Stock Futures Slip On China Trade War Worries - Investor's Business Daily

Stocks quickly trimmed early losses Wednesday, as concerns eased over an escalating China trade war. Meanwhile earnings news sent a number of stocks — including Match Group (MTCH), Avalara (AVLR) and Electronic Arts (EA) — sharply higher.

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The Nasdaq dropped 0.4%, then narrowed losses and was toggling in and out of narrow gains. The S&P 500 cut its decline to a fraction. The Dow Jones industrials traded almost level, just below the index's 50-day moving average.

Tuesday's after-hours reporting session sent Electronic Arts and IBD Leaderboard stock Match Group up sharply after their reports. 2U Inc. (TWOU) and 3D Systems (DDD) posted double-digit declines. The closely watched first public report from Lyft (LYFT) was mixed, holding the stock to a 0.5% advance in early trade. Cloud-based IPO Avalara (AVLR) rocketed after its report late Tuesday.

Wednesday's earnings reports triggered strong early gains by Siemens (SIEGY) and Bunge Group (BG).  TripAdvisor (TRIP) fell 7%.

Chip stocks were mixed, with Qorvo (QRVO) and Macom Technology (MTSI) soaring on earnings results, while Microchip Technology (MCHP) took a hard early hit following a soft fiscal first-quarter outlook.

Beyond Meat (BYND), also an IBD Leaderboard name, traded more than 3% higher.

China trade-sensitive Walmart (WMT) fell 1.2%, the worst loss among Dow Jones stocks. Dow Jones peer Merck (MRK) gained 0.4% after announcing positive clinical trial results.

Microchip and China's Netease (NTES) sunk to the bottom of the Nasdaq. Electronic Arts topped the Nasdaq 100 and S&P 500 indexes.

Earnings News: Match Group, Electronic Arts

IBD Leaderboard stock Match Group grabbed an early 7% gain, moving beyond buy range after the open. The stock ended Tuesday in a buy range, just above a 60.02 cup-with-handle buy point.

A 28% earnings jump and a 14% rise in revenue both topped analyst estimates for Match. Subscriber growth for its Tinder dating app also topped forecasts.

Video game pioneer Electronic Arts rallied nearly 5% after reporting big revenue and earnings beats in its fiscal fourth quarter. The company's outlook was mixed, however, with first-quarter earnings and revenue guidance well below analyst targets, while full-year earnings were far above expectations. The stock is not near a buy point, but it is positioned for a test of resistance at its converged 10- and 40-week moving averages — which have halted the stock's progress since August.

China Trade War: Nets Broken?

Trade negotiators plan to launch back into efforts on Thursday to end the U.S.-China trade war. China's chief trade official, Vice-Premier Liu He, is in Washington to lead China's side of the talks. Unlike a week ago, hopes are not high. Although news reports early Wednesday quoted President Donald Trump saying that Chinese negotiators told the White House they intended to make a deal on trade. The Trump administration has committed to a tariff increase on Friday if China shows no flexibility. China's state media, meanwhile, reports Beijing has reached its limit on concessions, and is prepared for increased tariffs.

One expert quoted by the South China Morning Post Wednesday said China has dug in at its current level of concessions, and increased tariffs will encourage no further compromises, only deteriorated negotiations. "It will be a situation where fishes are dead and nets are broken," said Liu Weidong, a U.S. affairs expert at the Chinese Academy of Social Sciences.

China markets took heavy losses Wednesday, with the Shanghai Composite down 1.1% and Hong Kong's Hang Seng Index dropping 1.2%. Japan succumbed to the mood as safe-haven trading drove the yen higher, with Tokyo's Nikkei 225 down 1.5% and breaking below key levels of support.

In Europe, markets turned mixed in afternoon trade. London's FTSE 100 slipped 0.2%. The CAC-40 in Paris shed its losses and gained 0.1%. Frankfurt's DAX also reversed early losses, rising 0.4% in late trade.

Dow Jones Snaps Support, Faces Test

Despite some bullish signals on Monday, the Dow Jones Industrial Average on Tuesday sliced below its 50-day moving average. Whereas the index edged ever closer to its first new high since October, it now faces the task of retaking support at its 50-day line. A look at a daily or weekly chart shows that line acting as a level of resistance for the index, stalling rally attempts in November and December.

