Global equities have suffered their worst week since the ructions in March, with Wall Street’s tech titans among the latest casualties in a sell-off attributed to caution over coronavirus and the US election. Renewed virus-related lockdowns across much of Europe and the final stretch of the hotly contested US presidential campaign have contributed to an uptick in financial market volatility this week, with further losses on Friday. The MSCI All Country World index of global equities fell 1.2 per cent, leaving it down 5.3 per cent over the five sessions, its steepest weekly sell-off since concerns about coronavirus gripped markets in March. The US S&P 500 closed down 1.2 per cent after a choppy day’s trading, to end the week 5.6 per cent lower. The tech-heavy Nasdaq Composite was 2.4 per cent lower and down 5.5 per cent for the week following quarterly results from some of the sector’s largest companies. Alphabet, Amazon, Apple and Facebook all beat analysts’ expectations, but share prices of the quartet have soared this year and investors took money off the table. Facebook shares fell more than 6 per cent, while Amazon and Apple slid more than 5 per cent. The biggest US tech companies set aside their growing political troubles on Thursday to disclose the latest leg of their seemingly unstoppable business ascendance: a stunning boom in digital markets has lifted their fortunes at a time when much of the global economy is hurting. Alphabet, Amazon, Apple and Facebook all disclosed quarterly results on Thursday that showed revenues climbing faster than Wall Street had been expecting in the three months to September. Online advertising markets roared back to life quickly after a coronavirus-induced slump earlier in the year, according to the latest figures. Meanwhile, the ecommerce and cloud computing booms touched off by the pandemic continued unabated, as digital activity soared. Deutsche Bank reported its highest profit in six quarters as a surge in bond trading and lower provisions for bad loans buoyed Germany’s largest lender. The bank’s fixed-income trading revenues climbed 47 per cent in the third quarter, surpassing the average of 26 per cent recorded by its five largest rivals on Wall Street. “While we benefited from some market tailwinds, the key driver of our outperformance has been the changes we have made to our business over the past year,” Ram Nayak, Deutsche’s head of fixed income and currency sales and trading, told the Financial Times. Total revenue at Deutsche’s investment bank increased by 43 per cent in the quarter from a year earlier, and at €2.4bn, surpassed the first quarter, traditionally the strongest for investment banks. British officials have not been able to meet a single senior member of Joe Biden’s foreign policy team in recent weeks, hampering Downing Street’s preparations for what might happen should the Democratic candidate win next week’s election. Foreign Office staff had hoped to meet Mr Biden’s closest foreign policy advisers in the run-up to the presidential election on November 3, but senior officials in London and Washington said the UK had been rebuffed as part of a strategy by his team to avoid meeting foreign governments during the campaign. The lack of contact has made it harder for Boris Johnson’s government to plan for what might happen should Mr Biden win, as polls predict. Mr Johnson has formed a strong bond with Donald Trump, the US president, and some in London are concerned they have not been able to foster such close links with his opponent, potentially throwing the future of a US-UK trade agreement into doubt. Donald Trump and Joe Biden clashed over whether the US is “rounding the corner” on coronavirus in a final presidential debate that was more civil than their first encounter but crystallised the personal and policy differences between the candidates. The confrontation in Nashville, Tennessee, on Thursday came 12 days before the election and with the president trailing his Democratic challenger in the polls, raising the pressure on Mr Trump to land a knockout blow. The pandemic was topic number one and Mr Biden accused Mr Trump of lacking a plan to stop the spread of the virus — warning of a “dark winter” ahead — as the US death toll from the disease climbed toward 220,000. Gilead has received the first US regulatory approval for a Covid-19 drug, as the Food and Drug Administration approved its antiviral remdesivir for patients hospitalised with the disease. Shares in Gilead rose 4.2 per cent to $63.18 in after-hours trading after the FDA’s announcement. Remdesivir, now known by the brand name Veklury, was originally developed to treat Ebola. The antiviral was already being used to treat patients under an emergency use authorisation. It was one of the drugs Donald Trump was given when the US president had Covid-19. Trials have shown that remdesivir can speed up recovery but it has shown little effect on how likely patients are to survive. UBS said on Tuesday it would set aside $2.5bn to return to shareholders next year as a surge in third-quarter profits and revenues confounded expectations that the pandemic would disrupt global lending. The Swiss bank — the world’s largest wealth manager — reported third-quarter profits attributable to shareholders of $2.1bn, up 99 per cent year on year. It recorded a 21.9 per cent return on tier one capital. Revenues for the quarter were $8.9bn, up 25 per cent from the third quarter of 2019, driven by a strong rise in trading revenues in investment banking and strong underlying performance in its core wealth management division. UBS said it had realised credit losses of just $89m in the three months to September, largely related to coronavirus — far less than the $201m in losses analysts had expected. China’s economy expanded 4.9 per cent year-on-year in the third quarter as industrial growth continues to power the country’s recovery from the coronavirus pandemic. The expansion in gross domestic product missed expectations but was still well ahead of a 3.2 per cent increase in the second quarter and represented a sharp turnround from a historic decline at the start of the year. The recovery in the world’s second-largest economy, which has been stoked by a state-backed industrial boom, now shows signs of extending to consumption at a time when global growth remains under severe pressure. Industrial production in China leapt by 6.9 per cent in September — its highest level this year and the