MARKET WRAPS
Watch out for:
Manufacturing PMI for April; ISM Business Manufacturing PMI Report for April; Construction Expenditure for March; Canada Manufacturing PMI for April; Revenue from Arista Networks, Global Payments, Norwegian Cruise Line, NXP Semiconductors, ON Semiconductor, Stryker, Vertex Pharmaceuticals
Most markets in Asia and Europe are closed for the May Day holiday
Today’s headlines/must reads
– First Republic Bank is seized and sold to JPMorgan
– Stock market calm reignites Fed tightening debate
– Big Tech’s rebound plays into bets on growth stocks
– The construction boom prolongs the market pain
– The air came out of the dollar
– China consumer lead recovery in April
Follow the market coverage of the WSJ here.
opening call:
Stock futures struggled for momentum on Monday after regulators seized First Republic and agreed to sell the bulk of its operations to JPMorgan.
The sale averts a messy lender meltdown that investors feared could reignite March’s banking turmoil. JPMorgan’s shares are up 3% pre-IPO, while First Republic’s shares fell another 35%.
Other regional bank stocks also came under pressure. PNC Financial, which bid for First Republic over the weekend, fell 2% premarket, as did Western Alliance and PacWest Bancorp.
Other stocks on the move
Iveric Bio rose 18% after Japanese company Astellas Pharma agreed to buy the biopharmaceutical company for about $5.9 billion. Astellas will pay $40 per share for Iveric Bio.
Read more here.
NIO, XPeng and Li Auto are expected to report deliveries for April. US-listed shares of the Chinese electric vehicle maker rose in premarket trading.
week ahead
Another busy earnings week begins Monday, with numbers from Apple, Ford, Advanced Micro Devices, Pfizer, CVS Health, Qualcomm, and Moderna.
The economic event of the week will be Wednesday’s Federal Reserve policy decision, with futures markets overwhelmingly pricing in a 0.25 percentage point hike in the Federal Funds Rate. The European Central Bank is expected to follow suit with the same move on Thursday.
There will also be plenty of data to analyze including the April jobs report on Friday. Economists are forecasting a decline in both job openings and hiring. The forecast is for an increase of 185,000 nonfarm payrolls, up from 236,000 in March.
Currency:
Bitcoin and other cryptocurrencies fell, and traders watched the outcome of this week’s Fed decision as a catalyst for further direction.
The 73 percent rally in bitcoin prices this year has come amid expectations that the Fed will be forced to ease policy.
Bitcoin is down 2.5% over the past 24 hours to $28,594. The decline marks a dip from just under $30,000 over the weekend for the largest cryptocurrency.
Read more here.
Energy:
Crude oil futures fell around 1% on concerns over consumer demand.
Goldman Sachs said concerns about oil consumption were visible in the distillate market, noting a sharp sell-off from about $45 a barrel after the war to the mid-teens in dollars a barrel.
“Questions are being raised about global activity and demand, particularly given the cyclical and potentially leading nature of industrial-driven distillate demand versus lagging and consumer-driven gasoline and petrochemical markets,” Goldman Sachs said.
Historically, when demand falls, manufactured products have also shown a drop in GDP growth, she added.
metals:
Cobalt prices are likely to stay low for at least a year or two with sufficient supply, UBS said.
It estimates that CMOC Group has more than 15,000 tonnes of cobalt hydroxide it can now export from its Tenke operation in Congo — about nine months of that mine’s production — after settling a royalty dispute.
“We expect CMOC to be disciplined,” but that supply combined with material production growth elsewhere should more than offset solid future demand growth, UBS said.
UBS preferred for equity exposure [Glencore] versus CMOC as it is more diversified, although CMOC is cheap/growing.”
TODAY’S TOP HEADLINES
First Republic Bank is seized and sold to JPMorgan, second largest US bankruptcy
Regulators seized First Republic Bank and agreed to sell most of its business to JPMorgan Chase & Co. to avert a chaotic meltdown that threatened to reignite the recent banking crisis.
JPMorgan said it will take on all of the First Republic’s $92 billion in deposits — insured and uninsured. It also buys most of the bank’s assets, including about $173 billion in loans and $30 billion in securities.
Astellas Pharma buys Iveric Bio for approximately $5.9 billion
Astellas Pharma Inc. announced Monday that it has agreed to acquire Iveric Bio Inc. for approximately $5.9 billion to bolster its eye care capabilities.
