US stock futures rose and European stocks rose on Wednesday, fueled in part by hopes that the search for a coronavirus vaccine will move forward.
Futures for the S&P 500 indicated that the US markets would open almost 1.5 percent more at the start of operations on Wall Street. Markets in Frankfurt, Paris and London also increased by more than 1 percent, after a mixed day in Asia.
In other markets, oil futures were trading higher on a day when major producers met to consider easing production restrictions. The production restrictions were approved in April when the industry was facing a dire drop in oil demand, and any relaxation of the rules would indicate stronger energy markets.
Elsewhere, 10-year US Treasury bonds were flat, with gold trading slightly lower.
On the vaccine front, there was positive news from the biotech company Modern, based in Cambridge, Massachusetts, who said an experimental drug elicited a positive immune response and seemed safe among the first 45 people who received it. It is the first coronavirus vaccine to be tested in humans, and Moderna’s shares were more than 14 percent higher in pre-market trade.
In Asia, Hong Kong’s Hang Seng ended the day unchanged, the Shanghai Composite lost 1.6 percent, South Korea’s Kospi gained 0.8 percent and Japan’s Nikkei was 1.6 percent. higher.
For the past 25 years, Bank of America He has surveyed fund managers on how they are positioning their portfolios. When a consensus emerges, the bank’s pollsters say, investors generally benefit from betting against it, according to today’s DealBook newsletter.
In their latest survey, which surveyed investors who managed about $ 600 billion in assets, nearly three-quarters of fund managers agreed that holding large tech stocks in the United States was the “busiest” trade in the market. It was the strongest consensus in the survey, prompting the bank to buy tech stocks as the “longest” longest “of all time.” For opponents, that is a sign that it is time to sell.
The dominance of tech giants is a risk to long-term returns, Goldman Sachs Analysts wrote in a new research note. The five largest stocks in the S&P 500 Index: Alphabet, Amazon, Apple, Facebook and Microsoft – They now represent 23 percent of their market capitalization. “We believe that a further capital increase would require the participation of a broader subset” of the index, analysts said.
And for what it’s worth, Goldman analysts concluded that the S&P 500 will generate a 6 percent annual return over the next decade, up from nearly 14 percent in the past decade and 10 percent since 1960.
British newspaper The Guardian said on Wednesday it would cut 12 percent of its workforce, about 180 jobs, as it faces a deficit of £ 25m ($ 31.5m) caused by the economic impact of the pandemic.
About 70 jobs will be lost in the newsroom, with the other cuts in departments like advertising, marketing, live events and its job search platform.
The Guardian, Britain’s leading left-wing newspaper, had already delayed a company-wide salary increase, suspended some 100 employees and cut other marketing and travel-related expenses. But the decline in advertising and sales for its print newspaper has created an “unsustainable financial outlook” for the media company.
“We will face unsustainable annual losses for years to come unless we take decisive action,” Annette Thomas, the executive director, and Katherine Viner, the editor-in-chief, said in an email to staff. Most of the cuts are expected to affect staff in Britain; The company also has operations in Australia and the United States.
Revenue for The Guardian Media Group, owned by The Scott Trust in a deal designed to isolate the newspaper from other for-profit business interests, declined slightly for the year ending in March to £ 223.5 million, according to financial reports published on Wednesday.
It’s a quick twist of fate for the newspaper, which posted earnings in fiscal year 2018-19, the first in decades, due to the success of its subscription program.
The United States economy is heading into a tumultuous fall, with the threat of closed schools, renewed government closings, empty stadiums, and an uncertain amount of federal support for businesses and unemployed workers, clouding hopes for a rapid rebound. of the recession.
For months, the prevailing wisdom among investors, Trump administration officials, and many economic forecasters was that after slipping into recession this spring, the country’s recovery would accelerate in late summer and take off in the fall as the virus It receded, trade restrictions eased, and consumers returned to more normal spending patterns. The increase in jobs in May and June fueled those optimistic predictions.
