funded job retention scheme pays 80% of their salaries and covers more than 9 million people at the moment, about a third of the private-sector workforce. But it will be scaled back from Saturday and come to an end on 31 October.
Here is our full story on Airbus. The Toulouse-based planemaker has been hit hard by the collapse in air travel, and received only eight new orders between April and June, compared with 290 in the first quarter.
Related: Airbus slows plane-making as Covid-19 leads to £1.7bn loss
Continue reading...Gold rally cools amid profit-taking
Julie Palmer, partner at business advisory and restructuring firm Begbies Traynor, says:
The success of Greggs has been the envy of the high street in recent years, however, even the bakery chain hasn’t been immune to the impact of Covid-19 which has forced its stores to close and eaten away at its top line.
For Greggs, achieving rent reductions from landlords will be first on the tick list, and indeed this has been a priority for many on the high street. But once these costs have been reduced its push to return to success will begin. And given its track record of marketing & PR success with its famous vegan sausage roll, I wouldn’t be surprised to see another high profile campaign on the horizon that captures the sentiment of a nation experiencing seismic change.
Let’s have a look at today’s corporate news. Greggs, Britain’s biggest bakery chain (known for its vegan sausage roll) has warned that sales won’t get back to pre-pandemic levels for as long as physical distancing continues.
But it’s fared better than other retailers: sales are now running at 72% of the 2019 level. All of its 2,050 stores reopened by July, after being forced to close during the Covid-19 lockdown imposed on 23 March. Greggs made a £65.2m loss before tax in the first half, compared with a £36.7m profit a year ago.
Continue reading...Synairgen’s share price rises 540% on morning of news of successful drugs trial
Three professors at the University of Southampton school of medicine have this week made a “major breakthrough” in the treatment of coronavirus patients and become paper millionaires at the same time.
Almost two decades ago professors Ratko Djukanovic, Stephen Holgate and Donna Davies discovered that people with asthma and chronic lung disease lacked a protein called interferon beta, which helps fight off the common cold. They worked out that patients’ defences against viral infection could be boosted if the missing protein were replaced.
Continue reading...Report identifies gap between market optimism and depressed state of economies
The global stock market rally represents a gamble by investors that central banks will ignore the risks of a buildup in debt and continue to provide support at the current record levels, the International Monetary Fund has warned.
In an update to its half-yearly global financial stability report, the IMF said central banks had been pivotal in the recovery of share prices from their Covid-19 trough but there was now a gap between the optimism of financial markets and the depressed state of economies.
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The government is reportedly ready to let beer gardens open from 22 June as part of plans drawn up by a group of ministers, dubbed the “Save Summer Six”, who are looking at ways to restart the hospitality industry earlier than initially planned, writes my colleague Rob Davies.
The proposals, first reported in the Financial Times, would allow some of the 27,000 UK pubs that have outdoor space to serve customers for the first time in three months.
UK airline and travel stocks are up, for once, despite the new quarantine rules. The cruise operator Carnival is the biggest riser on the FTSE 100 index, up 14%, while BA owner IAG is 6.9% ahead and easyJet has gained 5.5%.
As reported earlier, Ryanair boss Michael O’Leary said the airline would fly through the 14-day UK quarantine, which he described as “rubbish”. Britain’s three biggest airlines – Ryanair, easyJet and IAG – have begun legal proceedings against the government over the quarantine rules, which they argue are illogical and unfair, and come months late.
Related: Ryanair boss: Britons know quarantine rules are rubbish
Continue reading...Live coverage as Aston Martin and car dealer Lookers announce costs savings plans
Young’s pub chain intends to open all of its 276 sites by the 3 August, and is hopeful the business can “bounce back” once its pubs are allowed to reopen, but expects trading to be “materially below average” for the rest of the year.
Another interesting detail from the SMMT data: Tesla’s Model 3 was the most popular car during May.
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Germany’s final reading for the manufacturing PMI in May is 36.4, worse than expected, and up only slightly from April’s 11-year low of 34.5. It signals deep contraction.
Phil Smith, principal economist at IHS Markit, said:
The latest data show that business continues to be severely disrupted by the COVID-19 crisis. Even though more factories have started to resume operations after the loosening of restrictions, weak underlying demand is still a limiting factor, as evidenced by the survey’s measure of new orders rebounding far less than that of output in May.
Manufacturing production was already down 7-8% from a peak in late-2017 even before the onset of the pandemic, and now that figure looks to be in the region of 25-30%. With production as far as it is below capacity and manufacturers not expecting a full recovery anytime soon, factory job losses have continued to accelerate, led by another round of staff cuts in the particularly ravaged investment goods sector.
The French manufacturing PMI rose to 40.6 in May (slightly up from the preliminary reading of 40.3), compared with 31.5 in April.
Eliot Kerr, an economist at IHS Markit, which compiled the survey, said:
Despite some French manufacturers beginning to resume normal operations in May, output continued to decline following April’s record contraction. Although the rate of decline eased, the further reduction in activity highlights the challenges that the economy faces in its recovery from this crisis.
Firms are now presented with an environment of subdued demand, as clients remain hesitant to place orders amid uncertainty over the removal of restrictions and the potential for further outbreaks.
Continue reading...Live coverage of business, economics and financial markets
In total the coronavirus government support for UK workers has come to £21.8bn, if you add together the money paid for furloughed employees and income support for self-employed workers.
More than 10m British workers have been given some form of income support, if furlough numbers are added to those who have claimed self-employed support*.
More struggles for the British property sector:
British Land, which owns shopping centres including Sheffield’s Meadowhall and Drake Circus in Plymouth, has written down the value of its retail portfolio by more than a quarter due to the impact of the coronavirus.
Related: Shopping centre owner British Land slashes value of retail portfolio
Continue reading...Burr’s cellphone seized overnight in inquiry into claims he used private coronavirus briefing to sell stocks before market plunge
A Republican US senator stepped down from a key committee leadership role in Congress on Thursday after his phone was seized overnight by investigators with a warrant looking into allegations that he used private briefings as inside information to dump shares before the market plummeted over the coronavirus crisis.
Related: Republican senator urged to quit after report he sold stocks before Covid-19 market plunge
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