The S&P 500 found support at its 50-day line Tuesday, while the Nasdaq remained well above the line. But the Nasdaq now has declined in five of the past six sessions. The index staged a similar, five-day pullback in March, after the European Central Bank pointed to a weaker economic outlook. That pullback broke support at the index's 200-day line, then reversed as the Nasdaq ran 10.4% higher over the next eight weeks.

For more detailed analysis of the current stock market and the status of its uptrend, study the Big Picture.

IPO Watch: Avalar, Beyond Meat Surge

Aside from Lyft, early IPO action was mixed, with Avalara scorching 23% higher and Beyond Meat (BYND) up almost 7% in early trade. Zoom Video (ZM) gained 4%, while Zscaler (ZS) added 1.3%. Jumia Technologies (JMIA) slipped 2%.

Avalara spiked to fresh highs, clearing its post-IPO watermarks from June. Shares are up now up 73% since clearing an IPO base in January, and trading 207% above their initial offering price. The automated tax-program software developer reported a loss of 1 cent per share, vs. views for a 16-cent loss. Revenue surged a stronger-than-expected 38%, and second-quarter revenue guidance was above analyst forecasts.

Find Alan R. Elliott on Twitter @IBD_Aelliott

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2019-05-08 12:22:30Z
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Asian markets track global equity losses on persistent trade-war fears - MarketWatch

Asian markets retreated Wednesday, following sharp losses on Wall Street as investors worry the trade war between the U.S. and China could escalate.

U.S. stock futures indicated another weak session for those markets on Wednesday, after in a week that has seen losses of 2% across major U.S. indices. Investors got confirmation Tuesday that the Trump administration will increase tariffs on $200 billion of Chinese goods to 25% from 10% on Friday. Still, China’s Vice Premier Liu He will lead a delegation for ongoing trade talks in Washington on Thursday and Friday, and there remains a possibility that a deal could yet be worked out.

“Over the past 24 hours, there has been a significant sentiment shift as some investors hedge into safe-haven assets while some are falling by the wayside while the balance is opting for the sidelines,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note Tuesday. “But one thing that is for sure, Equity investors are getting more uncomfortable by the hour.”

Markets across Asia had largely recovered Tuesday, following a sharp selloff Monday, but slid back again Wednesday. Japan’s Nikkei NIK, -1.46%   closed down 1.5%, while Hong Kong’s Hang Seng Index HSI, -1.23%   dropped 1.2%.

Losses picked up for the Shanghai Composite SHCOMP, -1.12% which closed down 1.1%, while the smaller-cap Shenzhen Composite 399106, -0.65% slipped 0.4%. South Korea’s Kospi SEU, -0.41% also fell 0.4%, while benchmark indexes in Taiwan Y9999, -0.58%  , Singapore STI, -0.87%   and Indonesia JAKIDX, -0.43%   declined. Australia’s S&P/ASX 200 XJO, -0.42%   slipped 0.4%.

New Zealand’s NZ50GR, +0.36%  main stock index bucked the weaker trend, rising 0.4% after the country’s central bank the official cash rate by 25 percentage points to 1.5%, the lowest on record. It was the first rate cut by the Reserve Bank of New Zealand since 2016, and weighed on the country’s currency NZDUSD, -0.1212%  .

Among individual stocks, Toyota 7203, -0.95%   fell in Tokyo trading, as did SoftBank 9984, +0.04%   and Fanuc 6954, -2.24%  . In Hong Kong, Tencent 0700, +1.05%   rose but Sunny Optical 2382, -2.84%  , CNOOC 0883, -1.73%   and Wharf Real Estate 1997, -2.00%   fell. Hyundai Heavy Industries 009540, -1.23%   declined in South Korea, and Foxconn 2354, -2.45%   slipped in Taiwan. Beach Energy BPT, -1.49%   slid in Australia.

