1. Treasury Yields Reach 1%; Nasdaq Futures Tumble
Benchmark Treasury yields touched 1% for the first time since March while investors rotated out of technology and into cyclical stocks on speculation Democrats are on the cusp of taking control of U.S. Congress. Democrat Raphael Warnock ousted Republican Kelly Loeffler in a runoff race, leaving control of the Senate hinging on the state’s other election, which remains too close to call. Cyclical assets posted strong gains on Wednesday. Energy stocks and banks lifted equity benchmarks in Europe. In contrast, technology companies suffered and fell more than 2% in U.S. pre-market trading.
Futures on the S&P 500 Index fell 0.2% as of afternoon London time.
The Stoxx Europe 600 Index climbed 0.9%.
The MSCI Asia Pacific Index was little changed.
The MSCI Emerging Market Index gained 0.2%.
2. Democrats’ Senate Bid Hangs in Balance After First Georgia Win
Democrats’ hopes of taking control of the U.S. Senate received a huge boost early Wednesday after the party captured one seat in the Georgia runoff elections and waited on the outcome of another race that remained too close to call. To secure a narrow majority, Democrats need to win both Senate seats, which would split the chamber 50-50 between Republicans and the Democratic caucus, with Vice President-elect Kamala Harris casting tie-breaking votes. Senate control, paired with the Democrats’ narrow majority in the House, would give Democratic President-elect Joe Biden full control of the U.S. government and allow him to implement major pieces of his agenda.
3. Saudis Take Charge of Oil Market With Surprise Output Cut
Saudi Arabia surprised the market with a large cut in crude production, an assertion of primacy over the global oil industry that came directly from the kingdom’s de-facto ruler. The move papered over cracks in the OPEC+ coalition and was a U-turn from some recent Saudi oil-policy priorities, but those things paled in comparison next to the global impact of the decision. Crude prices jumped to a 10-month high and shares of energy giants in London and shale drillers in Texas surged.
4. U.K. Steps Up Biggest Vaccine Drive, With 1 in 50 Now Infected
More than 1 million people in England now have coronavirus, the British government said, as medics raced to vaccinate the most vulnerable against the rapidly spreading disease. Rocketing case rates from the new virus strain mean one person in every 50 in England now has Covid-19, while in London one in 30 is infected. Prime Minister Boris Johnson unveiled the statistics as he vowed to speed up the government’s vaccination program, in order eventually to lift the latest lockdown. He said 23% of all over-80s in England have now been given a dose of a Covid-19 vaccine, meaning some of those at the greatest risk are starting to get the protection they need.
5. Hong Kong Arrests U.S. Citizen, Dozens More Under Security Law
Hong Kong arrested dozens of opposition figures under a controversial national security law, an unprecedented crackdown that included an American lawyer, as authorities work to quash any dissent that remains in the former British colony. Police said they had swept up 53 people in the Wednesday operation and that around 1,000 officers had been dispatched to carry out the detentions. Those arrested included several prominent former lawmakers, with allegations centred on an informal July primary to choose candidates for legislative elections subsequently postponed by the government.
6. Faang Stocks Step Back as Democrats Advance in Senate
The Faang mega-cap stocks fell premarket Wednesday after Democrats won one of two seats in Georgia that they need to take control of the U.S. Senate. The other race remains too close to call. A blue sweep of Georgia that puts the Senate in Democratic control would be a “clear negative” for big tech, raising the potential for greater antitrust regulations in the sector. Facebook Inc. shares dropped 2.4% premarket, while Amazon.com Inc., Apple Inc., Netflix Inc., Alphabet Inc. and Microsoft Corp. fell less than 2%. Nasdaq 100 futures fell 1.4% while S&P 500 futures were trading lower by 0.3%.
7. Moderna’s Covid Vaccine Wins Backing of EU Drugs Regulator
Moderna Inc.’s Covid-19 vaccine won the backing of the European Union drugs regulator, clearing the way for a second weapon in the bloc’s fight to stem the pandemic. The recommendation was announced by the European Medicines Agency on Wednesday. The European Commission is working “at full speed” on the final clearance step, President Ursula Von Der Leyen said in a tweet. EU leaders are facing growing pressure to speed up clearance and deployment of vaccines to tame a virus resurgence across the continent. The 27-nation bloc began immunizations last week with the vaccine developed by Pfizer Inc. and BioNTech SE, but the pace of the rollout has been uneven, prompting unfavourable comparisons with the U.K. and U.S.
8. China’s Bottled Water King Is Now Richer Than Warren Buffett
The chairman of Nongfu Spring Co., a bottled-water company that’s ubiquitous in China, is now richer than Warren Buffett as his fortune surged $13.5 billion since the start of the year to $91.7 billion on Tuesday. Zhong, 66, is now the sixth-wealthiest person on the planet. Nongfu shares jumped 18% in the first two trading days of 2021, taking the advance since their September listing to more than 200%. It’s only the second time a Chinese national has broken into the world’s Top 10 — property tycoon Wang Jianlin hit No. 8 in 2015 — and no one from the mainland has ever ranked this high. Nicknamed locally as the “Lone Wolf” for avoiding involvement in clubby business groups or politics, Zhong also took vaccine maker Beijing Wantai Biological Pharmacy Enterprise Co. public in April. The stock has soared more than 2,800%.
9. World’s Super-Rich Families Want More Hedge Funds
More than a third of 185 investment firms for wealthy clans plan to boost allocations amid the economic upheaval caused by the Covid-19 pandemic, according to a survey released Wednesday by BlackRock Inc. and Juniper Place, a London-based firm that helps asset managers raise capital. Family offices and other investors soured on hedge funds in recent years, bemoaning high fees and lacklustre returns. But the health crisis has given some of those managers a boost, particularly stock-pickers who benefited from aggressive bets on technology stocks and copious economic stimulus that drove equities to new heights.
10. Gulf Arabs Agree to Restore Qatar Ties But No Word on OPEC Role
Saudi Arabia and three other Arab states agreed to fully restore ties with neighbouring Qatar on Tuesday after a sustained U.S. push for the countries to unite against Iran. The breakthrough ending a dispute among some of the world’s top oil and gas producers that erupted in 2017 came just two weeks before President-elect Joe Biden takes office after pledging a new start with Tehran. Saudi Arabia, Bahrain, the United Arab Emirates and Egypt signed an accord with Qatar in a mirrored concert hall in the northwestern Saudi town of Al Ula during a summit of Gulf Cooperation Council leaders, bringing the regional split to an end — at least on paper. The same day, Saudi Arabia asserted its primacy over the global oil industry by surprising the market with a large crude production cut that secured its leadership among global producers and sent crude prices soaring. The Gulf leaders made no mention of whether Qatar would rejoin the Organization of Petroleum Exporting Countries. The nation, which pumps around 650,000 barrels a day of crude in addition to gas, decided to leave the cartel at the start of 2019, in one of the most visible consequences of the fallout.