Dow climbs in early Friday action as Wall Street attempts to cap tumultuous trading week with an upswing


Stock benchmarks on Friday rose modestly higher as investors looked to close out a volatile, holiday-shortened week that has the tech-heavy Nasdaq Composite on track for its biggest weekly loss since the height of the pandemic-induced market selloff in March.

How are major benchmarks trading?

The Dow Jones Industrial Average
DJIA,
+0.19%

rose 117 points, or 0.4%, to around 27,650, while the S&P 500
SPX,
+0.07%

gained 14 points, or 0.4%, to trade at 3,353. The Nasdaq Composite Index
COMP,
-0.09%

climbed 48 points, or 0.5%, at 10,952. But all three benchmarks were trading off their intraday peak near the open, highlighting the week’s choppy action.

The Dow on Thursday fell 405.89 points, or 1.5%, to close at 27,534.58, while the S&P 500 ended with a loss of 59.77 points, or 1.8%, at 3,339.19. The Nasdaq Composite fell 221.97 points, or 2%, to finish at 10,919.59. Through Thursday, the Dow was down 2.1% for the week, while the S&P 500 was off 2.6% and the Nasdaq was 3.5% lower; markets were closed Monday for Labor Day.

What’s driving the market?

A decline in the S&P 500 index for the week would mark the benchmark’s first back-to-back weekly drop since May.

“While monetary policy is set to remain supportive for several more quarters, valuations are high across assets and volatility is resurfacing,” said Elia Lattuga, co-head of strategy research at UniCredit Bank, in a note. “The breadth of the rally is still limited and the recovery uneven—hence developments in the economic outlook and political risks represent significant threats to risk appetite.”

Stocks were unable to follow through Thursday on a Wednesday bounce that saw equities recover somewhat from a three-day, tech-led rout that pushed the Nasdaq into correction territory, falling more than 10% from its record close set last week.

Weakness on Thursday was partly tied to the inability of U.S. politicians to agree on a new coronavirus rescue package after Democrats blocked a Republican bill on the Senate floor, leaving the way forward unclear, analysts said.

Meanwhile, investors have fretted that the sharp rally that took stocks from their March pandemic lows to new all-time highs had left valuations significantly stretched for the large-cap, tech-related stocks that had led the rally this year. Among those highfliers, shares of Apple Inc.
AAPL,
-0.85%

 and Netflix Inc.
NFLX,
+1.22%

 were on track for weekly declines of more than 6%, while Facebook Inc.
FB,
-0.57%

 is off more than 5%.

In U.S. economic news, the consumer-price index for August rose 0.4% last month, beating average economists’ estimates for a rise of 0.3% but falling below the past two months at 0.6%. On a year-over-year basis, the CPI increased 1.3% after gaining 1.0% in July, the Labor Department said on Friday

Looking ahead, Federal budget figures for August are due at 2 p.m. Eastern.

Which companies are in focus?
What are other markets doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.675%

 rose 0.4 basis point to 0.687%. Bond prices move inversely to yields.

The ICE U.S. Dollar Index
DXY,
-0.12%
,
which tracks the performance of the greenback against its major rivals, fell 0.1%.

Gold futures
GCZ20,
-0.08%

were off 0.3% at $1,958 an ounce, threatening to snap a three-day winning streak. The U.S. crude oil benchmark
CL.1,
-0.10%

 fell 16 cents, or 0.5%, to $37.13 a barrel.

The Stoxx Europe 600 index
SXXP,
-0.11%

 was edging 0.1% lower, while the U.K.’s benchmark FTSE
UKX,
-0.26%

rose 0.2%. In Asia, Hong Kong’s Hang Seng Index
HSI,
+0.78%

and the Shanghai Composite Index
SHCOMP,
+0.78%

 both rose 0.8%, while Japan’s Nikkei
NIK,
+0.73%

rose 0.7%.



Original source link

European shares kick of week on strong footing, vaccine progress eyed By Reuters


© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

By Shreyashi Sanyal

(Reuters) – European shares bounced on Monday after a Wall Street-led rout in technology stocks kept global sentiment subdued in the previous week, with investors keeping a close watch on COVID-19 vaccine developments.

Australia expects to receive its first batches of a potential COVID-19 vaccine in January after a deal was struck with CSL (AX:) to manufacture two vaccines, one developed by rival AstraZeneca (L:) and Oxford University, and another in CSL’s own labs with the University of Queensland.

AstraZeneca rose 1.6%, with the European healthcare sector index () jumping 1.1%.

Sanofi (PA:) rose 1% after it said a coronavirus vaccine it is developing with Britain’s GlaxoSmithKline (L:) was likely to be priced at less than 10 euros.

The STOXX 600 index () was 1% higher, with Frankfurt shares () leading gains after rising 1.2%.

