1. U.S. Futures Drop After Tech Slide; Pound Slumps
U.S. stock futures turned lower with European equities as investors assessed a dimmer outlook for fiscal stimulus and for any tech-stock rebound after Wednesday’s tumble. Nasdaq 100 contracts signalled the gauge may fall further after its biggest drop in a month on news that Facebook was being sued by U.S. antitrust officials. In Europe, German bonds dropped and the euro turned higher after the European Central Bank boosted its emergency bond-buying program by 500 billion euros ($605 billion). The pound sank further after a report that talks between the EU and the U.K. are on course to end without a trade deal, barring a dramatic last-minute intervention.
The Stoxx Europe 600 Index dropped 0.2%
Nasdaq 100 Index futures sank 0.5%.
Futures on the S&P 500 Index sank 0.2%.
The MSCI Asia Pacific Index gained 0.6%.
2. Facebook Breakup Would Demolish Zuckerberg’s Social Media Empire
The U.S. Federal Trade Commission took a major step toward the possible breakup of Facebook by formally filing an antitrust lawsuit against the technology giant, accusing it of abusing its monopoly powers in social networking to stifle competition. Whatsapp and Instagram acquisitions were meant to erase competition. Now, the FTC wants Facebook to divest the two businesses — an idea that poses an existential threat to the empire built by CEO Mark Zuckerberg. Because much of the company’s revenue growth is already coming from Instagram, and WhatsApp is central to Facebook’s bet on digital commerce, losing the two platforms would threaten to erase much of Facebook’s long-term value.
3. EU Leaders to Unlock Budget & Stimulus Deal at Major Summit
European Union leaders gathering in Brussels are expected to sign off on the bloc’s landmark $2.2 trillion stimulus package after a compromise struck with Poland and Hungary was set to unblock the flow of rescue funds to the continent’s battered economies. The governments in Warsaw and Budapest vehemently opposed making funding conditioned on rule-of-law standards and threatened to torpedo the EU’s 750 billion-euro pandemic aid fund and the 2021-2027 budget. But after long negotiations with Germany, which holds the bloc’s rotating presidency, they agreed on a statement clarifying the way the link would work.
4. Airbnb Reaches $47 Billion Value in Above-Range IPO
Airbnb priced its long-awaited initial public offering above a marketed range to raise about $3.5 billion, seizing on investor demand for a home-rental business roaring back from a pandemic-fueled slump. The company’s IPO came just hours after DoorDash almost doubled from its listing price in its debut trading session, adding to a flurry of consumer-facing web-based companies going public this month. Airbnb and its investors sold about 52 million shares Wednesday for $68 each after marketing them for $56 to $60 apiece. At that price, Airbnb has a fully diluted value of about $47 billion, which includes employee stock options and restricted stock units.
5. Morgan Stanley to Shift About $120 Billion of Assets to Germany
Morgan Stanley plans to move about 100 billion euros ($120 billion) of assets to Frankfurt, the latest Wall Street bank to shift business away from the U.K. The U.S. lender expects to transfer the bulk of the assets in the first quarter of next year when the transition period for Britain’s exit from the European Union will likely have elapsed. They will sit in the Frankfurt-based subsidiary Morgan Stanley Europe SE. The move is in line with efforts by several other U.S. banks such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. to beef up their EU operations amid Brexit.
6. Fidelity Digital to Hold Bitcoin as Collateral for Cash Loans
Fidelity Digital Assets will allow its institutional customers to pledge Bitcoin as collateral against cash loans in a partnership with blockchain startup BlockFi. The unit of Boston-based asset manager Fidelity Investments will hold the digital asset and not make loans itself. The target is Bitcoin investors who want to turn their digital stash into cash without selling, and potential customers include hedge funds, crypto miners and over-the-counter trading desks. The new service from Fidelity comes after Bitcoin beat its 2017 highest price earlier this month before retreating in recent days. The world’s most valuable digital asset has risen 164% this year, hitting a high of $19,462 on Dec. 3. Other cryptocurrencies like Ether and Litecoin have also seen gains.
7. World’s Second-Largest Cigarette Market Raises Levy by 12.5%
Indonesia will raise the excise duty on cigarette products by an average of 12.5% as the country seeks higher earnings from the industry. The world’s second-largest cigarette market, after China, boosted the levy as it seeks to earn $12 billion in state revenue from tobacco products in 2021, a 5% increase from this year’s target. The industry accounts for a majority of the government’s excise revenue. The higher levies are effective Feb. 1, 2021. While Indonesia seeks to reduce the number of smokers, it’s also mindful of workers who rely on the tobacco industry, which is why it isn’t raising the levy for hand-rolled cigarettes.
8. U.K.-Singapore Sign Free Trade Agreement to Replace EU Deal
The U.K. and Singapore signed a free trade agreement on Thursday, under which companies from both countries will continue to enjoy the same benefits on about $23 billion worth of goods and services they receive under an existing EU-Singapore deal. The signing sustains the two nations’ trade relationship beyond the U.K. departure from the European single market. Under the agreement, duties will remain eliminated on 84% of tariff lines for Singapore’s exports to the U.K.
9. China to Sanction U.S. Officials, Curb Some Diplomat Travel
China said it will sanction more U.S. officials and place new travel restrictions on American diplomats in retaliation for measures taken by the Trump administration over Hong Kong. Chinese Foreign Ministry spokeswoman Hua Chunying didn’t provide specific names of those sanctioned but said they included people in the executive and legislative branches and their immediate families, as well as non-government organizations. China would also revoke visa-free entry to Hong Kong and Macau for U.S. diplomatic passport holders.
10. JPMorgan Says Gold Will Suffer for Years Because of Bitcoin
The rise of cryptocurrencies in mainstream finance is coming at the expense of gold, says JPMorgan Chase & Co. Money has poured into Bitcoin funds and out of gold since October, a trend that’s only going to continue in the long run as more institutional investors take a position in cryptocurrencies, according to the bank’s quantitative strategists. JPMorgan is one of the few Wall Street banks that’s predicting a major shift in gold and crypto markets as digital currencies become increasingly popular as an asset class. The trend poses a problem for bulls in precious metals markets over the coming years if investors move, even a small slice, of their allocations away from gold and into crypto.