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Stocks rose last week and continued to rise Monday as investors watched President-elect Biden with the Republican Senate. A loan… Erin Schaff/New York Times.
- Wall Street stocks were set to open up nearly 3% Monday after promising news about Pfizer’s Covid-19 vaccine pushed markets higher. This jump followed strong rises on the European and Asian markets on the first trading day after Joseph R. Biden Jr.’s call for the presidential race on Saturday.
- The Stoxx Europe 600 core index rose by 2.5%, the fifth increase of more than 1% over the last six trading days. The FTSE 100 in the UK increased by 2.4%, the CAC in France by 3.2% and the DAX in Germany by 3.4%. The Nikkei 225 in Japan ended the day with 2.1% and the Hang Seng in Hong Kong with 1.2%.
- The futures market developed after a vaccine developed by Pfizer and BioNTech showed more than 90% efficacy in preventing Covid-19 infections in a large study. Pfizer said it will produce enough vaccine by the end of the year to immunize between 15 and 20 million people. Pfizer’s shares have won more than 12% in pre-market trading.
- The news that the vaccine may be available later this year has caused publicity in the sector most affected by travel restrictions. In pre-market operations, American Airlines and United Airlines increased by 14% and 10% respectively. Carnival, an operator of cruise ships, grew by 19% before the market opened. This year, the company’s shares fell by more than 70%.
- Monday’s trading follows the best week since April for the S&P 500, as investors are increasingly confident that President-elect Biden will rule alongside the Republican Senate. However, due to the two rounds of voting in Georgia, the control of the Senate will not be known until January.
- The S&P 500 fell sharply at the end of October, but rose 7.3% last week and is now 2% higher than the September record. On Friday, the MSCI All Country World Index, a global stock market index, reached a record high after rising 7.6% last week.
- Oil prices have risen. The US West Texas Intermediate index rose 8.4%, exceeding $40 a barrel. Yields on ten-year US government bonds rose by 10 basis points or 0.1 percentage points to 0.92% and the price of gold fell by 2%.
- The prospect of higher government spending to support consumers, businesses and possibly state and local government finances in the United States is an important factor that has caused some volatility in the past two months. Although negotiations are expected to continue, the elections have somewhat clouded the picture and expectations regarding the size of fiscal operations have decreased.
- Paul Donovan, Chief Economist at UBS Global Wealth Management, presented a number of key issues for short- and long-term investors: The prospect of a lame duck financial package; all the policies that President Trump might take in the weeks leading up to Biden’s inauguration; who will have positions in Biden’s administration; which party will control the Senate.
- He said markets will focus more on environmental policies over a longer period of time, as well as whether increasing polarization will harm US economic growth.
- The Turkish lira rose from a record high on Monday after two major changes in the economic direction of the country. The head of the country’s central bank was replaced on Saturday. The next day, Finance Minister Berat Albayrak, President Recep Tayyip Erdogan’s son-in-law, announced his resignation.
- This unusual series of events could mean a change in orthodoxy, giving the lecture a much-needed breathing space, according to Peter Mathis, Rabobank’s monetary strategist.
Large companies and wealthy investors seem to be in a difficult situation with the election results. A loan… Gina Moon for The New York Times.
For Wall Street, the 2020 elections were associated with risks and uncertainties.
Candidates who had promised to limit the surplus of U.S. companies and tax the super-rich early questioned the Democratic presidential candidate as part of their promise to close the wealth gap in the country.
Fear has recently shifted to possible unrest or an election with no clear outcome – two factors that will lead to uncertainty that investors and CEOs do not like.
Finally, large corporations and wealthy investors seem to be in a tricky situation: the more predictable White House under Joseph R. Biden, Jr., now presidential candidate, is associated with the Republican-led Senate, which can protect itself from higher taxes or other policy changes that investors find unattractive. At least for now. Senate oversight is an issue that will not be resolved until January, after Georgia has held two rounds of elections).
Financial markets don’t want risks and sudden changes, says Charles Phillips, a long-term software industry director who is involved in a technology investment fund and supports Biden. So the fact that he’s evened out and he’s cooperating, and the fact that we’re probably going to have a Republican Senate – when that happens, it’s going to limit what he can do, he said.
Markets have grown over the past week, as the country’s vote count seems to have shown this result. Over the weekend, after the announcement of the race for Biden, some analysts said they expected more from the peaceful conclusion of the election process. To monitor the growth of business inventories, Biden’s policies are likely to be favorable – including green energy companies, equipment manufacturers and virus testing laboratories, as well as infrastructure.
Mr Biden has received substantial financial support from donors in the financial sector (approximately USD 74 million). According to data from the Centre for Responsible Politics, which has overshadowed Trump’s support on four occasions, some of them have expressed concerns about their candidate.
