Disappointing Earnings Reports Decline Stocks
US and European stocks declined on Thursday after several disappointing first-quarter earnings reports. The S&P 500 index (SPI:SP500) fell by 0.6%, while the Nasdaq Composite (NASDAQI:NDX) dropped by 0.8%. Shares in Tesla (NASDAQ:TSLA) fell nearly 10% after the company reported that price cuts had further lowered its profit margin. AT&T (NYSE:T) also experienced a 10% drop in its shares, pulling down stocks across the telecommunications sector, following weaker than anticipated revenue and free cash flow.
Alphabet Merges AI Units
Alphabet (NASDAQ:GOOG) has announced the merging of its AI research units, DeepMind and Google Brain, in a bid to catch up in generative AI against rivals such as Microsoft and OpenAI. The restructure will result in Demis Hassabis, the British head of DeepMind, leading the newly combined unit, which will claim credit for many of the research breakthroughs that have made AI one of the most important new technologies in the industry since the internet.
SpaceX Starship Launch Fails
SpaceX’s Starship system, carrying a spaceship atop the most powerful rocket ever built, was launched from the Gulf Coast of Texas. Although Starship successfully launched, at around 40km up, the booster and spaceship failed to separate from each other. This caused the craft to experience “rapid, unscheduled disassembly” and explode.
American Express’s Profit Drop
American Express (NYSE:AXP) set aside more funds to cover souring loans, causing a drop in first-quarter profit, as inflation and higher interest rates weigh on consumers. Shares of the company dropped by 3.8% to $158.61 in New York. Loan loss provisions in the period amounted to $1.1 billion, more than the $890 million estimated by analysts surveyed by Bloomberg.
BMW Apologises for Discrimination
BMW (ETR:BMW) has apologised in China after facing accusations of discrimination at the Shanghai motor show when giving out free ice creams. A video on China’s YouTube-like platform Bilibili showed that while the carmaker’s Mini booth offered free ice cream to foreign visitors, it turned away Chinese customers. The ice cream campaign was intended to be a sweet dessert for all visitors, the Mini China account said in a statement posted later on Chinese microblogging site Weibo, apologizing for the inconvenience.
BuzzFeed Shuts Down News
BuzzFeed (NASDAQ:BZFD) is shutting down its news operation and terminating about 15% of its workforce, according to an internal memo sent to staff. Despite winning a Pulitzer prize in 2021 for its journalism, the digital media company has struggled to make profits. Vice Media and Vox Media, similar disruptive firms launched shortly after BuzzFeed, also face funding challenges.
Whole Foods Cuts Jobs
Whole Foods Market is planning to cut hundreds of corporate jobs as it restructures its operations to simplify them. The Amazon-owned grocer (NASDAQ:AMZN), which operates in nine regions, will be consolidated to six, according to a memo viewed by The Wall Street Journal. Staff cuts are expected to result from the restructuring, with affected employees to be informed of the changes soon. Whole Foods has clarified that none of its stores or facilities will be closed.
Canadian ETF Trading Ban
Analysts in the fund industry have expressed surprise at the unusual financial arrangements of a family of Canadian exchange-traded funds (ETFs) that are under a trading ban. The Ontario Securities Commission suspended trading in 11 ETFs when their sponsor, Emerge Canada, failed to submit audited financial statements by the March 31 deadline, having parted ways with its auditor, BDO Canada, in November 2021. Six of the ETFs had a total of CAD 2.54mn ($1.89mn) owed to them by Emerge Canada as of June 30, 2022, which represented 2.4% of the funds’ combined assets of $107.5bn.
BHP Lowers Production Outlook
BHP (NYSE:BHP) , the world’s biggest mining company, has lowered its production outlook for certain metals, including nickel. However, the company maintained its full-year copper output outlook despite reducing guidance at its Escondida mine in Chile due to wet weather affecting coal operations. CEO Mike Henry remains positive on commodity demand after engaging with customers in China and India, offsetting slowing growth in the US, Japan, and Europe.
Rakuten Bank IPO Rush
Investors rushed to buy shares in Rakuten Bank (TYO:4755) in the first 30 minutes of Friday morning, leading to an untraded stock after Tokyo’s largest initial public offering since 2018. Rakuten Bank, Japan’s biggest internet bank by customer numbers and spun out of the country’s largest ecommerce group, raised $625mn in an IPO. Despite this, the build-up has failed to raise the share price of parent company Rakuten Group, which launched a mobile network during the pandemic and announced a full-year loss of $2.8bn in February.
Tianqi Cancels Takeover Bid
China’s Tianqi Lithium Corp. (SHE:002466) announced the cancellation of its takeover bid for Australian explorer Essential Metals Ltd. after failing to secure enough support from the target’s shareholders. Essential is now free to engage with other parties to progress its Pioneer Dome project toward production, said the Perth-based company. Tianqi dropped its A$136 million ($91 million) plan to buy Essential after it failed to secure the backing of the shareholders.
Sunac Clears Debt Hurdle
Sunac China Holdings Ltd. (HKG:1918) opened up to 20% higher in Hong Kong after clearing a significant hurdle in restructuring $9 billion worth of debt. Its offshore bonds were little changed Friday morning, around 21 cents on the dollar. Investors holding over 75% of its offshore debt accepted a restructuring proposal, the company said, allowing for the implementation of the debt restructuring. If approved by the court, the scheme will become binding on all creditors, including those who voted against and those who did not vote at all. Sunac’s shares have narrowed their 59% plunge since mid-April.