Google has missed a beat in the recent revenue growth surge that had carried its shares of parent Alphabet to record highs, sending a tremor through Wall Street as investors worried it might signal a turning point in its core advertising business. Shares in Alphabet fell more than 7 per cent in after-market trading on Monday after the company reported revenue growth of 17 per cent in the first three months of the year — a huge figure for a company whose quarterly revenue has now hit $36.3bn but still about $1bn less than most analysts had expected. Alphabet blamed the shortfall on a number of factors, including the strength of the US dollar, a tough comparison with a strong quarter last year, and a timing consideration that left it with fewer enhancements to its advertising services in recent months that might have pushed revenue higher.
The governing Socialist party (PSOE) has won Spain’s general election, taking 123 seats and giving prime minister Pedro Sánchez options to assemble a majority potentially without the support of Catalan separatists. The Socialists won 29 per cent of the vote and gained 37 seats on the previous election in 2016 in a decisive victory over a weakened rightwing opposition which split into three with the breakthrough of the ultranationalist Vox, which took 24 seats. Mr Sánchez told supporters in Madrid on Sunday night: “The Socialist party has won the general elections, and with them the future has won and the past has lost.” Together with the far-left Podemos, whose support held up better than expected, Mr Sánchez has 166 seats in the 350-seat Congress. He could try to form a government with the support of Basque nationalist and moderate regional parties. “Pedro Sánchez comes out of this very reinforced and has several options in reach,” said Astrid Barrio, professor of politics and the University of Valencia.
Deutsche Bank and Commerzbank have abandoned their merger talks, bowing to shareholder concerns and employee resistance in a move that could open the door for foreign rivals to acquire the smaller of the Frankfurt-based rivals. Germany’s two biggest listed lenders said that they concluded there were too many hurdles to justify pursuing a complex deal that would have formed the eurozone’s second-largest lender with €1.8tn in assets and 140,000 employees. The decision leaves the duo seeking strategic alternatives to cut costs and stem revenue losses, while grappling with historically low interest rates, fierce domestic competition and high funding costs. Shares in Deutsche Bank rose 4.2 per cent, while Commerzbank shares fell 2.5 per cent. “After careful analysis, the management board of Deutsche Bank has concluded today that a combination with Commerzbank would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration,” Deutsche Bank said in a statement.
Facebook has set aside $3bn to cover a potential fine by the US Federal Trade Commission for privacy violations, in what would be the largest civil penalty ever imposed by the regulator. The world’s largest social network took the charge in its first-quarter results on Wednesday, but it also warned that resolving the investigation, launched by the FTC in the wake of the Cambridge Analytica scandal, could cost even more. The fine could be as high as $5bn, it said, adding that “this matter remains unresolved”. Its estimate of the likely fine comes as Facebook and other big tech groups face increasing scrutiny from lawmakers around the world over how they handle user privacy and content moderation on their platforms, as well as growing concerns over their size and influence. As a result of the “one-off charge”, Facebook reported first-quarter earnings of 85 cents per share, well below the average analyst estimate of $1.61.
US stocks reached a record high on Tuesday as investors, reassured by recent dovish signals from central banks, extended a months-long recovery in spite of continued uncertainty over the outlook for the global economy. The benchmark S&P 500 ended the day 0.9 per cent higher at 2,933.7 thanks to the best daily gain for healthcare stocks since mid-January and a rally in consumer discretionary and technology shares. That pushed the equities benchmark past its peak closing level from September 20 last year of 2,930.8. The tech-focused Nasdaq Composite jumped 1.3 per cent to close at 8,120.8, taking it past its previous peak close of 8,109.7 on August 29. The S&P 500 is up 17 per cent so far this year and marks a recovery of about 25 per cent from a recent nadir on December 24, when it closed on the verge of a bear market. The Nasdaq Composite is up 22 per cent in 2019.
The Trump administration is demanding countries no longer import any oil from Iran, removing waivers from US sanctions on crude granted to some of Iran’s largest customers as part of an escalating effort to pressure the regime in Tehran and bring Iran’s crude exports “to zero”. The move sent oil prices to new highs for the year on Monday after the US said nations including India and China would face penalties if they continued to import Iranian oil. Japan, South Korea and Turkey would also face US sanctions if they did not comply after the waivers are withdrawn next month. “Any nation or entity interacting with Iran should do its due diligence and err in the side of caution,” said Mike Pompeo, the US secretary of state. “How long we remain on zero depends solely on Iran’s behaviour.”
Donald Trump feared Robert Mueller’s appointment as special counsel would lead to the “end” of his presidency and worked on multiple fronts to derail his investigation, only to be thwarted in many cases when his aides failed to carry out his orders, a redacted version of Mr Mueller’s report released on Thursday has revealed. Based on a nearly two-year investigation into Russian meddling in the 2016 elections, the 448-page report details the struggles of Mr Mueller’s team to determine whether the president’s efforts constituted criminal obstruction of justice. While respecting justice department guidelines against indicting a sitting president, the special counsel neither accused Mr Trump of violating the law or cleared his name. “If we had confidence after a thorough investigation of the facts that the president clearly did not commit obstruction of justice, we would so state. Based on the facts and the applicable legal standards, however, we are unable to reach that judgment,” the report said.
