1. U.S. Technology Shares Advance; Bond Yields Slump
Tech shares led gains in U.S. equities. The Nasdaq 100 Index added about 1%, easily outperforming the Russell 2000 Index of small-cap shares that tend to benefit when investors are betting on a reopening. In Asia, Chinese internet firm Tencent jumped 11%, the biggest gain since 2011, as mainland traders sparked a buying frenzy for shares and options. The picture was more negative in Europe. The Stoxx 600 Travel & Leisure index lost 2% amid news that France may go into another lockdown, the U.K. may tighten border controls and as Israel moved to bar foreign flights from entering the country.
The S&P 500 Index increased 0.3% as of 9:31 a.m. New York time.
The Stoxx Europe 600 Index declined 0.6%.
The MSCI Asia Pacific Index advanced 1.2%.
The MSCI Emerging Market Index climbed 1.5%.
2. Global Crisis From Covid-19 Is Now About 255 Million Jobs
The world economy won’t be able to fully repair last year’s damage to employment in 2021 after the Covid-19 pandemic wiped out the equivalent of 255 million jobs, according to the International Labour Organization. Even under the most optimistic assumptions, working hours will still be lower compared to pre-crisis levels. Under the organization’s baseline scenario, the global economy will end this year with the equivalent of 90 million fewer full-time jobs than before the outbreak. “The signs of recovery we see are encouraging, but they are fragile and highly uncertain,” said ILO Director-General Guy Ryder. “We must remember that no country or group can recover alone.”
3. Biden Push Congress on Stimulus After Senators Question Cost
President Joe Biden will escalate appeals for Congress to back his top priority, $1.9 trillion in pandemic relief, seeking to overcome Republican opposition to the plan as he enters his first full week in office. Biden’s top economic adviser, Brian Deese, spent more than an hour on Sunday discussing the proposal with a bipartisan group of lawmakers. Some asked the White House to further justify what would be the second-largest emergency spending measure in U.S. history and expressed interest in a much narrower bill focused on accelerating coronavirus vaccine distribution.
4. EU to Demand Notice for Vaccine Exports Amid Delivery Delays
The European Commission recommended on Monday that even people visiting the EU for essential reasons be required to show a negative Covid-19 test taken at the earliest 72 hours before departure. Separately, the bloc’s executive arm will initiate a “transparency scheme” in the coming days, an EU official said. Under the plan, companies will have to notify authorities about plans to export vaccines from facilities in the EU to other countries. The new proposals come amid concerns about delays in the rollout of coronavirus vaccines. The EU lags behind both the U.S. and the U.K. in terms of doses administered as a share of its population.
5. Tencent’s $251 Billion Rally Triggers Frenzy in Shares, Options
Hong Kong’s equity traders can’t get enough of Tencent, the $950 billion giant that’s on pace for its biggest-ever monthly gain. They’re paying up for bullish derivatives tracking the Chinese internet firm, buying thousands of January call options that expire Thursday. The price of one Tencent contract — which bets the stock will rise past HK$800 by expiry — surged as much as 118,300% on Monday. Traders also rushed to offload their bearish puts, with one of the most-traded contracts losing more than 84% in value. The stock rallied 11%, its biggest gain since October 2011. Hong Kong’s Hang Seng Index benchmark rose 2.4%, closing above the key 30,000 point-level for the first time since May 2019.
6. Goldman Sees ‘Unsustainable Excess’ in Parts of U.S. Market
Corners of the U.S. equity universe are showing signs of froth, but that shouldn’t put the broader market at risk, according to Goldman Sachs. Very high-growth, high-multiple stocks “appear frothy” and the boom in special-purpose acquisition companies is one of a number of “signs of unsustainable excess” in the U.S. stock market, strategists including David Kostin wrote in a note Friday. The recent surge in trading volumes of stocks with negative earnings is also at a historical extreme, they said. However, the aggregate stock market index trades at below-average historical valuations after taking into account Treasury yields, corporate credit and cash, the strategists added.
7. No Change in China’s Course, Warns Against Cold War: Xi
President Xi Jinping called on the world to abandon “ideological prejudice” and shun an “outdated Cold-War mentality” as he signalled that China will continue to forge its own path regardless of western criticism. It’s vital to stay committed to international law and international rules “instead of staying committed to supremacy,” Xi told the Davos Agenda event on Monday, in his first address since Joe Biden entered the White House. “Confrontation will lead us to a dead-end,” he said and urged a return to mutual respect to help the recovery from the pandemic. “To build small circles and start a new Cold War, to reject, threaten or intimate others, to willfully impose decoupling, supply disruptions, or sanctions, or to create isolation or estrangement, will only push the world into division and even confrontation,” he said.
8. Tiger Global World’s Top-Performing Hedge Fund of 2020
Tiger Global Management placed first in a world hedge-fund ranking and quant powerhouse Renaissance Technologies was ousted, another sign that trading conditions favored human stock-pickers over algorithms. The industry reaped $127 billion last year, with some of the biggest firms dominated by human traders racking up record profits, according to estimates disclosed Monday by LCH Investments, a fund of hedge funds. Chase Coleman’s Tiger Global generated $10.4 billion for clients, after fees, and Izzy Englander’s Millennium Management was a close second, with $10.2 billion. Renaissance, founded by billionaire mathematician Jim Simons, fell from the ranking of 20 firms after some of its public funds lost more than 30% last year. In 2019, it placed third on LCH’s list, which focuses on managers with most total profit since inception and is designed to favour the largest and oldest hedge funds.
9. As Wirecard Collapsed, Key Player Fled by Private Jet to Belarus
A former senior executive at Wirecard escaped from Austria to Belarus on a private aircraft last year with the help of a secret-service agent and a far-right politician. Jan Marsalek, the German payments company’s ex-chief operating officer who is on Interpol’s most-wanted list, fled in June shortly before Wirecard filed for insolvency. Executives admitted that 1.9 billion euros in funds never existed, setting off one of Germany’s biggest accounting scandals. The company’s implosion is the subject of a parliamentary investigation in Berlin, in which officials ranging from Chancellor Angela Merkel’s chief economic adviser to Deutsche Bank Chief Executive Officer Christian Sewing have been called to testify.
10. Amazon Asks India Court to Jail Retail Tycoon in Legal Spat
Amazon.com has filed a petition in an Indian court seeking detention of Future Group’s founder and seizure of assets for violating an arbitration court’s order that temporarily halted the sale of its retail operations to Reliance Industries. The Delhi High Court will hear the matter on Jan. 28. Besides seeking prison for tycoon Kishore Biyani, the e-commerce giant wants enforcement of the Singapore arbitrator’s ruling in October against the $3.5 billion deal. The Jeff Bezos-led American firm, in its petition, alleged deliberate and willful disobedience of the order temporarily restraining the Future Group from going ahead with the sale. It also wants the court to issue an injunction stopping the deal.
