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Daily Market Report | November 29, 2021

US FINANCIAL MARKET

Stocks Rise as Investors Weigh Omicron Variant – Wall Street Journal, 11/29/2021

  • U.S. stocks and oil prices recouped some losses from Friday’s selloff, with investors betting the impact of the Omicron Covid-19 variant will be less profound than initially feared.
  • The S&P 500 gained 1% in morning trading Monday.
  • The index suffered its worst one-day percentage decline since February on Friday after South Africa identified a fast-spreading strain of the coronavirus, which the World Health Organization has named Omicron.
  • The tech-focused Nasdaq Index rallied 1.6%, while the Dow Jones Industrial Average added about 120 points, or 0.4%.
  • Brent crude futures, the benchmark in global oil markets, gained 5.4% to $76.63 a barrel.
  • They tumbled more than 10% Friday, in their largest one-day percentage decline since April 2020.
  • Investors are awaiting more clarity on the likely transmissibility and severity of the Omicron variant and whether it will weigh on the efficacy of vaccines.
  • Some money managers worry the new strain could hit global mobility and the economic recovery. Israel has banned foreigners from entry and Japan has said it would close its borders to foreign visitors until more information about Omicron is available.
  • Travel stocks also rose, recouping some of Friday’s losses. Royal Caribbean Group shares added 2.5% and Carnival climbed 2%. Delta Air Lines and American Airlines Group ticked up 0.1% and 0.4%, respectively.
  • Investors sold out of government bonds, which are viewed as safe assets to hold, pushing up yields. The yield on the benchmark 10-year Treasury note rose to 1.559% from 1.484% Friday.
  • Overseas, the pan-continental Stoxx Europe 600 rose 1.2%, led by gains in the travel and leisure and energy sectors.
  • Major stock indexes in Asia fell. Tokyo’s Nikkei 225 index dropped 1.6% to its lowest closing level in a month and a half, after Japan said it would shut its borders to foreign visitors. The benchmark declined 2.5% Friday.
  • Hong Kong’s Hang Seng Index and South Korea’s Kospi each dropped around 1%, while Australia’s S&P/ASX 200 index fell 0.5% after the country tightened border controls over the weekend.

WHO flags global risk from Omicron, countries tighten curbs – Reuters, 11/29/2021

  • The Omicron variant of coronavirus carries a very high global risk of surges, the WHO warned on Monday, as more countries reported cases, prompting border closures and reviving worries about the economic recovery from a two-year pandemic.
  • The World Health Organization advised its 194 member nations that any surge in infections could have “severe consequences” but said no deaths linked to the Omicron variant had been reported so far.
  • A number of countries have imposed travel restrictions, including Japan, which described its ban on arrivals by foreigners as precautionary.
  • In Israel, a ban on arrivals by foreigners took effect overnight.
  • U.S. President Joe Biden will provide fresh details of the variant and the U.S. response on Monday, the White House said.

Doctor Who Saw Omicron Early Says Symptoms Different to Delta – Bloomberg, 11/29/2021

  • People infected by omicron in South Africa are showing very different symptoms to those suffering from the delta strain, said the doctor who alerted government scientists to the possibility of a new variant.
  • Patients who contracted it complain of fatigue, head and body aches and occasional sore throats and coughs, said Angelique Coetzee, who is also chairwoman of the South African Medical Association.
  • Delta infections, by comparison, caused elevated pulse rates, resulted in low oxygen levels and a loss of smell and taste, she said.
  • The World Health Organization is analyzing the new mutation, and has said it’s too early to say how transmissible and severe it is. It’s called on countries to start testing widely for omicron, saying the divergent design could fuel future surges of Covid-19.

Cyber Monday spending expected to slow as shoppers see fewer deals – Reuters, 11/29/2021

  • U.S. retailers are estimated to generate online sales of up to $11.3 billion on Cyber Monday, a decline in growth from a year earlier as fewer discounts and limited choices due to global supply chain disruptions deter shoppers.
  • Retailers had also spread out promotional deals across more weeks this year to protect profit margins from surging supply chain costs and to better manage inventories amid widespread product shortages ahead of the Christmas shopping season.
  • “Online sales on big shopping days like Thanksgiving and Black Friday are decreasing for the first time in history, and it is beginning to smooth out the shape of the overall season,” said Taylor Schreiner, director, Adobe Digital Insights.
  • U.S. spending on Cyber Monday, which gained popularity in the mid-2000s, is expected to be between $10.2 billion and $11.3 billion, according to estimates from Adobe.
  • That translates to roughly flat growth at the midpoint compared to last year’s $10.8 billion, which was a near 15% jump from 2019.
  • Discount rates in the United States in the week leading up to Cyber Monday were on average 8% lower than they were last year, according to Salesforce.

