DAILY MARKET REPORTS
- U.S. stocks rose on Wednesday, with the Dow Jones Industrial Average at an all-time high, driven by gains in financial and technology stocks.
- Italy indicated that it was open to reducing its budget deficit and debt in the coming years, easing concerns over the country’s high debt levels that have pressured global stock markets since the country’s ruling coalition last week tripled the previous government’s deficit target.
- U.S. bank stocks rose, with Citigroup, JPMorgan Chase, Bank of America up between 0.6% and 0.7%, mirroring a recovery in their Italian peers.
- In another sign of a healthy U.S. economy, data showed U.S. private payrolls recorded their biggest increase in seven months in September, pointing to sustained labor market strength.
- The stronger-than-expected data comes ahead of the more comprehensive non-farm payrolls data on Friday.
- Among top gainers on the S&P 500 was General Motors, which rose 2.9% after Honda said it would invest $2 billion over 12 years in the U.S. carmaker’s Cruise self-driving unit.
US FINANCIAL MARKET
- Lennar, the second-largest U.S. homebuilder, reported higher-than-expected quarterly profit and revenue on Wednesday, benefiting from a robust housing market.
- Revenue rose 73.9% to $5.67 billion, beating analysts’ estimate of $5.64 billion.
- The builder sold 12,613 homes during the third quarter, compared with 7,598 homes last year.
- The average sales price increased by 10.7% to $415,000.
- Lennar’s orders, a key indicator of future revenue for homebuilders, jumped 51.6% to 31,473 homes in the third quarter.
- Net income rose about 82% to $453.2 million in the quarter.
Honda buys stake in GM Cruise self-driving unit, to invest $2 billion
- Honda will invest $2 billion and take a 5.7% stake in General Motors’ Cruise self-driving vehicle unit, extending cooperation between the two automakers in a technology that has enormous costs and risk but no market-ready products.
- Honda, which has lagged behind many of its rivals in developing self-driving vehicles, is paying $750 million upfront for the minority stake in Cruise and will invest another $2 billion over 12 years, the companies said on Wednesday.
- Honda, GM, and Cruise will jointly develop self-driving vehicles for deployment in ride services fleets around the world.
- Honda’s investment values Cruise at $14.6 billion – about a third of GM’s market cap, $48.5 billion.
- By comparison, analysts have pegged the value of Alphabet’s Waymo self-driving unit as high as $175 billion.
- C. Penney names retail veteran, Joann Stores chief as new CEO
- J. C. Penney on Tuesday hired Jill Soltau, the former chief executive officer of privately held fabric and crafts retailer Joann Stores, to the top job, effective mid-October.
- Shares of the company, which hit a record low last week when its chief financial officer quit, rose about 10% in after-market trading.
- Soltau has served in senior-level positions at Sears and Kohl’s in a career spanning over 30 years, the company said in a statement.
North American orders for semi-trucks surge in September
- North American orders for Class 8 semi-trucks jumped 92% in September as trucking companies continued to struggle with tight capacity in a booming U.S. freight market, FTR, a company that tracks the industry, said on Wednesday.
- September was the 10th best month ever for North American sales of big rigs and capped the highest-ever quarter for sales.
- Preliminary orders for the big 18-wheelers that haul freight along the highways of the United States, Canada and Mexico reached 42,300 trucks, up 92% from 22,082 in September 2017.
- Full-year 2017 orders for Class 8 trucks came in at 290,000 units, compared with 164,000 in 2016.
- Over the last 12 months, orders for semi-trucks have totaled 497,000 units.
Some Tesla directors proposed James Murdoch to succeed Musk as chairman
- Some Tesla directors have proposed that James Murdoch, a fellow board member at the electric carmaker and chief executive officer of Twenty-First Century Fox, succeed Elon Musk as its chairman, the New York Times reported on Tuesday.
- Murdoch hasn’t volunteered for the post nor has he discussed it with any other director, the newspaper reported.
- The New York Times also said Musk had threatened to resign, in a phone call with directors, if the board insisted that he and the company enter into a settlement with the Securities and Exchange Commission (SEC).
Saudi Arabia, Russia agreed in Sept to lift oil output, told U.S.
- Russia and Saudi Arabia struck a private deal in September to raise oil output to cool rising prices and informed the United States before a meeting in Algiers with other producers, four sources familiar with the plan said.
- The sources said Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak agreed during a series of meetings to lift output from September through December as crude headed towards $80 a barrel.
