Market Snapshot
Asia: Japan -1.6% to 20223. Hong Kong -1.3% to 23168. China +1.2% to 3794. India +0.4% to 27932.
Europe: London -0.7%. Paris -0.5%. Frankfurt -0.9%.
Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude -0.4% to $42.93. Gold +0.5% to $1122.
Ten-year Treasury Yield -1 bps to 2.18%
Economic News
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8:30 Consumer Price Index
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2:00 FOMC minutes
Markets
Volatility prevailed in China’s stock market today, with a late afternoon rally reversing a sharp morning tumble as investors tested whether Beijing would step in to stabilize shares. The Shanghai Composite closed up 1.2% on reports of government intervention after falling as much as 5.1% during the session. Despite the latest stock turmoil, the yuan has held relatively steady this week following the central bank’s shock decision to devalue the currency on August 10.
A slump in emerging market confidence has led to $1T in capital outflows from developing economies over the past 13 months, roughly double the amount that fled during the financial crisis. The sustained exodus of capital highlights concerns that emerging markets, suffering slowing growth and weakening currencies, are relinquishing their longstanding role as locomotives to become a drag on demand.
German lawmakers have overwhelmingly voted in favor of Greece’s third bailout, ending months of heated negotiations between international creditors and the cash-strapped country. German Finance Minister Wolfgang Schaeuble prior to the vote: “There is no guarantee that this all will work…but due to the fact that the Greek parliament has already approved a big part of the (aid-for-reform) measures, it would be irresponsible not to use the chance for a new beginning.” Greece is hoping the approval, along with the support from other eurozone parliaments, will translate into fresh funds ahead of a €3.4B payment due to the ECB on Thursday.
Stocks
With commodity prices continuing to slide, Glencore (GLNCY) reported a 56% slump in first-half earnings, posting adjusted net income of $882M in the six months to June 30. Glencore shares are now heading south in London, erasing earlier gains triggered by news of a large investor stake. The figures come as copper futures break another record. The red metal has now dropped below $5,000 a metric ton for the first time since the financial crisis.
Google has unveiled a cylinder-shaped Wi-Fi router named OnHub, moving closer towards the connected home and drawing more users to its services. The Google (GOOG, GOOGL) router comes with in-built antennas that will scan the airwaves to spot the fastest connection and can be pre-ordered for $199.99 at several online retailers.
Intel announced several new platforms and partnerships at its developer forum on Tuesday, but the chipmaker’s foray into television came as a surprise. Bearing the title “America’s Greatest Makers,” the program will engage do-it-yourselfers who turn chips and other components into gadgets. Intel (INTC) will team with Time Warner (TWX) for the series, which will appear on TV and other media channels in 2016.
Kik Interactive, the Canadian startup behind a popular messaging app, has turned to China’s Tencent (TCEHY) for a $50M investment that values it at $1B. With more than 240M registered users, Kik Messenger aspires to become the Western world’s equivalent of WeChat, a messaging app that has expanded to facilitating commerce in China. Kik still has a long road to travel, however, facing stiff competition from the likes of Snapchat, WhatsApp and Facebook’s Messenger.
Following the corruption scandal at FIFA, corporate sponsors pondered whether to back away from the powerful marketing outlet, but it now looks like they are getting more involved. Soccer’s governing body is now scheduled to meet several of its commercial partners on Thursday, after Coca-Cola (KO) and Visa (V) urged the creation of an independent group to oversee reforms. FIFA collected $1.6B in sponsorship money in the four years leading up to the 2014 World Cup, nearly half of which came from its six top “partners” (Coke, Visa, McDonald’s (MCD), Adidas (ADDYY), Emirates and Hyundai (HYMLF)).
Yum Brands has announced new leadership for its China division as activists lobby the company to spin off the business region (its biggest driver of revenue and profit). Current CEO of Yum’s (YUM) KFC Division Micky Pant will replace retiring Sam Su as chief executive of the China division, while COO Roger Eaton will head KFC operations outside of China and India.
SoftBank’s decision to lift its stake in Sprint (S) has helped boost shares in the unprofitable U.S. wireless operator by almost 50% over the last seven trading days, adding more than $6B to its market value. Yesterday, SoftBank (SFTBY) disclosed that it had increased its stake in the carrier for a second time this month, acquiring 16.8M shares for $73M. The boost comes as Sprint makes a high-profile move towards leasing and away from contracts and phone sales.
More than 17 years after the FDA approved Pfizer’s (PFE) Viagra, the first drug to treat low sexual desire in women has won approval from U.S. health regulators. Addyi (flibanserin), produced by privately-held Sprout Pharmaceuticals, will only be available through certified health care professionals and pharmacies due to its safety issues. The drug can result in potentially dangerous side effects such as low blood pressure and fainting, especially when taken with alcohol.
Target has agreed to reimburse thousands of financial institutions as much as $67M for costs incurred from its massive data breach in 2013. The agreement, struck with Visa (V) on behalf of banks and other firms that issue credit and debit cards, comes as the card industry moves toward more secure cards that are aimed at stopping such attacks. Target (TGT) is also working with MasterCard on a similar deal.
Bank settlement roundup: JPMorgan (JPM) is in advanced talks with the SEC to pay more than $150M for steering clients to its own investment products without proper disclosures. Citigroup (C) has agreed with the New York attorney general to return $4.5M in management fees charged on some 15,000 frozen accounts, while BNY Mellon (BK) will shell out $14.8M to settle several intern-related bribery cases.
Volkswagen has been one of the few global automakers unaffected by rupturing airbags made by Takata (TKTDY), but that may no longer be the case. This week, safety regulators demanded more details from the two companies on a recent rupture of a Takata airbag in a 2015 Volkswagen (VLKAY) Tiguan. The airbag’s inflater exploded after the SUV hit a deer in Missouri, sending metal shards into the car’s cabin.