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(Bloomberg) — Windward Ltd, an Israeli maritime AI company providing real-time information about shipping at sea, is expecting rising wages in the technology sector to result in bigger losses for the year ended in 2021.

The company, which listed on London’s junior AIM market in December last year, said its earnings before interest, taxes, depreciation and amortization loss for 2021 will be “slightly higher than expectations” and that salary inflation will continue to be a factor in the current year. Windward expects to report its final 2021 results near the end of March. 

Shares fell as much as 2.8%, but trade above the debut price. 

From banking to technology, companies have been facing higher wages and difficulties recruiting staff. Apple Inc. unveiled record bonuses at the end of last year, as fierce competition among the silicon valley giants led the company to splurge in an effort to retain talent.

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(Bloomberg) —

Crypto was red-hot in 2021 — so much so that it spawned a whole ecosystem of related products, including the first Bitcoin futures exchange-traded fund in the U.S. But can companies maintain enthusiasm for the growing industry as prices tumble in the new year? Hany Rashwan, co-founder and CEO of 21Shares, a provider of crypto exchange-traded products, joins this week’s “What Goes Up” to talk about that and his company’s plans for expanding its own offerings.

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(Bloomberg) — Hong Kong stocks posted their biggest post-Lunar New Year holiday advance since 2009, as traders played catch-up to gains in global equities and a rally in financials outweighed the impact of an overnight tech rout in the U.S.

The Hang Seng Index closed up 3.2% on Friday. AIA Group Ltd. and HSBC Holdings Plc were among those leading gains. The Hang Seng Tech Index climbed 3.1%. Mainland China markets will reopen on Monday.   

Global equity markets endured volatility while Hong Kong was closed. While that led some to expect fluctuations as trading in the city’s shares resumed, the benchmark equity index got a boost from financial stocks after a hawkish pivot by central banks in Europe brightened the outlook for the sector on higher rates. Gains were also seen in certain industries linked to the Winter Olympics, such as sportswear brands.

There is “more upside” possible in the medium term as China eases monetary and fiscal policies further to support economic growth, said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd. 

The Hang Seng Index closed above its 100-day moving average on Friday. Its gains come after shares of Chinese companies listed in the U.S. advanced during the holiday period. The Nasdaq Golden Dragon China Index — which includes many large Chinese technology firms — has jumped 5% since Hong Kong last traded at mid-day Monday, helped in part by encouraging commentary from the country’s cyberspace watchdog.

Equity benchmarks in Seoul, Singapore and Kuala Lumpur on Thursday had all posted post-holiday jumps, providing some reassurance for a positive open in Hong Kong. The U.S. tech selloff Thursday also showed signs of easing in late trading after Amazon.com Inc. and Snap Inc. soared on quarterly results. 

Yet there are significant threats to a sustained recovery in Hong Kong and mainland stocks, even as an increasing number of global banks turn bullish on them.  

Some investors continue to sell into rallies, China’s property-market distress remains acute and the slowing pace of economic growth continues to weigh. Positive statements toward the technology sector have yet to undo the damage inflicted on the business models of many internet platforms over the past year.

Moreover, the mainland’s CSI 300 Index entered a bear market last week despite Beijing’s efforts to bolster confidence going into the holiday as well as the central bank’s earlier pivot to stimulus.

Hong Kong’s benchmark had fallen into a bear market much earlier, in August, and remains down more than 20% from its peak in February last year.

“It’s clearly a rebound to catch up with the world, but we need to see how Hong Kong can navigate global volatility from here on,” said Joshua Crabb, a fund manager at Robeco Hong Kong Ltd.

(Updates with closing prices.)

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(Bloomberg) — U.S. equity-index futures rose Friday as Amazon.com Inc. earnings soothed nerves about the technology sector. European stocks opened higher, while a hawkish chorus from key central banks hurt bonds.