- Originally, the two countries had hoped to announce an overall increase of 500,000 barrels per day (bpd) from Saudi-led OPEC and non-OPEC Russia at a gathering of oil ministers in Algiers at the end of September.
- But with opposition from some in OPEC, including Iran which is subject to U.S. sanctions, they decided to defer any formal decision until a full OPEC meeting in December.
- Since then, Riyadh has planned to lift output by some 200,000 bpd to 300,000 bpd from September to help fill the gap left by lower Iranian output due to the sanctions. Russian output rose 150,000 bpd in September.
Oil prices sink as US crude stockpiles rise by 8 million barrels
- Oil prices fell on Wednesday after government data showed a big jump in U.S. crude stockpiles.
- Commercial crude stored in the United States rose by 8 million barrels in the week through Sept. 28, the U.S. Energy Information Administration reported.
- U.S. West Texas Intermediate (WTI) crude futures were down 80 cents, or 1.1%, at $74.43 a barrel.
Dell exploring IPO option if tracking stock bid fails
- Dell Technologies confirmed on Wednesday it had met with some investment banks to explore an initial public offering if its plan to buy the tracking stock of VMware falls through.
- Dell, which owns 80% of VMware, said in July it would buy the tracking stock in a $21.7 billion cash-and-stock deal, to return to the public market.
- The company’s board may not proceed with an IPO even if the VMware deal does not go through, Dell said in a regulatory filing.
US ECONOMY & POLITIC
- U.S. private payrolls recorded their biggest increase in seven months in September, boosted by hiring at construction sites and in the services sector, pointing to sustained labor market strength that should continue to underpin economic growth.
- Private payrolls rose by 230,000 jobs in September, the largest gain since February, the ADP National Employment Report showed on Wednesday, after an upwardly revised 168,000 increase in August.
- Economists forecast payrolls advancing by 185,000 last month following a previously reported 163,000 increase in August.
- The ADP report showed construction payrolls rose by 34,000 jobs last month, accelerating from 3,000 in August. The services sector added 184,000 jobs in September, up from 145,000 in August.
U.S. Service Industries Grow Near Record Pace, Topping Forecasts
- A gauge of U.S. service industries unexpectedly rose to a near-record level in September, an Institute for Supply Management survey showed Wednesday, offering fresh evidence of strength in the biggest part of the economy.
- The ISM non-manufacturing index rose to 61.6 last month, the highest level since the index was created in 2008.
- Economists expected the index to hit 58 in September. The index jumped from 58.5 in August.
- The increase was across all four components: business activity, new orders, employment and supplier deliveries.
- While ISM’s headline non-factory index dates to 2008, unofficial calculations based on earlier readings of components show the index is the highest since reaching 62 in August 1997.
McConnell says senators will get FBI report on Kavanaugh
- Senate Majority Leader Mitch McConnell said on Tuesday that each U.S. senator would get a copy of the FBI report on sexual misconduct allegations against Supreme Court nominee Brett Kavanaugh.
- McConnell repeated that he expected a vote this week in the full Senate on President Donald Trump’s nominee, a conservative federal appeals court judge.
- He would not elaborate on whether the vote would be procedural or a vote to confirm Kavanaugh but said he would fight any Democratic attempts to delay it.
- The top Senate Democrat, Chuck Schumer, said Democrats would ask only for adequate time to review results of the FBI report before they vote.
In North Dakota, Kavanaugh debate tests Democratic wave – and #MeToo
- For Heidi Heitkamp, the Democratic North Dakota senator running for re-election in a largely rural, conservative state that strongly backed Donald Trump for president in 2016, the partisan war over Brett Kavanaugh’s confirmation to the U.S. Supreme Court presents a seemingly intractable dilemma.
- Five weeks before the Nov. 6 elections, her decision on Trump’s pick could come at her peril – whether she votes yes or no.
- If Heitkamp, one of the most vulnerable Democrats in this year’s congressional midterm elections, rejects Kavanaugh, as she has hinted, she risks alienating conservative voters including independent and Democratic-leaning women who support Kavanaugh in a state Trump carried by 36 points in the 2016 presidential election.
- A “yes” vote, however, might provoke a backlash among her core supporters that could depress Democratic turnout in her bid for a second term.
- This year the Democratic Party can not afford to lose any seats given the limited number of Republican seats on the ballot, much less deemed vulnerable.
