Stocks Rise Amid Debt-Ceiling Deal Talks
Stocks made gains on Thursday following House Speaker Kevin McCarthy’s announcement that the House of Representatives could vote on a debt-ceiling deal as early as next week. The S&P 500 (SPI:SP500) rose by 0.9%, reaching its highest level since August 25. The Nasdaq Composite NASDAQI:NDX) increased by 1.5%, while the Dow Jones Industrial Average (DOWI:DJI) saw a slight rise of 0.3%.
Japanese Stocks Surge, Volatility Spikes
The recent surge in Japanese stocks, reaching levels not seen in over 30 years, has been accompanied by an unusual spike in volatility. The Nikkei Volatility Index (JNIV), based on options prices similar to the CBOE VIX, rose from 15.78 a week ago to as high as 22.48. This increase coincides with a wave of short-covering by market players who did not anticipate such a strong rally.
Yen Hits Lowest Point of the Year
The value of the yen against the dollar reached its lowest point this year amid diminishing speculation that the Bank of Japan would make early adjustments to its yield-curve control policy. On Thursday, the Japanese currency traded at 138.75 per dollar, the weakest level since November. Among the Group-of-10 currencies, the yen is the second-worst performer this year, depreciating by more than 5% against the greenback.
China’s Yuan Depreciates Rapidly
China’s yuan is experiencing the fastest depreciation in three months, and the country’s central bank has refrained from intervening. The offshore yuan has dropped to as low as 7.075 against the dollar, marking the largest weekly loss in three months. The People’s Bank of China set the currency’s fix weaker than 7 per dollar for the first time since December. The yuan fix on Friday was generally aligned with the average estimate in a Bloomberg survey of analysts and traders.
Japanese “Digital Deficit” Weighs on Yen
Barclays Plc suggests that the increasing outflow of Japanese funds for services like video and music streaming is becoming a significant burden on the yen. This so-called “digital deficit” in Japan, resulting from payments to overseas technology companies such as Netflix Inc. (NASDAQ:NFLX) and Amazon.com Inc. (NASDAQ:AMZN), has grown considerably in relation to trade and travel in the country’s current-account balance. The continued expansion of this deficit is expected to exert pressure on the yen. Last year alone, it reached ¥4.8 trillion ($34.7 billion), accounting for nearly 90% of Japan’s services account deficit.
Stockholm IPOs Trade Below Offering Price
Economic headwinds and market volatility have taken a toll on companies listed in Stockholm since 2020, with nearly 80% of them now trading below their initial public offering price. This situation undermines the prospects of a swift recovery in new listings. Data compiled by Bloomberg reveals that out of the 203 companies that went public during this period, shares in at least 160 are currently valued lower than their market entry. Shockingly, 30 of these companies have experienced a decline of 90% or more in their value.
Nationwide Profits Jump 39%
Nationwide, the largest building society in the UK, recorded a significant 39% jump in full-year profits, thanks to rising interest rates that boosted the lender’s bottom line. However, the chief executive expressed concerns about the potential impact of higher borrowing costs on customers. The UK lender posted pre-tax profits of £2.2 billion for the year ending in April, marking a 39% year-on-year increase. Revenues also saw a substantial rise, reaching £4.7 billion, a 20% surge.
Amundi Shifts Focus to China
Amundi (EPA:AMUN), Europe’s largest asset manager, is shifting its focus from US assets to China due to the latter’s promising economic prospects, better valuations, and a more favorable outlook for inflation. Vincent Mortier, the chief investment officer of the Paris-based fund firm with €2.1 trillion in assets, believes that Chinese credit and high-quality companies are currently undervalued, whereas the US markets appear overly optimistic amidst the looming recession.
Disney Cancels Florida Campus Plan
Disney (NYSE:DIS) has decided to cancel its plans for constructing a corporate campus near Orlando, Florida, and relocating over 2,000 jobs to the area. The cancellation comes as a result of a fallout between Disney and Florida’s Republican governor, Ron DeSantis. This dispute arose following Disney’s opposition to the “Don’t say gay” law. The cancellation nullifies the potential benefits of a tax credit on the $1 billion site, which would have allowed Disney to recoup up to $570 million over 20 years.
Alibaba Spins Out $12B Cloud Business
Alibaba Group Holding Ltd. (NYSE:BABA) surprised the market by announcing the complete spinout of its potentially transformative $12 billion cloud business, sparking speculation about whether this decision was influenced by market dynamics or political considerations. The move has raised questions and intrigue surrounding the Chinese e-commerce giant’s strategic decisions.
Supreme Court Rules Against Amgen’s Patents
In a victory for rival pharmaceutical firm Sanofi (EPA:SAN), the Supreme Court ruled that Amgen’s (NASDAQ:AMGN) patents related to its cholesterol drug Repatha should not have been granted by the patent office. The unanimous 9-0 decision, authored by Justice Neil Gorsuch, makes it more challenging for pharmaceutical companies to secure broadly worded patents that are used to block competitors from entering the market. This ruling concludes a long-standing lawsuit dating back to 2014, in which Amgen sought substantial damages from Sanofi and its partner Regeneron Pharmaceuticals for alleged patent infringement.
Syngenta Abandons Nasdaq-Style Listing Plan
Syngenta Group, a global agricultural company, has decided to abandon its plan to go public on China’s Nasdaq-style market and instead pursue a listing on Shanghai’s main market, making another attempt at a significant initial public offering. Acquired by state-owned ChemChina for $43 billion in 2017, the seed and pesticide producer has been diligently working towards a listing in mainland China for almost two years, aiming to make a major impact on the stock market.
Fujitsu Sale Faces Price Dispute
The sale of Fujitsu Ltd.’s (TYO:6702) majority stake in its air-conditioner manufacturing unit has hit a roadblock due to disagreements over the price, sources familiar with the matter revealed. The negotiations for the 42% stake have been impacted by the recent increase in shares of Fujitsu General Ltd. However, the individuals spoke on condition of anonymity as the issue remains confidential. Following the report by Bloomberg News, Fujitsu General’s shares experienced a significant drop of up to 10.3% in Tokyo, marking the largest intraday decline since January 2018