Autos () led sectoral gains in Europe after analysts at JP Morgan said the overall tone for production outlook in the European autos sector was “upbeat”, following its meetings with industry leaders.

Insurers () and financial services sub-indexes climbed in early trading, while telecoms () rose the least, suggesting a risk-on mood.

The STOXX 600 has remained stuck in a tight range since June, as a euro zone economic recovery appeared to be losing steam.

A batch of middling economic data last week bolstered expectations the ECB would maintain an accommodative stance to support inflation, in line with the U.S. Federal Reserve.

“Liquidity and low interest rates alone cannot be the solution to everything, so it’s essential to see continued improvement in economic data and an end to the pandemic for sustainable upside in risk assets,” said Hussein Sayed, chief market strategist at FXTM.

Data showed German industrial output rose far less than expected in July, suggesting Europe’s largest economy faces a slow return to production levels that preceded the crisis unleashed by the coronavirus pandemic.

“German industry eked out a meagre increase in production in July, leaving output still well below its pre-crisis level. Production is likely to have increased again in August, but we now seem to be past the period of rapid catch-up growth,” said Jack Allen-Reynolds, senior Europe economist at Capital Economics.

European banks () turned flat following a strong opening, after a rally last week on M&A negotiations between Bankia (MC:) and Caixabank (MC:).

Dechra (L:) jumped 9%, to the top of STOXX 600, after its profit beat expectations.

U.S. markets are closed on Monday for the Labor Day holiday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Original source link

U.S. IPO Weekly Recap: The September IPO Market Kicks Off With A Quiet Week


While there were no IPOs this past week, five SPACs went public ahead of the post-Labor Day rush.

Casdin Capital and Corvex Management’s SPAC CM Life Sciences (CMLF) upsized to raise $385 million. Led by the firms’ founders, Eli Casdin and Keith Meister, the company plans to target the life science industry, specifically businesses in the life science tools, synthetic biology, and diagnostics fields.

Tech SPAC Tailwind Acquisition (TWND.U) raised $300 million. The company was formed by Chairman Philip Krim, co-founder and CEO of Casper (NYSE:CSPR), which is down 24% from its February IPO. Venture capitalist Chris Hollod serves as CEO, and Tengram Capital Partners co-founder Matt Eby serves as CFO.

INSU Acquisition II (NASDAQ:INAQU), the second blank check company formed by Cohen & Company and targeting the insurance industry, upsized to raise $200 million. Chairman Daniel Cohen and CEO John Butler serve in the same roles for Insurance Acquisition (INSU; +33% from IPO), which recently announced a merger agreement with Shift Technologies.

Boxer Capital’s warrantless SPAC BCTG Acquisition (NASDAQ:BCTG) upsized to raise $145 million. The company is led by Boxer Capital co-founders Aaron Davis and Christopher Fuglesang, and plans to leverage its management team’s experience and target a business in the biotechnology industry.

Life sciences SPAC HighCape Capital Acquisition (NASDAQ:CAPAU) raised $100 million. Led by HighCape Capital co-founders, the company plans target the life sciences industry, specifically therapeutics, devices, diagnostics, medical information technology, agrisciences, and animal health.

5 IPOs During the Week of August 31st, 2020

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 09/04

CM Life Sciences

$385M

$473M

0%

+3%

+3%

Blank check company formed by Casdin Capital and Corvex Management targeting a life science business.

INSU Acquisition II

$200M

$266M

0%

+3%

+3%

Second blank check company formed by Cohen & Company and targeting the insurance industry.

BCTG Acquisition

$145M

$181M

0%

+2%

+3%

Blank check company formed by Boxer Capital targeting the biotech industry.

HighCape Capital Acq.

$100M

$129M

0%

+2%

+2%

Blank check company formed by HighCape Capital targeting the life sciences industry.

Tailwind Acquisition

$300M

$375M

0%

+0%

+0%

Blank check company formed by Casper CEO Philip Krim targeting a technology business.

14 IPOs and 11 SPACs submitted initial filings.

SMB services provider Thryv Holdings (OTC:THRY) filed for a direct listing on the Nasdaq. Rare disease biotech Orphazyme (ORPH) filed to raise $115 million. Avocado supplier Mission Produce (AVO), LNG services provider Hygo Energy Transition (HYGO), gene therapy biotech Taysha Gene Therapies (TSHA), optical bonding company VIA optronics (VIAO), and oncology biotechs PMV Pharmaceuticals (PMVP) and Prelude Therapeutics (PRLD) all filed to raise $100 million. Ocular disease biotech Graybar Vision (GRAY) and medical device maker Pulmonx (LUNG) filed to raise $86 million. Plant-based beverage manufacturer Laird Superfood (LSF) filed to raise $40 million. Chinese real estate holding company Sancai Holding Group (SCIT) filed to raise $30 million. Chinese agriculture services provider Green Grass (QQCY) filed to raise $24 million, and micro-cap oncology biotech Lixte Biotechnology (OTCQB:LIXT) filed to raise $11 million.

