Signs of resurgent US economy send stocks to new peaks
Wall Street stocks are pushing ever further into uncharted territory as new data and corporate financials show that the economy and corporate America are still rebounding from the depths of the coronavirus crisis.
The S&P 500 has generated returns including dividends of 27 per cent so far this year as the blue-chip index has set record highs on more than 60 trading days, according to Goldman Sachs data.
Last week alone, US markets rallied 2 per cent, the best performance since June. Companies beaten down during the pandemic such as airlines, cruise operators and casinos advanced after Pfizer’s announcement on Friday that its antiviral pill successfully reduced hospitalisation rates stemming from Covid-19 by 90 per cent.
Evidence that the US economy is pulling itself out of the pandemic-induced downturn further bolstered sentiment, with the latest monthly jobs report showing a pick-up in job growth across nearly all sectors after several months of more lacklustre gains. More than 500,000 positions were created in October, and the unemployment rate fell to 4.6 per cent in a move that exceeded economists’ expectations.
Read more about US markets here.
What to watch in Asia today
Data: Singapore releases its current account and trade figures, Malaysia releases data on its foreign currency reserves and Taiwan publishes its balance of trade.
Earnings: Earnings released today include Japanese investment group SoftBank. The company reported ¥761.51bn ($6.9bn) in net profit in its June quarter. That was down 39 per cent on a year before, when it benefited from the merger of the US carriers Sprint and T-Mobile, but ahead of analysts’ forecasts of a net loss of ¥11.8b.
APEC: The Asia-Pacific Economic Cooperation ministerial summit opens. Although officially hosted by New Zealand, the gathering will be held entirely online
China: The central committee of the Chinese Communist party gathers in Beijing to set China’s agenda at their sixth plenum. The meeting will clear the way for President Xi Jinping to secure an unprecedented third term at the party’s 20th congress next year.
French prosecutors investigate Sanjeev Gupta’s business empire
French authorities have opened an investigation into Sanjeev Gupta’s business empire, deepening the challenge facing the UK metals magnate once hailed as the “saviour of steel”.
The Paris Prosecutor’s Office told the Financial Times it was probing Gupta’s French operations over allegations of “misuse of corporate assets” and “money laundering”.
France is home to several important assets in the GFG Alliance, the collection of plants and smelters Gupta amassed during a multibillion-dollar acquisition spree financed by Greensill Capital. Greensill’s collapse in March plunged GFG into crisis and triggered investigations in Germany and by the UK’s Serious Fraud Office.
Paris prosecutors said they launched their probe in July after suspicious activities were reported by public officials. They declined to provide details of the investigation.
GFG said it was “not aware of any such investigation and refutes any suggestion of wrongdoing in its French operations”.
Read more about the investigation here.
Musk urged to sell 10% of Tesla stake after holding Twitter poll
Elon Musk at the weekend asked Twitter users to decide whether he should sell more than $20bn worth of his Tesla shares and pay tax — and the online crowd responded with a resounding “yes”.
Musk’s apparent willingness to cash in a tenth of his stock and incur a tax bill of more than $4bn based on the will of the Twittersphere follows a proposal in the US that billionaires should pay tax on their unrealised capital gain. He warned last month that any new tax would one day be extended to the middle classes, tweeting: “Eventually, they run out of other people’s money and then they come for you,” he tweeted.
Leaving it to the crowd to decide whether he should make his first large-scale sale of Tesla stock was the kind of stunt that has delighted Musk’s fans and made him the most widely followed business leader on Twitter, with 62.7m followers, while needling his many critics.
“Whether or not the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll,” Ron Wyden, the Democratic head of the Senate finance committee, said before the result of the vote was known. Wyden has proposed a new tax on billionaires’ unrealised capital gains that would hit the 700 wealthiest people in America.
Read more about Elon Musk here.
Activist investor Third Point buys stake in Cartier owner Richemont
Activist hedge fund Third Point has taken a stake in Swiss luxury group Richemont, which owns watch and jewellery brands Cartier and Van Cleef & Arpels, according to people familiar with the matter.
The US-based fund Artisan Partners, which has been a Richemont shareholder for many years and owns a roughly 1.2 per cent stake, has also been pressing the group to improve its performance, according to one of the people.
Third Point did not return requests for comment, while Artisan could not immediately be reached for comment. Richemont, which will report its half-year results on Friday, declined to comment.
An activist campaign at Richemont would have to contend with powerful chair Johann Rupert, who has long set strategy and chosen managers for the 26 maisons that belong to the group. Although the South African businessman owns only 9.1 per cent of the capital, he controls 50 per cent of the voting rights under a dual-class share structure.
Critics argue that Richemont has not kept pace with competitors during a decade-long boom for the luxury industry largely driven by Chinese consumers. Its market capitalisation has risen by 79 per cent in the past five years, while those of LVMH and Hermes have roughly quadrupled.
Read more about the Richemont takeover here.