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2019-05-08 12:20:00Z
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Uber And Lyft Drivers Are Striking — And Call On Passengers To Boycott - NPR

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Uber and Lyft drivers in a number of U.S. cities are striking on Wednesday, calling for higher wages and better working conditions as Uber prepares to go public on Friday. Its valuation may be as high as $91 billion. Richard Vogel/AP hide caption

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Richard Vogel/AP

Ahead of Uber's initial public offering, drivers for Uber, Lyft and other ride-hailing companies plan to strike, turning off the apps as they flex their collective muscles to say: What about us?

Drivers in 10 cities across the country are taking action on Wednesday to draw attention to what they say are decreasing wages for drivers and a distressing lack of job security – and some are calling on passengers to temporarily boycott the ride-hailing services, too.

Among the drivers' demands in LA are a 10 percent cap on commissions taken by Uber and Lyft, hourly minimum pay, and fare breakdowns on passenger receipts that show the companies' take. New York drivers are demandingan end to sudden account deactivations and the right to appeal through the courts.

The strike was spearheaded by Rideshare Drivers United, a Los Angeles-based association of drivers. And the group is asking for the support of would-be passengers, too.

"We ask that the public support drivers in their struggle for fair wages and our Drivers bill of rights," spokesperson and member Brian Dolber said in an email to NPR. "We are calling for community standards that will ensure that Uber and Lyft do not create needless traffic and pollution. By boycotting Uber/Lyft for 24 hours, passengers can show that they stand with RDU in our fight for a rideshare industry that truly serves Angelenos."

When companies go public, it usually means big money for executives, and sometimes nice payouts for employees. San Francisco's housing market has been bracing for the thousands of newly-minted millionaires spawned by four major IPOs this spring.

Uber's valuation could be as high as $91 billion when trading begins, which would place it among the top three most valuable firms to ever debut on a U.S. exchange. Co-founder and former CEO Travis Kalanick's stake may be worth as much as $5.9 billion.

But the IPO won't be life-changing for most drivers, whom Uber insists are independent contractors, not employees. Some drivers will receive one-time bonuses according to their loyalty: Those who completed more than 2,500 trips before April 7 and at least one this year are eligible for a one-time bonus, ranging from $100 for those drivers with 2,500 completed trips to $40,000 for 40,000 completed trips. U.S. drivers can use that bonus to buy up to $10,000 in stock in the company at the IPO price.

That may not end up being a great deal, if Lyft's IPO is any indication: its shares are down about 20 percent since the initial offering. Some drivers also went on strike before Lyft went public in March.

Strikes or rallies are also planned in Chicago, Washington, Boston, Atlanta, Philadelphia, San Diego, San Francisco, and Stamford, Conn. On Twitter, organizers are using the hashtags #StrikeUberLyft and #AppsOffMay8 to build momentum.

This strike will take different forms in different cities, but in the LA metro area the strike will last for 24 hours, with a picket line at LAX airport and a noon rally. The New York Taxi Workers' Alliance called for a rush hour strike, during which drivers will turn off the Uber, Lyft, Juno and Via apps from 7 to 9 a.m., and then rally outside Uber and Lyft headquarters in Long Island City.

"Uber/Lyft going public on the stock market will make billionaires of Uber and Lyft bosses while drivers struggle in poverty and the companies destroy the livelihoods of drivers in every sector," the New York drivers' organization says in its call to action.

For those who often use ride-hailing apps and want to support the strike, today may mean a commute by public transit, a cab, or bicycle. At D.C.-area airports, officials arranged for extra cabs, and said they always encourage passengers to consider taking the Metro or the bus, The Washington Post reported.

In a statement to Post, Uber said drivers "are at the heart of our service — we can't succeed without them — and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road. Whether it's more consistent earnings, stronger insurance protections or fully-funded four-year degrees for drivers or their families, we'll continue working to improve the experience for and with drivers."

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2019-05-08 11:05:00Z
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Uber drivers set to protest around the world ahead of the company's $90 billion IPO - CNBC

Uber and Lyft drivers are logging off ride-hailing apps and taking to the streets in cities around the world Wednesday to protest against working conditions and wages.

The protests come ahead of Uber's anticipated IPO (initial public offering) on the New York Stock Exchange on Friday which could put the ride-hailing firm's valuation as high as $91.5 billion.