Twitter Stock Halted After Report of Jack Dorsey Stepping Down as CEO – Wall Street Journal, 11/29/2021

  • Twitter shares were halted Monday morning after jumping as much as 11% on a report that Jack Dorsey was expected to step down from the social-media company.
  • Mr. Dorsey, the co-founder of Twitter, is in his second stint as CEO, having recently been in the role since the fall of 2015.
  • He currently serves as CEO of both Twitter and Square Inc.
  • A Twitter spokesman wouldn’t confirm whether Mr. Dorsey was stepping down. “I have nothing to share right now,” he said.

Iron Ore Surges as China’s Steel Mills Prepare to Restock – Bloomberg, 11/29/2021

  • Iron ore futures in Singapore jumped nearly 10% as optimism over a bout of restocking by China’s steel mills added to tailwinds from the risk-on mood in global markets.
  • Prices rebounded from Friday’s pandemic-driven losses alongside a rally across commodities from nickel to crude oil on bets the impact of a new coronavirus variant may not be as severe as initially feared. As well as a broad recovery for risk assets, iron ore is benefiting from signs that pressure on China’s steel production is easing.
  • “Iron ore demand fell to a three-year low at the start of this month,” Mysteel wrote in a research note. “Now the expected resumption of steel output in December is affecting market sentiment and changing the market trend.”
  • The Shanghai-based research group said pig iron output would rise by 37,000 tons a day by the end of December as 16 idled and two overhauled blast furnaces were restarted.
  • That’s a relatively small amount, but could mark an inflection point after months of pressure on steel output.

US ECONOMY & POLITICS

U.S. Pending Home Sales Rebound to Highest Level of the Year – Bloomberg, 11/29/2021

  • A forward-looking gauge of U.S. home purchases rebounded in October to a 10-month high, signaling steady housing demand despite growing affordability concerns among many prospective buyers.
  • The National Association of Realtors’ index of pending home sales increased 7.5% from a month earlier to 125.2, according to data released Monday. The median estimate in a Bloomberg survey of economists called for a 1% advance.
  • Contract signings increased across all four regions, led by an 11.8% gain in the Midwest and a 8% rise in the South.
  • Compared with a year earlier, contract signings were down 4.7% on an unadjusted basis.

Showdowns Loom in Congress Over Debt Limit, Shutdown, Biden Agenda – Bloomberg, 11/29/2021

  • The U.S. Congress returns from its week-long Thanksgiving recess facing urgent deadlines to avoid both a federal government shutdown and a debt limit default, pass the annual defense bill and finalize President Joe Biden’s signature tax and spending bill.
  • Missteps on the funding bills or debt ceiling would have profound consequences for the country and party in power, while failure to agree on a final form of the $2 trillion House-passed Build Back Better bill could cement voter perceptions that Democrats are too preoccupied with infighting to legislate.
  • The House will need to take up some kind of stopgap spending bill this week to avoid a partial government shutdown after midnight Friday, Dec. 3. None of the 12 annual appropriations bills funding federal agencies for the fiscal year that began Oct. 1 have been enacted.
  • Treasury Secretary Janet Yellen has warned Congress the U.S. is at risk of failing to meet all of its payment obligations sometime after Dec. 15.
  • The House this month passed its version of Biden’s tax and spending bill. The Senate plans to take up and pass its version before the Dec. 25 Christmas holiday.
  • Moderate Democrats Joe Manchin of West Virginia and Kyrsten Sinema of Arizona are the key players.
  • Manchin has objections to the overall price tag, spending in early years paired with offsets in later years, as well as the bill’s four weeks of paid family leave and Medicare hearing coverage. Sinema has kept her specific objections largely private.

Some Hospitals Prepare to Lose Staff Over Covid-19 Vaccination Mandate – Wall Street Journal, 11/29/2021

  • Some hospitals, nursing homes and other healthcare providers are preparing to operate without up to a third of their staff at the start of next year, if those workers don’t comply with a federal mandate to get vaccinated against Covid-19.
  • Thirty percent of workers at more than 2,000 hospitals across the country who were surveyed in September by the Centers for Disease Control and Prevention were unvaccinated. Applied to a nationwide healthcare workforce of some 22 million according to the Census Bureau, that would equal nearly seven million who have yet to get inoculated.
  • The Biden administration is requiring facilities that receive funding from the Centers for Medicare and Medicaid Services to have workers vaccinated by Jan. 4. Two dozen states are challenging the requirement in court.
  • Some 17 million healthcare workers are employed at facilities that receive reimbursement from the federal Medicare and Medicaid programs, according to CMS. The Biden administration earlier this month made future reimbursement contingent on all eligible staff getting fully vaccinated against Covid-19 by Jan. 4.
  • The regulation allows for medical and religious exemptions.