What’s in a name? One-third of U.S. voters don’t know candidates
- Less than five weeks before elections that will determine control of the U.S. Congress for the next two years, about a third of registered voters do not know the name of their party’s candidate for office, a Reuters/Ipsos opinion poll found.
- Name recognition is critical in motivating voters, is the reason candidates spend millions of dollars on TV ads and is a major factor in incumbents’ advantage in fending off challengers.
- A Reuters/Ipsos poll released on Wednesday found that 34% of Republican registered voters and 32.5% of Democratic registered voters said they did not know the names of their party’s congressional candidates in their districts.
- But it may be slightly less critical on Nov. 6 as many voters may view their choices as referendums on a man whose name will not be on the ballot: Republican President Donald Trump.
EUROPE & WORLD
- Tesco shares fell 8% after Britain’s biggest retailer missed first-half profit forecasts as weak trading in Thailand and Poland eclipsed accelerating sales growth in its main UK business.
- Tesco, which said it was “firmly on track” to meet its medium-term targets, reported underlying operating profit of 933 million pounds ($1.21 billion) – up 24% on last year but short of analysts’ average forecast of 978 million pounds.
- Profit fell 29.1% in Asia and by 3.3% in central Europe, partly offsetting the growth of 47.6% in the UK and Ireland where the 3.7-billion-pound acquisition of Booker has allowed Tesco to expand to provide food to restaurants, bars, and smaller grocers.
- Tesco has a leading 27.4% share of Britain’s 200-billion-pound grocery market, according to industry data, although it could be overtaken by Sainsbury’s proposed 7.3-billion-pound takeover of Walmart’s Asda.
Mexican, Canadian steel lobbies urge fix to U.S. tariff dispute
- The steel industries of Mexico and Canada on Tuesday urged their governments to resolve a tariff dispute with the United States before signing a new trilateral trade deal that was unveiled this week.
- Mexican steel producers association Canacero welcomed the new pact, called the United States-Mexico-Canada Agreement (USMCA), but said it viewed “with concern” the ongoing steel dispute and the “serious situation” it created for the industry.
- U.S. President Donald Trump said on Tuesday that U.S. steel and aluminum tariffs would remain in place for Canada and Mexico until they “can do something different like quotas, perhaps.”
- The United Steelworkers of Canada adopted a less conciliatory tone after the new trade deal was announced, calling it a “sell-out” for Canadian workers.
Tencent Music files for U.S. IPO, first-half revenue surges
- Tencent Music Entertainment, which owns China’s most popular music apps, has filed for a U.S. IPO seeking funds to develop content and new services, in what is expected to be one of the biggest U.S. listings by a Chinese company this year.
- With streaming apps QQ Music, Kugou, Kuwo as well as karaoke app WeSing, Tencent Music is China’s largest online music platform boasting more than 800 million monthly active users.
- Released in a regulatory filing, for the first half of this year, revenue jumped 92% to $1.3 billion while profits after tax climbed roughly fourfold to $263 million.
- The music arm of tech giant Tencent, which plans to list either on the Nasdaq or the New York Stock Exchange, set a placeholder amount of $1 billion for registration purposes.
Aston Martin skids on market debut
- Shares in luxury automaker Aston Martin fell as much as 6.5% on their market debut in London on Wednesday as investors and analysts raised concerns over its ability to deliver an ambitious roll-out of new models.
- The company, which last year made its first profit since 2010 and has gone bankrupt seven times, had priced its shares at 19 pounds each, giving it a market capitalization of 4.33 billion pounds ($5.63 billion).
- The shares fell to as low as 17.75 pounds.
Sharp makes long-awaited OLED foray, wary of big spending
- Japan’s Sharp unveiled its long-awaited move into the organic light-emitting diode (OLED) market on Wednesday as the Apple supplier looks to catch rival Samsung.
- Sharp will offer OLED panels in its new smartphones this year and plans to sell the screens to other manufacturers, although it has signaled it is wary about a rapid expansion in OLED as momentum for the thinner but more expensive screens slows.
- Sharp has so far invested 57.4 billion yen ($505 million) to produce OLED panels in western Japan, less than a third of the planned 200-billion-yen investment that was announced by Foxconn at the time of its acquisition in 2016.
TODAY in HISTORY
- President Lincoln declared the last Thursday in November as Thanksgiving Day. (1863)
- East Germany and West Germany united to become Germany, 45 years after being split into two countries at the end of World War II. (1990)
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