In the U.K., drivers planned a nine-hour boycott of the Uber app from 7:00 a.m. to 4:00 p.m. local time in London, Birmingham, Nottingham and Glasgow. Hundreds of drivers are also expected to protest outside Uber's London headquarters on Wednesday afternoon.

Fares in London were surging at 1.8x normal rates as of 9:00 a.m. Wednesday morning, but it's unclear if the surge pricing was related to driver availability or rainy weather conditions.

Drivers are also expected to stage protests against Uber and Lyft in at least eight cities around the U.S., including New York, Chicago and San Francisco. Overnight, the strikes kicked off in Australia with Uber drivers in Sydney, Brisbane and Melbourne staging brief protests, according to Australia's Transport Union.

The London protests were organized by the United Private Hire Drivers Branch (UPHD) of the Independent Workers Union of Great Britain (IWGB), who say Uber's executives will benefit from the massive IPO while drivers remain underpaid.

The U.K. drivers are demanding fares to increase to £2 ($2.60) per mile, up from the current rate of £1.25 per mile in London. The unions also want to lower the commission they pay Uber per ride from 25% to 15%.

"Uber's business model is unsustainable in its dependence upon large scale worker exploitation, tax avoidance and regulatory arbitrage," IWGB said in a statement.

Uber and Lyft drivers are classified as contractors instead of employees, which has exempted them from certain benefits like minimum wage and social security. Both companies acknowledged in their S-1 filings that identifying their workers as contractors is key to their business models.

A 2016 court decision in London ruled in favor of classifying drivers as "workers" who should be entitled to benefits like minimum wage and holiday pay when the app is switched on and they are prepared to take trips. Uber lost an appeal on the case in December and has said it plans to appeal again to the country's Supreme Court.

In a statement Tuesday, an Uber spokesperson said: "Drivers are at the heart of our service — we can't succeed without them — and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road. Whether it's more consistent earnings, stronger insurance protections or fully-funded four-year degrees for drivers or their families, we'll continue working to improve the experience for and with drivers. "

Meanwhile, a Lyft spokesperson said Tuesday: "Lyft drivers' hourly earnings have increased over the last two years, and they have earned more than $10 billion on the Lyft platform. Over 75% drive less than 10 hours a week to supplement their existing jobs. On average, Lyft drivers earn over $20 per hour. We know that access to flexible, extra income makes a big difference for millions of people, and we're constantly working to improve how we can best serve our driver community."

— CNBC's Lauren Feiner contributed reporting.

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2019-05-08 09:17:44Z
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Uber drivers set to protest around the world ahead of the company's $90 billion IPO - CNBC

Uber and Lyft drivers are logging off ride-hailing apps and taking to the streets in cities around the world Wednesday to protest against working conditions and wages.

The protests come ahead of Uber's anticipated IPO (initial public offering) on the New York Stock Exchange on Friday which could put the ride-hailing firm's valuation as high as $91.5 billion.

In the U.K., drivers planned a nine-hour boycott of the Uber app from 7:00 a.m. to 4:00 p.m. local time in London, Birmingham, Nottingham and Glasgow. Hundreds of drivers are also expected to protest outside Uber's London headquarters on Wednesday afternoon.

Fares in London were surging at 1.8x normal rates as of 9:00 a.m. Wednesday morning, but it's unclear if the surge pricing was related to driver availability or rainy weather conditions.

Drivers are also expected to stage protests against Uber and Lyft in at least eight cities around the U.S., including New York, Chicago and San Francisco. Overnight, the strikes kicked off in Australia with Uber drivers in Sydney, Brisbane and Melbourne staging brief protests, according to Australia's Transport Union.

The London protests were organized by the United Private Hire Drivers Branch (UPHD) of the Independent Workers Union of Great Britain (IWGB), who say Uber's executives will benefit from the massive IPO while drivers remain underpaid.

The U.K. drivers are demanding fares to increase to £2 ($2.60) per mile, up from the current rate of £1.25 per mile in London. The unions also want to lower the commission they pay Uber per ride from 25% to 15%.

"Uber's business model is unsustainable in its dependence upon large scale worker exploitation, tax avoidance and regulatory arbitrage," IWGB said in a statement.

Uber and Lyft drivers are classified as contractors instead of employees, which has exempted them from certain benefits like minimum wage and social security. Both companies acknowledged in their S-1 filings that identifying their workers as contractors is key to their business models.