Energy SPAC Bluescape Opportunities Acquisition (BOAC) filed to raise $700 million. Tech SPAC Reinvent Technology Partners (RTPU) filed to raise $600 million. TPG’s two SPACs TPG Pace Tech Opportunities (PACE.U) and TPG Pace Beneficial Finance (TPGY.U) filed to raise $450 million and $350 million, respectively. Private equity firm’s SPAC Peridot Acquisition (PDAC.U), media SPAC Falcon Capital Acquisition (FCACU), and renewable energy SPAC ArcLight Clean Transition (ACTCU) all filed to raise $300 million. ACON Investments’ SPAC ACON S2 Acquisition (STWOU) filed to raise $250 million. Luxury brand SPAC Aspirational Consumer Lifestyle Corp. (ASCL.RC) and Oaktree’s Oaktree Acquisition II (OACBU) both filed to raise $225 million. Healthcare SPAC Blue Water Acquisition (BLUWU) filed to raise $50 million.

25 Filings During the Week of August 31st, 2020

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

ArcLight Clean Transition

$300M

SPAC

Citi

Blank check company formed by ArcLight Capital Partners targeting a renewable energy business.

Aspirational Consumer

$225M

SPAC

Credit Suisse

Blank check company formed by executives at LVMH and L Catterton targeting a lifestyle business.

Graybug Vision

$86M

Health Care

SVB Leerink

Phase 2 biotech developing transformative medicines for ocular diseases.

Mission Produce

$100M

Consumer Staples

BofA

Leading supplier of fresh avocados.

Orphazyme

$115M

Health Care

BofA

Danish late-stage biotech developing protein therapies for rare neurodegenerative diseases.

Peridot Acquisition

$300M

SPAC

UBS

Blank check company formed by Carnelian targeting business with Mitigation and Adaptation principles.

PMV Pharmaceuticals

$100M

Health Care

Goldman

Early stage biotech developing targeted therapies for cancer.

Prelude Therapeutics

$100M

Health Care

Morgan Stanley

Phase 1 biotech developing small molecule therapies for cancer.

Pulmonx

$86M

Health Care

BofA

Makes minimally invasive medical devices for emphysema.

Sancai Holding Group

$30M

Real Estate

Univest Securities

Real estate holding company in China.

TPG Pace Beneficial Fin.

$350M

SPAC

Deutsche Bank

Blank check company formed by TPG Pace Group targeting a business with a strong ESG profile.

TPG Pace Tech

$450M

SPAC

Deutsche Bank

Blank check company formed by TPG Pace Group targeting the tech industry.

VIA optronics

$100M

Technology

Berenberg

German provider of sunlight readable, ultrathin display and touch solutions.

Blue Water Acquisition

$50M

SPAC

Maxim

Blank check company formed by an industry veteran targeting a healthcare business.

Falcon Capital Acq.

$300M

SPAC

Goldman

Blank check company formed by Ariliam Group and Eagle Equity Partners targeting a media business.

Green Grass

$24M

Industrials

Provides specialty farming and agriculture services in China.

Lixte Biotechnology

$11M

Health Care

WestPark Capital

Phase 2 biotech using biomarker technology to develop protein inhibitors for cancer.

Bluescape Opp. Acq.

$700M

SPAC

Citi

Blank check company formed by Bluescape Energy Partners targeting the energy and industrial sectors.

Taysha Gene Therapies

$100M

Health Care

Goldman

Early stage biotech developing AAV-based gene therapies for CNS disorders.

Thryv Holdings

$272M

Technology

Provides marketing solutions and SaaS customer experience tools to SMBs.

ACON S2 Acquisition

$250M

SPAC

Deutsche Bank

Blank check company formed by ACON Investments targeting a sustainable business.

Hygo Energy Transition

$100M

Energy

Morgan Stanley

Provides integrated downstream liquefied natural gas solutions in Brazil.

Laird Superfood

$40M

Consumer Staples

Canaccord

Manufactures plant-based packaged beverage products.

Oaktree Acquisition II

$225M

SPAC

Deutsche Bank

Second blank check company led by the head of Oaktree Capital’s Value Equities group.

Reinvent Tech Partners

$600M

SPAC

Morgan Stanley

Blank check company formed by LinkedIn co-founder Reid Hoffman and Zynga founder Mark Pincus targeting the tech sector.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 9/3/20, the Renaissance IPO Index was up 54.8% year-to-date, while the S&P 500 was up 6.9%. Renaissance Capital’s IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Zoom Video (NASDAQ:ZM) and Uber (NYSE:UBER). The Renaissance International IPO Index was up 38.6% year-to-date, while the ACWX was down 4.2%. Renaissance Capital’s International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include Xiaomi and Meituan-Dianping.