Contracts on the tech-heavy Nasdaq 100 were up 1.9% after e-commerce titan Amazon and Snap Inc. soared in late trading on strong earnings. Europe’s Stoxx 600 headed for the first weekly gain this year. Oil was on course for a seventh weekly advance. The U.K.’s 10-year yield climbed to the highest level since November 2018. The dollar stared at the worst week since 2020.

The relief for equity investors comes after a a historic, $251 billion wipeout for Facebook owner Meta Platforms Inc. on Thursday sparked a global technology rout and pulled down U.S. indexes. Despite some weaker reports, the overall earnings picture in the world’s largest economy remains robust, providing investors a cushion against concerns ranging from Federal Reserve tightening to stubborn inflation.

 

 

 

Amazon could add nearly $200 billion in market value if the stock’s 14% gain in after-hours trading holds to Friday’s Wall Street close. That is brightening the mood after Nasdaq 100’s worst drop since 2020.

Volatility has become the hallmark of global markets this year. Investors are trying to come to grips with less favorable monetary conditions and a moderating global recovery but hoping company earnings will underpin stocks.

“The first half this year we are now experiencing a rates shock,” Tracy Chen, portfolio manager at Brandywine Global Investment Management, said on Bloomberg Television. “If the Fed and BOE and other EM central banks are too aggressive in hiking interest rates, potentially we are going to face kind of a recession risk in the second half, or at least more slowdown in the economy.”

Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. Investors dumped the region’s bonds.

 

Investors also awaited Friday’s official jobs report, where they focused on wage growth to gauge the health of the economy and the potential for a further surge in inflation.

The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.

Treasury yields were steady, with the 10-year rate hovering around 1.83%. The dollar was little changed, heading for a 1.4% decline this week.

An Asia-Pacific equity gauge pushed higher partly on a 3% jump in Hong Kong, which was catching up with global markets after reopening from a holiday. The Stoxx 600 advanced 0.4%, with energy companies and banks leading the gains.

West Texas Intermediate hit a fresh seven-year high near $91 a barrel, set for a jump of 4.6% this week. Brent has surged 18% since the year began and banks including Goldman Sachs Group Inc. forecast it’ll reach $100.

For more market analysis, read our MLIV blog.

What to watch this week:

• U.S. payrolls report for January, Friday
• Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.4% as of 8:16 a.m. London time
• Futures on the S&P 500 rose 1.1%
• Futures on the Nasdaq 100 rose 1.9%
• Futures on the Dow Jones Industrial Average rose 0.6%
• The MSCI Asia Pacific Index rose 0.8%
• The MSCI Emerging Markets Index rose 1%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was unchanged at $1.1440
• The Japanese yen fell 0.1% to 115.11 per dollar
• The offshore yuan was little changed at 6.3584 per dollar
• The British pound fell 0.1% to $1.3583

Bonds

• The yield on 10-year Treasuries was little changed at 1.83%
• Germany’s 10-year yield advanced two basis points to 0.17%
• Britain’s 10-year yield advanced two basis points to 1.38%

Commodities

• Brent crude rose 0.7% to $91.73 a barrel
• Spot gold rose 0.2% to $1,808.89 an ounce

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(Bloomberg) — The U.S. warned Thursday of a Russian plot to release a fake video purporting to show a Ukrainian attack on Russia or Russian-speaking people, as a way to justify an invasion. The EU warned of a new Russian-backed cyber threat. 

Russian President Vladimir Putin arrived in Beijing for the opening of the Winter Olympics. He’s meeting there with President Xi Jinping, their first in-person talks since 2019. China and Russia “coordinated their stances” on issues including Ukraine at talks in Beijing on Thursday between their foreign ministers.

Moscow has repeatedly denied it plans to attack Ukraine, while decrying the use of NATO forces near Russia’s borders. 

Key Developments

• Putin’s Financial Fortress Blunts Impact of Threatened Sanctions
• Putin Courts China’s Xi for Help in Showdown With the West
• Ukraine Briefing Spurs Greater Urgency on Sanctions in Congress
• What we know so far about potential U.S.-EU sanctions on Russia
• Where military forces are assembling around Russia and Ukraine

All times CET

EU Warned of New Russian Cyber Threat (8:40 a.m.) 

