—— Stocks and Gold Gain On Fed; Apple CEO Opens New Shanghai Store; US Initial Jobless Claims Ease; Target to Double Employee Bonuses; Bank of England holds rates at 5.25%; Reddit Jumps 67% After IPO; 7.
1. Stocks and Gold Gain On Fed
Global equities surged to all-time highs, led by tech stocks in Europe, as traders grew more optimistic about the prospect of lower interest rates. The Stoxx 600 index traded up 0.7%, reaching a record level, while S&P 500 futures indicated a fourth consecutive day of gains for US shares. Pre-market trading saw Micron Technology Inc. soaring by 18% following a better-than-expected revenue forecast and robust demand for AI hardware.
The Swiss franc experienced a sharp decline after the Swiss National Bank unexpectedly cut interest rates, while the pound fell as two prominent hawks within the Bank of England withdrew their support for raising rates.
Investor sentiment in the equity markets was buoyed by the Federal Reserve’s decision to maintain its outlook for three interest-rate cuts this year, despite recent signs of inflationary pressures.
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2. Apple CEO Opens New Shanghai Store
Apple Inc. CEO Tim Cook inaugurated a large new store in central Shanghai on Thursday, demonstrating the company’s dedication to China both as a market and a production base.
Cook’s emergence from the store at 7 p.m. was met with enthusiastic applause from the crowd, as he interacted with fans by shaking hands and giving hugs.
This event marked the conclusion of Cook’s highly publicized tour around the financial hub and occurs at a sensitive moment for Apple and its position in the world’s second-largest economy.
The CEO oversaw the opening of Apple’s eighth store in the city, following his interactions with a local celebrity, sampling Shanghainese delicacies, and engaging in discussions with the leaders of suppliers such as BYD Co. and Lens Technology Co.
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3. US Initial Jobless Claims Ease
Initial applications for US unemployment benefits remained close to historically low levels last week, indicating the strength of the labor market.
According to data released by the Labor Department on Thursday, initial claims decreased by 2,000 to 210,000 in the week ending March 16, slightly below economists’ median forecast of 213,000 in a Bloomberg survey.
Continuing claims, which serve as a proxy for the number of individuals receiving unemployment benefits, also showed little change at 1.81 million in the week ending March 9.
Despite higher interest rates and some signs of labor market cooling, applications for unemployment insurance have stayed subdued over the past year.
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4. Target to Double Employee Bonuses
In a notable display of financial strength, Target Corp. is enhancing bonuses for salaried employees, doubling the payout for eligible 2023 bonuses.
This move, according to sources familiar with the matter, sees an increase from 50% to 100% of employees’ eligible bonuses compared to the previous year.
Despite facing three consecutive quarters of sales declines, Target’s profits exceeded expectations last year, resulting in an additional $2 billion in operating income. This surplus is now being allocated towards bonuses in an effort to retain employees.
Typically, bonuses at Target can reach a maximum of 175% of eligible amounts. However, it’s important to note that the increased payouts do not extend to hourly employees, and senior executives have their own separate bonus structure.
Cash bonuses are expected to be distributed at the end of March.
Source: Target Is Doubling Its Employee Bonuses This Year
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5. Bank of England holds rates at 5.25%
The Bank of England has decided to maintain UK interest rates at 5.25%, causing a decline in the value of sterling as the central bank hints at a possible future cut in borrowing costs.
Governor Andrew Bailey expressed optimism about inflation, stating that things are “moving in the right direction.” This decision by the BoE’s Monetary Policy Committee marks the fifth consecutive time that the benchmark rate has been held at its 16-year high.
Additionally, two members who had previously advocated for higher interest rates have shifted their stance and voted with the majority to keep rates unchanged.
Following Thursday’s announcement, the value of sterling declined against the dollar, trading down 0.4% on the day at $1.273.
Source: Financial Times – Bank of England holds rates at 5.25%
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6. Reddit Jumps 67% After IPO
Reddit Inc. shares surged by as much as 67% above their initial public offering (IPO) price, indicating strong investor demand and signaling a resurgence in the US IPO market. Priced at the top end of the marketed range, the company and its shareholders raised $748 million.
The shares traded at $51.86 each on Thursday at 1:39 p.m. New York time, representing a 53% increase from the IPO price of $34 per share. Reddit had offered 22 million shares at a price range of $31 to $34 each.
With the current price, Reddit boasts a market value of $8.2 billion based on the outstanding shares listed in its filings with the US Securities and Exchange Commission.
Taking into account stock options and restricted share units, Reddit’s fully diluted valuation stands at approximately $10 billion.
Prior to pricing, some analysts suggested that the company’s valuation should align with the $10 billion achieved in a funding round in 2021.
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7. Sales of Previously Owned US Homes Surge
Sales of previously owned homes in the United States surged in February to the fastest pace in a year, accompanied by a significant increase in the number of listings. This suggests that both buyers and sellers are adjusting to higher mortgage rates.
According to data released by the National Association of Realtors on Thursday, contract closings rose by 9.5% from the previous month to reach an annualized rate of 4.38 million. This pace exceeded all estimates in a Bloomberg survey of economists. These figures indicate that the resale market is emerging from a prolonged slump caused by high mortgage rates, which discouraged homeowners from selling their homes and moving.
NAR Chief Economist Lawrence Yun noted during a call with reporters that homeowners may be acknowledging that mortgage rates are stabilizing at a new level and therefore cannot postpone their decision to move any longer.
Consequently, more homeowners listed their properties last month, leading to an increase in inventory levels to the highest level for any February since 2020.
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.