Original post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.





Original source link

Deflation – Not Inflation – Is The Real Threat (Central Bank Week In Review For 8/31-9/4)


On Aug. 27, the Fed announced a new inflation targeting regime:

On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it “seeks to achieve inflation that averages 2 percent over time.” To this end, the revised statement states that “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”

There are several reasons for the change. The first is that the market interpreted the previous “symmetrical” program as imposing an inflation ceiling. Vice President Clarida explains (emphasis added):

For example, under our previous flexible inflation-targeting framework, the Federal Reserve declared that the 2 percent inflation objective is “symmetric.” This term has been interpreted by many observers to mean that the Committee’s reaction function aimed to be symmetric on either side of the 2 percent inflation goal, and that the FOMC set policy with the (ex ante) aim that the 2 percent goal should represent an inflation ceiling in economic expansions following economic downturns in which inflation falls below target.

A second reason for this change of course is that low inflation — which increases the possibility of deflation — is now the global norm.

Above is a chart for the EU’s core inflation rate since 2002. It last hit 2% in 2007-2009. Even then it barely moved above that level and then only for a little more than a year. Since then prices have trended lower.The situation in Japan is more pronounced. The blue line shows the absolute value of the CPI using the left scale. Prices have been near stagnant for over 20 years. The red line shows the Y/Y percentage change in CPI, which has only moved above 3% once in the last 25 years.

Above is a chart for the Y/Y percentage change in core CPI (in blue) and the core PCE price index (in red). Both have been very tame for about 20 years.

Low inflation is reflected in r* – the hypothetical interest rate that’s neither stimulative nor restrictive. The Richmond Fed calculates this amount as:

The data leads to this conclusion: In the developed world, deflation is far more a threat than inflation.

There are four reasons for weak pricing pressures. First, the EU, US, and Japan’s populations are trending older. As this occurs, people save more and consume less. The former increases the amount of available funds while the latter eases demand-pull pressures. Both lead to lower inflation. This was first explained by Ben Bernanke in his Global Savings Glut paper. Second, increased global competition has helped to contain costs. Third, increased price transparency – especially as a result of the web – has given purchasers more negotiating power. Fourth, the de-unionization of the US labor force has lowered wage pressures.

Now, let’s return to the Fed’s statement about inflation. They said they would tolerate a 2% average rate of inflation. Using simple numbers, let’s say the PCE price index is 1% for 10 months. It would have to run at 3% for the next 10 months before the Fed would raise rates. At this point, some people will argue that inflation could run out of control. But that ignores a basic fact: Deflation is now the primary threat to the US economy. Put another way, inflation just isn’t a problem right now.

For those of us who came of age during the 1970s and 1980s, the idea of tolerating higher inflation seems anathema. But Paul Volcker successfully broke inflation in the early 1980s, bring in the “great moderation.” Now the possibility of an extended period of deflation is far greater. The Fed is now doing everything it can to encourage and cultivate pricing pressure.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.





Original source link

Volkswagen’s labour chief rules out four-day week to save jobs By Reuters


© Reuters. Head of Volkswagen works council Bernd Osterloh addresses the media after a supervisory board meeting at the Volkswagen plant in Wolfsburg

BERLIN (Reuters) – Volkswagen (DE:) sees no need for a four-day week at its plants to secure jobs despite a growing shift to electric cars that are easier to build and require fewer workers, the company’s head of labour relations was quoted saying on Sunday.

Germany’s largest trade union IG Metall on Aug. 15 proposed negotiating for a transition to a four-day week across industry to help secure jobs, against the backdrop of economic fallout from the coronavirus crisis and structural shifts in the auto sector.

But VW labour chief Bernd Osterloh told Welt am Sonntag newspaper that VW’s existing cost-cutting plan, that includes reducing the workforce by up to 7,000 through the early retirement of administrative staff at its Wolfsburg headquarters, was enough to help it overcome the coronavirus crisis and other issues.

“At the moment we are not talking about less work,” Osterloh said. “With the Golf we had the (production) levels of last year in June and July and introduced extra shifts,” he added, referring to one of the company’s most popular models.

“The four-day week is not an issue for us.”

Demands by IG Metall, which represents 2.3 million employees in the metal working and electrical sectors, are potentially significant in Germany because they often set benchmarks for wage negotiations in those industries and beyond.

VW in 2016 set out a cost-reduction programme dubbed Future Pact, but the company has ruled out compulsory layoffs until 2025. Osterloh was quoted as saying in July that VW had no need for deeper cost cuts to counter the effects of COVID-19, which dealt a severe blow to car sales.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Original source link