President-elect Biden offers great experience, a strong hand and an unparalleled ability to overcome obstacles, said Jon Gray, chairman of the giant investment firm Blackstone Group.
Other reactions from Wall Street after the election call were more balanced.
Ken Griffin, billionaire and founder of La Citadelle, said he was relieved there was no social unrest. David Solomon, CEO of Goldman Sachs, and George Wallace, who heads Neuberger Berman, both stressed the challenges Biden is facing in the country due to the pandemic and the economic crisis. Meanwhile, Bill Ackman, director of the Pershing Square Capital Management hedge fund, has asked President Trump to mercilessly resign and call for unity from all those who have supported you.
Monday at an investment bank in Tokyo. The technology conglomerate’s latest profit report showed that the company continues to improve after the heavy losses of a year ago… credit… Koji Sasahara/Presse Associée
Last year, SoftBank, a Japanese conglomerate led by roving billionaire Masayoshi Song, came back from the brink of collapse.
On Monday, SoftBank said the trend continued until the end of the summer, prolonging the recovery of one of the biggest losses in the history of Japanese companies.
On Monday, the company announced profits for the three months ending September for an amount of Yen 562 billion or $ 5.4 billion. The jump from a major loss a year ago was largely due to the growing global technology base, as the coronavirus encourages consumers to spend more time online.
Last year, WeWork’s disastrous investment in offices challenged Mr. Sun’s investment strategy. At the beginning of the year, due to the coronavirus pandemic, Softbank focused on companies like Uber and Oyo, which were severely affected by the locations around the world.
But a broad market recovery has increased the value of some of the shares held by Vision Fund Softbank, the world’s largest technology investment vehicle. According to the company, the fund’s initial investments in 83 companies had grown from $75 billion to $76.4 billion by the end of September.
However, about half of the fund’s growth is due to rising valuations of unregistered companies. SoftBank has often been criticized by analysts for the lack of transparency in the evaluation of its investments in these private companies.
All market volatility has not been good news for SoftBank. The Company also recorded a loss of US$1.27 billion as a result of the price at risk of derivative financial instruments. These measures, which were widely publicised in September, raised additional concerns about Mr Song’s perception of investments.
At Monday night’s profit conference, Mr. Song rejected management’s criticism of losses as short-lived setbacks that distracted him from his long-term vision of the company’s success.
Amazon’s quarterly results exceeded the analysts’ high expectations… Kevin Mohatt/Reuters.
The third quarter revenue season is almost over and the results so far are much better than expected. According to a report by Peter Evis and Neary Cokeshi of the New York Times, about 80 percent of the S&P 500 companies that reported third quarter revenues have so far exceeded analysts’ expectations.
It’s much more than usual. Usually, two-thirds of companies simply stay away from quarterly analysts’ forecasts.
These are Peter and Nyrai’s highlights at the end of the season that he won.
The strong become stronger.
As the pandemic forced people to stay at home and do more online business, some successful companies were in an ideal position to take advantage of the changes.
Let’s take a look at the Amazon. Profit for the first nine months was USD 5.8 billion higher than the previous year. They allowed the company to spend 120% more on issues such as storage, technology and other capital investments during that time. These costs – $25.3 billion – can make it difficult for the company to expand beyond Amazon’s main competitors.
Some entities are performing better than expected.
When the pandemic struck, many executives rightly feared that their companies were facing an existential crisis. But it’s surprising that many of them succeeded, partly because many Americans who didn’t lose their jobs but didn’t spend money on travel and entertainment had a higher disposable income.
General Motors, Ford Motor and other car manufacturers reported large profits.
In the case of certain large restaurant chains, the increase in the number of customers and the delivery and acceptance of orders contributed to this development. Papa John’s, whose shares have risen 32% this year, reported an increase in sales, profits and cash flow on Thursday and announced a new share buy-back programme.
The economy has adapted, in some cases successfully.
Hertz filed for insolvency protection in May. And its biggest competitor, Avis Budget Group, suffered huge losses – $639 million in the first six months of the year. But in the third quarter, Evis made a modest profit of USD 45 million.
The company’s profitability was made possible by cost savings and the decision to sell 75,000 vehicles in the United States to take advantage of the strong demand for used cars. (At national level, expenditure on used light goods vehicles, including SUVs, increased by almost 19% in the third quarter compared with the previous year).
Prospects for others are terrible
Passenger airlines are among the major losers from the pandemic and have little chance of improving their prospects. Delta, United Airlines and American Airlines quickly cut costs and received $50 billion from the federal government’s economic stimulus package in March.
In the third quarter, the American lost $2.4 billion and the United Company $1.8 billion. For all three indicators, turnover fell by more than 70% compared to the same three months of the previous year.
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