1. Nasdaq Leads U.S. Futures Lower; U.S. Yields Rise
U.S. equity futures slumped amid disappointing earnings, while bonds resumed a selloff. Contracts on the tech-heavy Nasdaq 100 fell 0.8% and S&P 500 futures dipped. Walmart Inc. dropped in U.S. pre-market trading after saying it will increase spending on worker salaries and automation. In Europe, banks led losses in the Stoxx 600 Index. Yields on 10-year Treasuries climbed to 1.29%. Concern is growing across markets that higher borrowing costs could sap a rally that’s driven values to historic highs. Technology companies that derive much of their cash flows from future earnings are especially vulnerable to inflation pressures.
Futures on the S&P 500 Index sank 0.5% as of 8:22 a.m. New York time.
The Stoxx Europe 600 Index decreased 0.4%.
The MSCI Asia Pacific Index sank 0.8%.
The MSCI Emerging Market Index sank 0.8%.
2. Big Freeze in Texas Is Becoming a Global Oil Market Crisis
What began as a power issue for a handful of U.S. states is rippling into a shock for the world’s oil market. More than 4 million barrels a day of output — almost 40% of the nation’s crude production — is now offline. One of the world’s biggest oil refining centres has seen output drastically cut back. The waterways that help U.S. oil flow to the rest of the world have been disrupted for much of the week. Brent crude briefly surged above $65 a barrel on Thursday, a level not seen since last January. Spreads indicating supply tightness also soared. Ten months ago, the price slumped below $16 because of a demand shock caused by Covid-19.
3. Facebook Blocks News in Australia in Warning for the World
Facebook’s decision to block news sharing on its Australian platform is an unprecedented show of force that escalates a legal standoff with the government and flashes a warning to regulators worldwide. The tech giant imposed the restrictions early Thursday, an unexpected riposte to a proposed law that will force the company and Google to pay Australian publishers for news content. Facebook’s algorithmic ambush switched off the main news source for almost one in five Australians. It also disabled — accidentally, the company said — a raft of government Facebook pages carrying public health advice on the coronavirus, warnings from the weather bureau and even the site of a children’s hospital.
4. Walmart Falls After Forecasting Earnings Drop, More Spending
Walmart Inc. fell after forecasting a slowdown in sales and profit for the year, plus billions of additional spending on worker salaries, automation and other technology. The retailer said Thursday earnings per share will decline slightly in the fiscal year that just started, though will be flat or slightly up when excluding divestitures. Although U.S. comparable sales will stay positive this year, they’ll rise in the low-single-digits, below the recent breakneck rate but on pace with estimates. Walmart shares fell 5% in premarket trading at 7:49 a.m. in New York. Over the past 12 months, the shares have outpaced the S&P 500 but have trailed Target Corp.
5. Biden Immigration Agenda Takes Shape as Lawmakers Unveil Bill
President Joe Biden’s proposed immigration overhaul will be introduced in Congress on Thursday, kicking off what will likely be one of his most difficult legislative challenges. The legislation, known as the U.S. Citizenship Act of 2021, hews closely to the outline that Biden sent to Congress on his first day in office. The proposal includes an eight-year path to citizenship for most of the roughly 11 million immigrants living illegally in the U.S., bolsters the nation’s refugee and asylum systems and calls for additional technology to be used to help secure the southern border. The citizenship path is not explicitly tied to the implementation of border security measures, a trade-off included in past immigration bills designed to earn Republican support.
6. Bitcoin Keeps Hitting New Highs as Crypto Mania Accelerates
Bitcoin’s incredible rally shows little sign of abating yet after the token jumped past $52,000 for the first time. The largest cryptocurrency was little changed in Asian trading Thursday at about $52,100 after a fivefold surge in the past year. The crypto faithful counter that the digital asset is grabbing more mainstream attention, especially after Tesla’s recent $1.5 billion purchase. MicroStrategy Inc. boosted its convertible debt sale to buy Bitcoin by nearly half to $900 million and cut the coupon to 0%, making it virtually a straight bet on the price of the cryptocurrency.
7. WeWork Slashes Prices Across the U.S. by 10%
WeWork Cos. cut prices across the U.S. in the past few months, indicating that a post-pandemic recovery will come slowly for office rentals. The New York-based company reduced the price of most rental units—from individual desks to small offices—in early November and again in January. The average price reduction overall was about 10%, the data show. Some locations declined by as much as 25%. The pricing information was contained within the source code of WeWork’s website but wasn’t displayed to visitors through a web browser. Office rental prices across the country have been dropping precipitously. In the largest American cities, fewer than 20% of office workers were back at their desks as of the end of last year. Landlords’ asking prices could drop by 7% by early 2022 before rebounding.
8. Global Cases Slowing; Pregnancy Vaccine Trials: Virus Update
Encouraging signs in the fight against the Covid-19 pandemic are emerging, with new global infections slowing sharply, according to data from Johns Hopkins University. In a lab study, Pfizer Inc. and BioNTech SE’s Covid-19 vaccine stimulated lower levels of neutralizing antibodies against the South African coronavirus variant. Indonesia will mandate vaccinations, the government said Thursday, while New Zealand has made masks compulsory on most forms of public transport. The United Nations is pushing for a worldwide vaccination effort. Vaccine-makers will begin trialling their shots with pregnant women, in a bid to provide reassurance that they are safe for expectant mothers.
9. Hong Kong Unemployment Hits Highest Level Since April 2004
Hong Kong’s unemployment rate rose in January to the highest level in more than 16 years as social distancing and travel restrictions from the pandemic continue to damage local businesses and destroy jobs. The jobless rate rose to 7% in the November-to-January period from 6.6% previously, the highest since April 2004, according to a government report Thursday. The underemployment rate also increased, rising to 3.8%. Hong Kong has struggled under an extended recession over the past two years amid social unrest and the global pandemic, with the economy shrinking a record 6.1% in 2020. Retail consumption, a key pillar of the economy, slumped first because of political demonstrations and then continued to decline due to restrictive measures to contain the spread of the virus.
10. Robinhood Rival Webull Raises New Funds at $1 Billion Valuation
Webull, the Chinese-owned brokerage that runs one of the fastest-growing retail trading platforms in the U.S., raised $150 million in a new financing round that gives the startup more firepower to compete with Robinhood Markets. The fundraising valued Webull’s parent company at more than $1 billion. The brokerage, founded by Alibaba Group Holding alum Wang Anquan, has benefited from the surge in trading by individual investors as stock prices soar to all-time highs. Webull has positioned itself as the go-to platform for disgruntled users of Robinhood, whose restrictions last month on highly volatile stocks including GameStop sparked outrage from some customers and drew criticism from politicians.