But the inability to suppress the resurgence of confirmed infections threatens to stifle recovery and push the country into a recessionary spiral, which could inflict long-term harm to workers and businesses large and small, unless Congress reconsiders the scale of federal aid. which may be required in the coming months.
The impending economic pain was evident on Tuesday when big companies forecast bleak months ahead. Delta Air Lines said it was cutting plans to add flights in August and beyond, citing consumer demand. The nation’s largest banks have warned that they are setting aside billions of dollars to cover anticipated losses, as clients are unable to pay off their mortgages and other loans in the coming months.
“The resumption of activity earlier than anticipated has been accompanied by a sharp increase in the spread of the virus in many areas,” Lael Brainard, governor of the Federal Reserve, said Tuesday. “Even if the spread of the virus flattens, the recovery is likely to face headwinds from declining activity and costly adjustments in some sectors, along with declining incomes for many consumers and businesses.”
The British luxury retailer Burberry He plans to cut up to 500 jobs worldwide as he continues to deal with the impact of the coronavirus on his business.
Burberry on Wednesday said sales fell 45 percent to 257 million pounds ($ 324 million) in its first quarter, which ended on June 27. In Europe and the Middle East, sales fell 75 percent due to a sharp decline in tourism. Sales fell 70 percent in the Americas and 10 percent in the Asia Pacific region, with double-digit growth, however, in mainland China.
Burberry CEO Marco Gobbetti announced plans for “structural savings”, including layoffs. He said the job cuts would include 150 office positions at London headquarters, as the company sought savings “to reinvest in customer-oriented activities.”
The additional savings of £ 55 million are in addition to the already announced cost cuts of £ 140 million. Last month, Burberry said its next live show would take place, without an audience, on September 17.
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The Trump administration, which mistakenly sent $ 1.4 billion in stimulus to deceased people, began canceling the checks that were delivered to the deceased. The Internal Revenue Service said in an update on its website that such checks should still be returned to the federal government, but that it was taking steps to ensure they cannot be cashed. A report from the Government Accountability Office released last month found that about $ 1.4 billion of the $ 270 billion in direct stimulus payments went to the deceased.
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Three of the country’s largest banks revealed that they had set aside billions of dollars to cover possible loan losses, indicating that they do not expect consumers and corporations to pay their debts in the coming months as the pandemic continues. destroying employment and commerce. Collectively JPMorgan Chase, Citigroup and Wells Fargo They have set aside $ 25 billion in the second quarter, they said. As a result, his quarterly earnings plummeted. It was Wells Fargo’s first quarterly loss since 2008.
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Lael Brainard, a Federal Reserve governor, warned that a second wave of coronavirus cases could jeopardize the economy and markets once again, despite financial conditions calming down since the wild days of March and the labor market has started to improve. “A second broad wave could reactivate financial market volatility and market disruptions at a time of increased vulnerability,” Brainard said in remarks to the National Association for Business Economics. And, in any event, “the strength of the recovery will depend largely on the timing, magnitude, and distribution of additional fiscal support.”
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Best Buy, the electronics retailer with about 1,000 locations in the United States, said Tuesday that it planned to require customers to cover their faces in its stores beginning Wednesday. The company said it would provide masks to customers who did not have one, and would make exceptions for young children and people who were unable to wear masks for health reasons, according to a blog post. Customers who don’t want to wear a mask will be asked to shop online or through the curbside pickup, the company said.
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RSG Group, a German fitness company, said it won an auction to acquire The gold gym, the Dallas-based gym chain, bankrupt for $ 100 million. Gold’s Gym, which filed for Chapter 11 protection on May 4 amid economic pressures caused by pandemic closings, will emerge from bankruptcy with 61 company-owned gyms and more than 600 franchise-owned gyms, said RSG, the owner and operator. from the McFit chain gym in Europe.
