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Stocks rebound from rout as Fed faces calls to cut rates early
Most equities rallied Tuesday after the previous day’s global rout fueled by U.S. recession fears that have led to calls for the Federal Reserve Board to cut interest rates before its next meeting.
Tokyo, which suffered a record loss Monday, led the gains, soaring more than 10 percent as traders bought beaten-down stocks caught up in Monday’s very bad day.
London edged up after shedding around two percent Monday, while Paris and Frankfurt were also higher.
U.S. futures were pointing higher, according to Bloomberg, with the Dow Jones Industrials and Nasdaq up more than 100 points and the S&P 500 up almost 30.
But analysts warned there would likely be more volatility to come.
Kiyoshi Ota / Bloomberg via Getty Images
The sell-off followed data Friday showing way fewer U.S. jobs than expected were created last month, while another report pointed to continuing weakness in the manufacturing sector.
That led to warnings the Fed had kept rates at more than two-decade highs for too long and was risking causing a recession.
Some analysts pointed to the “Sahm Rule” that says an economy is in the early stages of recession if the three-month moving average of unemployment is 0.5 percentage points above its low over the previous 12 months. That was triggered by Friday’s data.
Commentators also said a stronger yen had led investors to unwind their “carry trades” in which they borrowed in the cheap Japanese currency to invest in higher-yielding assets, such as equities.
While Wall Street’s three main indexes suffered another day of pain — with the Nasdaq down more than three percent — a forecast-beating read on the key U.S. services sector provided some solace.
Tokyo’s Nikkei, which tanked more than 12 percent Monday and suffered a record points loss, jumped 10.2 percent Tuesday.
Toyota was up more than 12 percent, Sony piled on more than nine percent and chip giant Tokyo Electron added 16.6 percent.
“This is a sweeping, across-the-board gain,” said analysts at Nomura, adding that investors would also pay close attention to the foreign exchange market.
Japan’s Prime Minister Fumio Kishida said at a scheduled news conference Tuesday that, “The stock market has been moving again today, and I think it is important to judge this situation calmly.”
“We will continue to monitor the situation with a sense of urgency and to carry out economic and fiscal management in close cooperation with the Bank of Japan.”
Markets in Shanghai, Sydney, Seoul, Taipei, Mumbai and Bangkok also rose but Hong Kong gave up early gains to finish in the red.
Singapore and Wellington also suffered more selling, while Manila was flat.
President-elect Donald Trump announced late Thursday that his campaign co-chair Susie Wiles will serve as his White House chief of staff come January, the first woman to ever hold that position.
“Susie Wiles just helped me achieve one of the greatest political victories in American history, and was an integral part of both my 2016 and 2020 successful campaigns,” Trump said in a statement. “Susie is tough, smart, innovative, and is universally admired and respected. Susie will continue to work tirelessly to Make America Great Again. It is a well deserved honor to have Susie as the first-ever female chief of staff in United States history. I have no doubt that she will make our country proud.”
Wiles is known as a formidable political operative who prefers to work behind the scenes, rather than on camera. Trump asked her to come to the microphone when he declared victory early Wednesday morning, and she declined, preferring to stay out of the spotlight.
Wiles has managed to not just curry but, more critically, keep Trump’s favor while working in a high-profile campaign role, managing the ambitions, personalities and egos in Trump’s orbit.
Wiles used to work for Florida Gov. Ron DeSantis, helping secure the governor’s office for him. But DeSantis’ relationship with her soured, and Trump world brought her into the fold. Wiles helped team Trump defeat her former boss in the Republican primaries.
Wiles’ father was the late Pat Summerall, a famous sports broadcaster. Now 67, Wiles has worked behind-the-scenes roles shaping and guiding politicians in Florida for four decades.
The chief of staff role is a demanding one that involves managing the president himself, in addition to senior White House staff, and by extension, the hundreds of people who work in the West Wing. But it also involves mapping out and executing a president’s policy objectives, ambitions and legacy.
Trump had four chiefs of staff during his first term, and parted with some of them on uncomfortable terms. Trump’s longest-serving White House chief of staff, John Kelly, has said Trump meets the definition of a fascist, and warned against a second Trump term. Reince Priebus, Mark Meadows and Mick Mulvaney also served in the role, although Mulvaney was only ever an acting chief of staff.
contributed to this report.
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Canada announced Wednesday it won’t block access to the popular video-sharing app TikTok but is ordering the dissolution of its Canadian business after a national security review of the Chinese company behind it.
Industry Minister François-Philippe Champagne said it is meant to address risks related to ByteDance Ltd.’s establishment of TikTok Technology Canada Inc.
“The government is not blocking Canadians’ access to the TikTok application or their ability to create content. The decision to use a social media application or platform is a personal choice,” Champagne said.
Champagne said it is important for Canadians to adopt good cybersecurity practices, including protecting their personal information.
He said the dissolution order was made in accordance with the Investment Canada Act, which allows for the review of foreign investments that may harm Canada’s national security. He said the decision was based on information and evidence collected over the course of the review and on the advice of Canada’s security and intelligence community and other government partners.
A TikTok spokesperson said in a statement that the shutdown of its Canadian offices will mean the loss of hundreds of local jobs.
“We will challenge this order in court,” the spokesperson said. “The TikTok platform will remain available for creators to find an audience, explore new interests and for businesses to thrive.”
TikTok is wildly popular with young people, but its Chinese ownership has raised fears that Beijing could use it to collect data on Western users or push pro-China narratives and misinformation. TikTok is owned by ByteDance, a Chinese company that moved its headquarters to Singapore in 2020.
TikTok faces intensifying scrutiny from Europe and America over security and data privacy. It comes as China and the West are locked in a wider tug of war over technology ranging from spy balloons to computer chips.
Canada previously banned TikTok from all government-issued mobile devices. TikTok has two offices in Canada, one in Toronto and one in Vancouver.
Michael Geist, Canada research chair in internet and e-commerce law at the University of Ottawa, said in a blog post that “banning the company rather than the app may actually make matters worse since the risks associated with the app will remain but the ability to hold the company accountable will be weakened.”
Canada’s move comes a day after the election in the United States of Donald Trump. In June, Trump joined TikTok, a platform he once tried to ban while in the White House. It has about 170 million users in the U.S.
Trump tried to ban TikTok through an executive order that said “the spread in the United States of mobile applications developed and owned” by Chinese companies was a national security threat. The courts blocked the action after TikTok sued.
Both the U.S. FBI and the Federal Communications Commission have warned that ByteDance could share user data such as browsing history, location and biometric identifiers with China’s government. TikTok said it has never done that and would not, if asked.
Trump said earlier this year that he still believes TikTok posed a national security risk, but was opposed to banning it.
U.S. President Joe Biden signed legislation in April that would force ByteDance to sell the app to a U.S. company within a year or face a national ban. It’s not clear whether that law will survive a legal challenge filed by TikTok or that ByteDance would agree to sell.