A 2016 court decision in London ruled in favor of classifying drivers as "workers" who should be entitled to benefits like minimum wage and holiday pay when the app is switched on and they are prepared to take trips. Uber lost an appeal on the case in December and has said it plans to appeal again to the country's Supreme Court.

In a statement Tuesday, an Uber spokesperson said: "Drivers are at the heart of our service — we can't succeed without them — and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road. Whether it's more consistent earnings, stronger insurance protections or fully-funded four-year degrees for drivers or their families, we'll continue working to improve the experience for and with drivers. "

Meanwhile, a Lyft spokesperson said Tuesday: "Lyft drivers' hourly earnings have increased over the last two years, and they have earned more than $10 billion on the Lyft platform. Over 75% drive less than 10 hours a week to supplement their existing jobs. On average, Lyft drivers earn over $20 per hour. We know that access to flexible, extra income makes a big difference for millions of people, and we're constantly working to improve how we can best serve our driver community."

— CNBC's Lauren Feiner contributed reporting.

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2019-05-08 09:10:32Z
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Liam Dann: Reserve Bank leaps into new era with a bold OCR cut - did they get it right? - New Zealand Herald

COMMENT:

The Reserve Bank has kicked off a new era of committee-based monetary policy with a bold move, cutting the official cash rate to a record low.

The RBNZ yesterday lowered the rate by 0.25 per cent - to 1.5 per cent - despite economic conditions being far from bleak.

It was the first cut since November 2016.

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The move signals that, under Governor Adrian Orr's watch, and a new policy regime that considers employment as well as inflation data, the bank is prepared to get on the front foot to tackle slowing growth early.

It does leave room for critics who would prefer the bank had kept more rate-cut firepower in reserve for a serious financial crisis or recession.

A slowdown from an annual GDP growth rate - from three per cent to around two per cent - might not have been a high enough bar to cut in previous economic cycles.

However, with inflation largely missing in action, and central banks like the US Federal Reserve pulling the brakes on rate-hike plans, the new monetary policy committee agreed unanimously that the cut was needed.

The decision was also largely well received by economists.

In its monetary policy statement the RBNZ cited slowing global growth and highlighted local concerns - including the slowing housing market, gloomy business sentiment and tighter profit margins.

It noted that while employment was near "its maximum sustainable level" but that the outlook for employment growth was subdued and "capacity pressure was expected to ease slightly in 2019".

Inflation - which has been on the low side of the RBNZ's 1-3 per cent target band - was expected to rise only slowly.

The market had put odds of a cut at about 50 per cent - although the move was expected in August if not today.

The New Zealand dollar fell sharply, dropping from just above US66c to US65.47c immediately after the announcement at 2pm.

But it recovered during the afternoon - to US65.89c at 5pm - as markets digested the tone of the statement which did not point specifically to further cuts being required.

Orr said the lower OCR provided "a more balanced outlook for interest rates."

Many economists still see a second cut as likely this year but Orr indicated the Bank was prepared to wait and see how the data unfolded.

"We don't think they will stop there," said KiwiBank chief economist Jarrod Kerr. "The RBNZ's OCR trajectory shows a move to 1.4 per cent. That's the banks way of saying there's roughly 40 per cent chance of another move to 1.25 per cent."

The RBNZ would monitor how much of the 25-basis-point cut is passed on to borrowers and savers, Kerr said.

RBNZ cited a slowing housing market as one reason for the OCR cut. Photo / File

"If not all 25bps are passed on, the chance of a rate cut increases."

Banks did move quickly to cut floating rates, although not by 25 basis points.

ANZ, the country's largest bank, also said it would cut between six and 14 basis points off its fixed-term rates.

Others are expected to follow, although ASB chief economist Nick Tuffley said much of the move had already been priced in, with rates coming down in the past two months since cuts were first signalled in March.

While lower interest rates will offer some relief to mortgage holders and heavily leveraged businesses, there were also warnings that they may also reignite the housing market.

The Auckland market in particular was a cause of considerable concern for when prices soared from 2011 through to 2017.

A series of regulatory moves by both the central bank and Government have seen it cool and drift backwards in the last two years.