The Japanese drugmaker said it will fund the proposed acquisition with about 800 billion yen of bank loans and commercial paper in addition to existing cash and expects to repay new debt within the next five to seven years.
SoftBank’s arm is confidentially filing for a massive IPO
Arm Ltd., the British chipmaker owned by Japan’s SoftBank Group Corp., privately filed for its long-awaited IPO over the weekend.
Arm said Saturday that it had filed a draft registration statement for its IPO with the US Securities and Exchange Commission, but had not disclosed its size or price range.
Revlon gains new directors as lenders take control in bankruptcy
Revlon Inc. will emerge from bankruptcy with new ownership and a new board of directors that includes former executives from Bloomin’ Brands Inc., Sephora and Walgreens Boots Alliance Inc.
The new board of directors for the reorganized beauty products company was selected by Glendon Capital Management LP, King Street Capital Management LP, Angelo Gordon & Co. and Nut Tree Capital Management LP, company lenders taking control in Chapter 11.
Starbucks, Ford and Apple lead another busy earnings week
Apple Inc., Marriott International Inc. and Starbucks Corp. are among the companies set to release quarterly results in the coming days that offer a closer look at consumer spending habits in a slowing economy.
Ride-hailing company Uber Technologies Inc., automaker Ford Motor Co., and pharmacy chain CVS Health Corp. are also expected to report as consumers face steady price increases and inflation shows little sign of slowing down.
Jack Dorsey criticizes the sale of Twitter to Elon Musk
Elon Musk hasn’t proven to be the best leader for Twitter, according to co-founder Jack Dorsey, who said “everything went wrong” when the company was sold to the billionaire.
Mr Dorsey shared his views on Friday in a series of posts on Bluesky, a social media platform some have touted as a possible alternative to Twitter.
The Super Mario Bros. Movie will be the first billion-dollar plus movie of 2023
The Super Mario Bros. Movie on Sunday surpassed an estimated worldwide box office gross of over $1 billion, becoming the first film to do so in 2023, according to research firm Comscore.
As of Sunday, the film has grossed $490 million domestically and $532 million internationally. Since the pandemic began, only five movies have surpassed the billion-dollar mark, according to Box Office Mojo: Avatar: The Way of Water, Spider-Man: No Way Home, Top Gun: Maverick, and Jurassic World: dominions.”
Hollywood is preparing for the strike by would-be writers sparked by the shift to streaming
Hollywood is running out of time to write happy endings.
Entertainment industry writers and major networks, streamers and studios are struggling to agree on their next deal. If no agreement is reached by the end of Monday, writers are expected to go on strike for only the second time in four decades.
Indeed’s pricing changes are unsettling small businesses
The largest job search website has run afoul of the small business community.
Indeed.com began changing the way it charged employers for contacting job seekers, and billed the change as better for small businesses because they could choose which applications to review, and only those could pay for applications that appealed to them. Instead, it caused confusion and unexpected costs for many business owners, and now the company is trying to minimize the consequences.
EY’s separation plan is really dead
When Ernst & Young dropped its separation plan, firm executives said they would remain committed to achieving the separation. Since then, according to internal webcasts and people familiar with the matter, it’s become clear that the effort is dead, at least for the next few years.
Leaders of EY’s dominant US and UK operations are focused on repairing the damage caused by an 18-month effort to split up the firm’s audit and advisory activities, known as Project Everest.
Elon Musk expects SpaceX to spend around $2 billion on Starship Rocket this year
SpaceX expects to spend about $2 billion on its Starship rocket program this year and may not need to raise additional outside funding as that work unfolds, according to founder and chief executive Elon Musk.
Mr. Musk outlined SpaceX’s plans Saturday during an audio chat on Twitter about Starship, the powerful rocket the company first launched in early April. The first test mission ended after about four minutes when a flight abort system on the vehicle destroyed it as the missile began to plummet.
Exxon’s Canadian subsidiary grapples with oil sands sewage leak
TORONTO-Exxon Mobil Corp.’s Canadian subsidiary, Imperial Oil Ltd., is struggling to stem the environmental and social impacts of an ongoing spill of toxic sewage at one of its projects in the oil sands of western Canada.
Indigenous leaders, Imperial Oil and government officials said the full extent of the leak went unreported to nearby Indigenous communities and the Canadian federal government for nine months.
(FOLLOWING) Dow Jones Newswires
05-01-23 0608ET
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