Biden to meet with CEOs on supply chain amid new COVID threat – Reuters, 11/29/2021

  • President Joe Biden planned to meet with chief executives of major retailers and other companies on Monday to discuss how to move goods to shelves as the U.S. holiday shopping season begins in the shadow of the Omicron coronavirus variant.
  • Biden, who is wrestling with U.S. inflation that recently hit a 31-year high, has taken measures to try to break supply chain logjams including unclogging ports and expanding trucker hours.
  • The Democratic president has also sought investigations into excessive shipping fees and possible illegal conduct into oil and gas markets that are keeping fuel prices high.
  • Biden planned to host at the White House the CEOs of Best Buy, Food Lion, Samsung North America, Qurate Retail Group, Todos Supermarket, Etsy, Mattel and Kroger, the White House said.

EUROPE & WORLD

Omicron Disrupts Reopening Plans Across Asia – Wall Street Journal, 11/29/2021

  • Many countries across Asia were only just beginning to ease strict border controls and coronavirus restrictions that had been in place for much of the pandemic. The new Omicron variant is now disrupting those reopenings.
  • From Japan to Australia, countries are now recalibrating their plans to account for the new variant, even though it may take weeks for scientists to better understand the potential danger posed by Omicron.
  • On Monday, Japan said that starting Tuesday it would close its borders to foreigners, including business travelers and foreign students, until the end of the year. Australia said it would postpone plans to allow students and skilled migrants to enter the country until Dec. 15, and global travel hub Singapore said on Sunday that it would delay quarantine-free travel lanes for several Middle Eastern countries because they were travel nodes for some of the affected countries in southern Africa.
  • Only a handful of cases have been identified in the region—three in Hong Kong and five in Australia. At least some of the cases in Australia were asymptomatic, authorities said.
  • Indonesia, Southeast Asia’s most populous nation, had reopened its borders to tourists in mid-October, but starting Monday will require all foreign travelers to be quarantined for a week upon arrival in Indonesia, up from the three days required previously.

Shares Drop After Hui Sells; Fantasia Delay: Evergrande Update – Bloomberg, 11/29/2021

  • China’s stressed developers face nearly $1.3 billion of bond payments in December, including a unit of China Evergrande Group, which will see a grace period end in the middle of next month.
  • Fantasia Holdings Group meanwhile won approval to delay early redemption of a local bond by two years.
  • Evergrande plunged 8.8% in Hong Kong Monday, extending the biggest two-day drop in more than four months, after its billionaire chairman sold shares last week at a discount.
  • The developer’s 8.75% note maturing in 2025 was indicated little changed at 23.9 cents on the dollar. A gauge of real estate stocks slipped 1.6%, extending losses this year to 31%.

Nissan to Spend $17.6 Billion on Battery-Powered Vehicles Over Five Years – Wall Street Journal, 11/29/2021

  • Nissan Motor said Monday it plans to spend $17.6 billion over the next five years as it adds 20 new battery-powered vehicles to its lineup.
  • “We have a 10-year head start over our competitors in electrification,” said Nissan CEO Makoto Uchida. The amount the company plans to invest in the next five years is twice what it has spent on electric vehicles since 2010.
  • Nissan said nine of the 20 new vehicles to be introduced by 2026 would be purely battery-powered EVs. The others would include Nissan’s version of gasoline-electric hybrids, vehicles powered by electric motors but equipped with a small gasoline engine to recharge the battery while driving.
  • Nissan said Monday that it wants pure-electric or hybrid vehicles to generate 40% of its U.S. sales by 2030. Mr. Uchida said he couldn’t provide a breakdown by type of vehicle.

LATAM Airlines shares plummet 85% after restructuring plan revealed – Reuters, 11/29/2021

  • Shares of LATAM Airlines, Latin America’s largest air transport group, plunged on the Chilean stock exchange on Monday after an announcement by the indebted carrier over the weekend of a restructuring plan that would dilute shares in the company.
  • On Friday the firm said it had filed a reorganization plan, proposing an $8.19 billion infusion of capital into the group, in a bid to exit its Chapter 11 bankruptcy.
  • The financing proposal will include a mix of new equity, convertible notes and debt, the group said in a statement, adding that it intends to launch an $800 million equity rights offering to shareholders upon confirmation of the plan.

Factmonster – TODAY in HISTORY

  • Italian composer Giacomo Puccini died in Brussels before he could complete his opera “Turandot.'” (1924)
  • Commander Richard E. Byrd and a crew of three became the first to fly over the South Pole. (1929)
  • The Beatles released I Want to Hold Your Hand in Great Britain. (1963)
  • Actor Cary Grant died in Davenport, Iowa, at age 82. (1986)
  • Beatle George Harrison died of cancer. (2001)

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