The tech companies Pinterest and Zoom Video Communications have each set the price of shares in their initial public offerings above their earlier price ranges, pointing to stronger demand from investors than they had previously indicated. The news suggested that the slump at ride-hailing company Lyft, whose shares have fallen 17 per cent since its stock market debut two weeks ago, has not damped Wall Street’s appetite for the latest batch of tech IPOs. However, some analysts had described Pinterest’s earlier price range as very cautious, and others said that the performance of recent IPOs such as Lyft was unlikely to have a big effect on overall demand. “The fact that some trade up and some trade down isn’t going to affect either of these [IPOs], except at the margin,” said Lise Buyer, an IPO adviser in Silicon Valley who was not involved in either deal.
The Chinese economy grew at a faster-than-expected rate during the first quarter of this year, after US President Donald Trump last month backed down from a threat to escalate his trade war with Beijing and government stimulus measures began to take hold. On Wednesday the National Bureau of Statistics estimated that the world’s second-largest economy expanded 6.4 per cent in the first quarter, compared to the same period last year and ahead of the 6.3 per cent expected according to a Reuters poll. The figure matched the 6.4 per cent growth posted in the final quarter of 2018, but was significantly below last year’s first-quarter growth figure of 6.8 per cent. “Q1 is expected to mark the low point of China’s growth cycle,” said Tai Hui, chief Asia Pacific market strategist for JPMorgan Asset Management. “Recent data indicate that government policy to stabilise the economy is taking effect.”
Goldman Sachs has delayed an eagerly anticipated strategic update, dashing hopes that the powerhouse investment bank would lay out new plans as some of its core businesses struggle with difficult trading conditions. The bank’s shares were down as much as 3 per cent by midday after Goldman revealed a 21 per cent decline in net earnings in the quarter compared to a year earlier. They were dragged down by falling trading revenues, lower private equity profits and shrinking transaction revenues in its investing and lending division. David Solomon, who was appointed chief executive last October, said he would wait until the first quarter of 2020 before providing a “comprehensive strategic update” that will detail a three-year plan for Goldman’s continued transformation from a trading powerhouse to a more diversified bank that offers everything from retail banking to cash management for companies.
Italy cut its growth forecasts for this year and next on Tuesday while hiking the budget deficit and public debt, underscoring the economic woes faced by the populist ruling coalition. Gross domestic product in the euro zone’s third largest economy will increase just 0.2 percent this year, the government said, down from a projection of 1.0 percent it made in December. The slowdown in growth hurts public finances, and the Treasury raised this year’s budget deficit target to 2.4 percent of GDP from a 2.04 percent goal fixed in December after a drawn-out tussle with the European Commission.
No company in recent history has come to the public markets under more of a legal shadow than Uber. In the coming weeks, documents will be made public for a stock market listing that could value the ride-hailing app at more than $100bn. But those documents will include lengthy disclosures on its pending lawsuits and government investigations, including any lingering issues dating back to its days under its hard-charging former chief executive Travis Kalanick, said lawyers and corporate governance experts. “With Uber, given their previous CEO and history, there are more risk factors than with other [companies],” noted Jay Ritter, an expert in initial public offerings at the University of Florida. At the top of that list of risk factors is the very structure of Uber’s business, which relies on a workforce of drivers which the company does not consider employees — and therefore does not have to meet regulations about pay and benefits.
The global economy has slowed sharply since last summer and will rely on a “precarious” boost from a few emerging markets to reverse the loss of momentum, the IMF has predicted in its latest economic forecast. Cutting its outlook for 2019 and 2020, the fund judged that advanced economies would “continue to slow gradually” into next year while emerging economies would play a more positive role, led by an end to crisis conditions in Turkey and Argentina and stabilisation in the all-important Chinese growth rate. Global growth slowed sharply in the second half of 2018 from 3.8 per cent in the first half to only 3.2 per cent, the IMF said with industrial production and world trade hit hard. Growth rates would have fallen further without consumer sentiment holding up strongly.
Bitcoin [BTC] as it so often does, anchored a massive bullish swing for the market. The collective market pumped to levels not seen since the November 2018 bear market shaved over $100 billion in less than a month. Litecoin [LTC], EOS [EOS], Tron [TRX], Monero [XMR], and IOTA [MIOTA] saw notable gains, but Bitcoin was the highest gainer in the top-20. Reaffirming its position as the king coin, Bitcoin’s massive pump saw its dominance in the market rise. The top cryptocurrency had seen a significant dip in its hold over the market, as it has been slipping since the beginning of the year. In early-January 2019, Bitcoin’s dominance stood at over 54 percent and prior to the immediate pump, was close to dropping below half. Many analysts believed that 2019 was the year that the Altcoins would edge the king coin in market dominance and institutional investors would chide Bitcoin for other multi-faceted options. Mati Greenspan, the senior market analyst at eToro was a proponent of this camp, claiming that the altcoin season had arrived.
|
PurposeMajor markets news headlines which captured the markets. Archives
March 2021
Categories |