"Mortgage rates have plunged over the past two months, and today's OCR cut will cause them to fall further," said Westpac chief economist Dominick Stephens.

"We think the consequence will be an upturn in the housing market, starting in the second half of 2019."

Orr downplayed the risk.

"I wouldn't say worried," he said. "We have anticipated with lower interest rates it does free up cash and if [borrowers] want to in the housing market that will be their choice."

The sharemarket also bounded back sharply after the rate cut news, shaking off a big trade-war-related slump, to end the day in positive territory.

Trade wars aside stock markets globally have been buoyed by central bank policy shifts which suggest rates will stay at historic lows for some time yet.

Analysis of the official cash rate cut.

Today's decision was the first to be made by a committee including external - non Bank members.

As well as Governor Orr it included deputy Governor Geoff Bascand, two RBNZ economists and three external economists.

Did they get it right?

Yes.

If you accept that a cut was needed at all then it makes sense to go sooner, to stay ahead of the market and deliver an economic boost before the economy loses too much momentum.

Questions will remain about whether central banks should be pushing harder to get rates back to more traditional levels before we face our next financial crisis.

But, in the face of a global central bank policy U-turn in the past few months - the new-look RBNZ has opted for action.

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2019-05-08 07:09:08Z
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Wall Street plunges on heightening U.S.-China trade worries - Yahoo Finance

A Wall St. street sign is seen near the New York Stock Exchange (NYSE) in New York City, U.S., March 7, 2019. REUTERS/Brendan McDermid

By Amy Caren Daniel

(Reuters) - Wall Street's main indexes tumbled more than 1 percent on Tuesday, as renewed worries over trade negotiations with China stoked global growth worries and kept investors away from risky assets.

Beijing said on Tuesday that Chinese Vice Premier Liu He will visit the United States this week for trade talks, playing down U.S. President Donald Trump's unexpected threat on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.

Trade tensions also pushed U.S. treasury yields lower as investors turned to low-risk government bonds, pressuring interest rate sensitive banking stocks, which fell 1.69%.

"Many had been looking at this week as providing a potential breakthrough in talks between the world's two largest economies, yet we instead have seen the U.S. threaten a raft of new tariffs," Joshua Mahony, senior market analyst at IG, wrote in a note.

"Much of the gains of the eventual deal have been factored into market valuations and thus there is a substantial risk that markets could jolt lower if the direction of talks shift towards more, rather than less barriers to trade."

Boeing Co, the single largest U.S. exporter to China, slipped 2.7% and Caterpillar Inc declined 1.9%.

All the major S&P sectors were trading in the red, with technology companies posting the steepest decline of 2%.

The CBOE Volatility Index, a gauge of investor anxiety, spiked to its higher level in over three months.

At 10:55 a.m. ET the Dow Jones Industrial Average was down 355.41 points, or 1.34%, at 26,083.07. The S&P 500 was down 42.23 points, or 1.44%, at 2,890.24 and the Nasdaq Composite was down 138.67 points, or 1.71%, at 7,984.62.

Marquee names including Microsoft Corp, Apple Inc, Amazon.com Inc and Facebook Inc fell more than 1.7% and weighed on markets.

The earnings season has now reached its homestretch. Of the 414 S&P companies that have reported earnings so far, about 75% have surpassed analysts' estimates, according to Refinitiv data.

The upbeat reports have turned around earnings estimates for the first quarter to an almost 1.2% rise, a sharp improvement from the 2.3% decline expected at the start of the earnings season.

American International Group Inc jumped 6.7%, the most among S&P companies, after the insurer reported a quarterly profit that blew past expectations.

Among decliners, Mylan NV tumbled 17% after the drugmaker missed Wall Street estimates for quarterly revenue, hurt partly by manufacturing problems at its Morgantown plant in West Virginia.

Shares of Regeneron Pharmaceuticals Inc fell 5% after the drugmaker missed quarterly profit estimates.

Declining issues outnumbered advancers for a 4.26-to-1 ratio on the NYSE and for a 2.95-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and four new lows, while the Nasdaq recorded 37 new highs and 22 new lows.

(Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)

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2019-05-07 15:50:00Z
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