same rate as in December before the coronavirus outbreak. Boris Johnson is on Friday expected to try to force Brexit trade talks to a moment of crisis, amid claims in London that Brussels is dragging its feet by insisting that future concessions must come from the British side. David Frost, the prime minister’s chief negotiator, said he was “disappointed” with the outcome of a European Council meeting, in spite of the EU committing to continuing with talks next week. British officials claimed the “atmospherics were not good” at the summit and that Mr Johnson would make a statement on Friday, in which he will emphasise talk of a “no deal” end to the transition period on January 1. Some hedge funds are betting that the best days for the stock market’s coronavirus winners are in the past. Shares linked to home computing and gym equipment, grocery retail and healthcare soared when the pandemic forced countries into lockdown earlier this year. Many were lifted by hopes that changing behaviour and shopping patterns as a result of Covid-19 would feed through into stronger, long-term earnings growth, even though some companies have until recently been unprofitable. But some hedge fund managers are now betting against those stocks, in the belief that the boost to company earnings will fade away faster than many investors anticipate. The total value of China’s stock market has climbed to a record high of more than $10tn, as the country’s accelerating economic recovery propelled it past the previous peak hit during an equities bubble five years ago. The market capitalisation of all shares listed in Shanghai and Shenzhen hit $10.08tn according to Bloomberg data compiled on Wednesday based on the previous day’s close. The benchmark CSI 300 slipped 0.6 per cent on Wednesday. That is above the $10.05tn pinnacle hit in June 2015 immediately prior to a historic rout sparked by a crackdown on leveraged trading, which resulted in the Chinese market plunging by half. The world’s rich nations have drafted a set of technical principles which would revolutionise the corporate taxation of multinational companies and could raise $100bn in extra tax revenues around the world. The blueprints of the new system are ready to be implemented if political agreement can be reached next year, the OECD said on Monday. The Paris-based organisation has sought consensus between more than 135 nations on the reforms, which it said would enable tax authorities to collect up to 4 per cent more corporate tax. The blueprint’s goal is to ensure that multinationals — including highly profitable US tech giants and European luxury goods companies — pay corporate taxes on profits where they operate and cannot shift them to tax havens. China’s currency jumped by the most in four and a half years as trading resumed after a long holiday, boosted by the country’s accelerating economic recovery and rising odds of a Joe Biden presidency in the US. The onshore exchange rate for the renminbi, which has not traded since September 30 due to the lengthy National Day holiday, rose by as much as 1.2 per cent in morning trading on Friday to Rmb6.7091 per dollar. That is the currency’s biggest intraday rise since February 2016. The offshore renminbi, which traded throughout the recent holiday and whose value is more loosely regulated, climbed 0.6 per cent to Rmb6.6997 against the greenback. Senior White House officials and congressional Democrats traded barbs over Donald Trump’s sudden withdrawal from talks on a new economic relief package, as hopes dwindled for even a limited stimulus deal to help the US recovery. Democrat Nancy Pelosi, the House Speaker, and Steven Mnuchin, the US Treasury secretary, renewed talks on Wednesday morning after Mr Trump suggested he would be willing to support narrow aid bills, including one for an airline industry beginning massive lay-offs. But aides to Ms Pelosi noted that Republicans in the House of Representatives had opposed an airline rescue bill proposed by Democrats last week, adding the Speaker told Mr Mnuchin to review the legislation so they could have a more “informed conversation”. Amazon, Apple, Google and Facebook have all abused their market power according to a damning Congressional report that recommended forcing large technology companies to restructure their businesses entirely. A 449-page report released on Tuesday by the Democrat-controlled House of Representatives antitrust subcommittee amounts to a justification and a road map for what would be the biggest assault on corporate power in the technology industry since the 1990s. The report said: “By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them.” Donald Trump returned to the White House on Monday evening after three days of hospital treatment for coronavirus, although his doctor warned that the president was not yet “out of the woods”. Mr Trump walked down the steps of the Walter Reed Medical Center wearing a mask and without assistance shortly before 7pm, giving a thumbs up to the cameras and saying only: “Thank you very much, everybody.” Upon returning to the White House, he discarded his mask for an extended period to watch the departure of the presidential helicopter, Marine One, which had flown him back from the Maryland military hospital. Donald Trump and his wife Melania have tested positive for Covid-19 and will quarantine barely a month before the US presidential election. “Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!” Mr Trump tweeted. Shortly after Mr Trump sent the tweet, the White House released a signed memorandum from the president's physician confirming that both Mr and Mrs Trump had tested positive on Thursday evening. The Federal Reserve has banned big US banks from buying back shares for the rest of the year and capped their dividends, dashing hopes that more profitable lenders would be able to return boost returns to their shareholders. The Fed said on Wednesday that it had decided to extend curbs on payouts introduced in September because it wanted banks to maintain a “high level of capital resilience” against the backdrop of “continued economic uncertainty from the coronavirus response”. The extension was largely expected, but some bankers had tentatively spoken of increasing payouts later in the year. Jenn Piepszak, JPMorgan Chase’s finance boss, said at a conference on September 15 that she “wouldn’t rule out” buybacks in the fourth quarter. |
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