European Union institutions were warned Thursday of a new Russian-backed cyber threat that’s been running credential harvesting activity since mid-2021, according to an alert seen by Bloomberg News. 

The alert says it’s possible the capabilities will be used for cyberespionage purposes. No institutions have been targeted yet. The alert didn’t mention Ukraine. 

The group, known as Reuse Team or Callisto, has been involved in state-sponsored espionage and criminal activity since the early 2000s, the alert said. The group has recently targeted an EU body and was involved in a campaign that targeted a European ministry of foreign affairs in 2020. It has gathered intelligence related to foreign policy in Eastern Europe and the South Caucasus, according to a 2017 report by F-Secure, a cyber security research firm. 

Gazprom Reliability in Doubt, Von Der Leyen Says (8:31 a.m.) 

Gazprom is abiding by its contracts with the EU but unlike other suppliers isn’t shipping more gas than planned to Europe, and that’s casting doubt on its reliability, European Commission President Ursula von der Leyen said in an interview with Les Echos and Handelsblatt.

Gazprom’s behavior is “weird,” and Russia is using gas deliveries as a way to put pressure on Europe, she said.

Von der Leyen also described the EU’s sanctions package in the event of a Russian invasion of Ukraine, which includes including shutting Moscow off from foreign capital, and controlling exports of critical goods to Russia needed in areas such as artificial intelligence, weapons, quantum computing, lasers and space technologies.

Macron to Visit Russia, Ukraine Next Week (8:21 a.m.) 

French President Emmanuel Macron will travel to Moscow on Monday and Ukraine on Tuesday, an Elysee official said, as he continues an active diplomatic role in the crisis. 

The trips will follow three calls in the past week between Macron and Vladimir Putin to discuss the Ukrainian situation.    

U.S. Lawmakers Briefed by Top Security Team (11:00 p.m.) 

U.S. lawmakers are rushing to draft a new round of potential sanctions on Russia intended as a deterrent to any aggression against Ukraine. The sense of urgency in Congress escalated following day-long briefings Thursday by top national security officials. 

Negotiations had been slowed as Democrats and the Biden administration resisted Republican efforts to impose more sanctions on Russia now. Both sides agree on the need for more punishing penalties should Russia invade Ukraine, which the Kremlin denies it plans to do. 

U.S. Says Russia Planned Fake Video Plot (7:40 p.m.)

Moscow has considered staging a graphic propaganda video that would purport to show an attack by Ukraine on Russia or Russian-speaking people as a pretense for an invasion, U.S. officials said, calling it one of a number of plans Russia has developed in recent weeks. 

The video would feature an attack — including scenes of an explosion — as well as the aftermath, including corpses, mourners and destroyed equipment purportedly provided by the West to Ukraine, Pentagon spokesman John Kirby told reporters. 

The plan “shows the level of cynicism, frankly, that is on the other side of this conflict,” Jon Finer, deputy national security adviser, said in an interview with MSNBC. 

 

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(Bloomberg) — Candidates seeking to succeed Philippine President Rodrigo Duterte said they will continue to push for better infrastructure, pitching to prioritize areas outside the capital and for companies to build more while government debt remains high.

At the first presidential forum on Friday, Manila Mayor Isko Moreno and Senator Panfilo Lacson said they will boost public-private partnerships, which Duterte earlier criticized but eventually adopted. 

The Southeast Asian nation is banking on infrastructure spending to help boost pandemic recovery. Duterte, whose six-year term will end in June, allocated 1.18 trillion pesos ($23 billion) this year, or 5.3% of economic output, to build bridges, railways and roads. 

Vice President Leni Robredo said that if elected president, she will prioritize projects outside Manila and focus on water facilities and public transport. Labor rights activist Leody de Guzman said he plans to reallocate more funds to hospitals, while Senator Manny Pacquiao said he will extend a planned railway on the southern island of Mindanao. 

Both Pacquiao and Moreno said they favor reclamation projects, while the rest of the candidates said the environmental cost must be considered. Former Senator Ferdinand “Bongbong” Marcos, who’s leading the presidential race, skipped the forum due to a conflict in his schedule.

The virtual forum, where the candidates faced an all-male panel, was marred by technical glitches. Robredo had Internet connection problems, while de Guzman spoke a couple of times while on mute.

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(Bloomberg) — Here’s the key business news from London-listed companies this morning:

Shaftesbury Plc: The owner of 16 acres of the West End is seeing more people making their return to the central London district after omicron-related restrictions were eased.

• Vacancy levels are heading toward where they were before the pandemic, while rent collection is starting to improve

SSP Group Plc: The company, which operates food and drink outlets in travel hubs, still doesn’t expect to return to pre-pandemic levels of trading until 2024.

• The omicron variant heavily impacted people’s travel plans, leading to sales for the eight weeks to January 30 that were just 57% of 2019 levels

Windward Ltd: The maritime tech company warned its earnings loss will be slightly worse than expectations as wages in the technology sector soar. 

• The company, which uses big data and AI to create predictive intelligence for the maritime industry, listed on London’s AIM exchange at the end of last year

Outside The City

Prime Minister Boris Johnson’s Downing Street operation was plunged into further disarray last night after four key aides quit.

Meanwhile, Amazon.com Inc could post the largest single-day gain in value in U.S. stock market history today after it said it would hike the price of its prime subscription. That’s a day after Meta Platforms Inc broke the opposite record with a $251 billion plunge in market capitalization.

In Case You Missed It

Bloomberg’s exclusive report revealed how DAZN, the so-called “Netflix of Sports,” won then lost its bid for BT Sport. So confident was DAZN in their success, an executive was spotted playing a farming simulation game in a meeting with BT Plc. In the end, BT lost confidence in DAZN’s bid, according to people familiar with the matter. And yesterday BT revealed it would pursue a joint venture with rival bidder Discovery Inc.

Looking Ahead

Earnings season continues next week with updates from health care and consumer companies. Oil-giant BP Plc reports on Tuesday, following peer Shell Plc whose results were boosted by high commodity prices. Also on Tuesday, Ocado Group Plc’s results might give us an insight into how online grocery shopping demand has held up as omicron measures ease. 

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(Bloomberg) — Japan flagged its vulnerability to supply side constraints in China in a report showing that more than 1,000 import items are heavily dependent on its biggest trading partner.

China had a more than 50% share in 1,133 categories of imported goods, or 23% of the value of Japan’s imports in 2019, according to a trade analysis by the cabinet office released Thursday. 

The level of reliance was about twice as much as U.S. dependence on China, the report said. 

The analysis comes as Prime Minister Fumio Kishida’s government is expected to introduce an economic security bill later this month. The bill aims to strengthen supply chains, ensure the security of core infrastructure, enhance research and development, and tighten information disclosure on patents, Kishida said Friday in Tokyo.  

“We will improve the autonomy of our economic structure and make our technology superior and essential in order to protect our security,” he said. “Economic security is an urgent matter and a key pillar” of the administration’s agenda.

Japan’s reliance on China was most pronounced in household electronics items such as personal computers, tablets and cellphones, again outweighing the corresponding levels dependence for the U.S. and Germany, the report showed. 

“Kishida sees cutting reliance on China as an important theme,” said Koya Miyamae, an economist at SMBC Nikko Securities Inc. “As supply-side crunches continue, I think Japan will be trying to restructure its production capacity among its allies.”   

While the report also showed that the overall level of reliance was little changed from a decade earlier, global supply snarls during the coronavirus pandemic have added to calls for more resilient supply lines and less reliance on China. 

(Updates with Kishida’s comments.)

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