By Geoffrey Smith
Investing.com -- Covid-19 wreaks havoc with the biggest iPhone production hub in the world; forcing Apple (NASDAQ:AAPL) to warn about holiday season shipments. China's exports fall for the first time in two and a half years as the war in Ukraine and the end of the pandemic hit demand in western markets. Facebook (NASDAQ:META) owner Meta Platforms is set to lay off thousands of staff in an effort to restore profitability. Stocks are set to build on their post-payroll gains on Friday. And there's trouble in crypto-land as Binance takes aim at rival FTX. Here's what you need to know in financial markets on Monday, 7th November.
1. Apple warns on holiday shipments as Covid disrupts iPhone factory in China
Apple confirmed that it will ship fewer iPhones than expected in the key holiday quarter, owing to a Covid-19 outbreak that has badly disrupted operations at contractor FoxConn’s biggest assembly plant for the iPhone in Zhengzhou. Reports from Zhengzhou have depicted a chaotic scene, with thousands of workers either quarantined or hastily relocated to other plants.
“We now expect lower. . .shipments than we previously anticipated and customers will experience longer wait times to receive their new products,” the company warned in a statement at the weekend.
The news is a stark contrast with the rumors of an impending liberalization of China’s Covid-Zero policy, which continue to push local markets higher. Real-time data also point to an increasing economic slowdown as key export markets in North America and Europe struggle with high inflation. Chinese exports fell in year-on-year terms for the first time in over two years in October, according to data released on Monday.
2. Meta set to announce huge layoffs
Meta Platforms, the owner of Facebook, is expected to join the list of big tech companies making big job cuts this week, The Wall Street Journal reported.
The layoffs will represent a landmark moment for the company, which has never downsized in all of its (admittedly brief history. They represent CEO Mark Zuckerberg’s reaction to a sharp slowdown in revenue growth and an explosion in operating costs due to heavy and – as yet – unproven investments in the so-called Metaverse.
The absolute number of layoffs could dwarf those seen at Twitter last week in absolute terms, given that Meta employs over 10 times Twitter’s workforce. However, Zuckerberg is not expected to lay off half of the workforce as Elon Musk did last week. Various reports have suggested that Twitter will face legal action – especially outside the U.S. – for what appears to have been a flagrant breach of labor law in several jurisdictions.
Meta stock rose 3.4% in premarket on hopes that the measures will restore its shrinking profit margins.
3. U.S. stocks set to open higher as labor market report encourages Fed hopes; FanDuel ruling in focus
U.S. stock markets are set to open higher later, building on the gains they made in response to the labor market report on Friday. The report had added to evidence of a slowdown in hiring and in wage growth that analysts said brought the end of Federal Reserve policy tightening a little closer.
By 06:00 ET (11:00 GMT), Dow Jones futures were up 165 points, or 0.5%, while S&P 500 futures and Nasdaq 100 futures were up broadly in parallel. The three main cash indices had all risen by between 1.2% and 1.4% on Friday.
Aside from Big Tech, the stocks likely to be in focus later include Walgreens Boots Alliance (NASDAQ:WBA), which is moving past last week’s agreement to draw a line under the opioids scandal with a deal to buy Summit Health for around $9 billion including debt, according to the WSJ. Also in focus will be Fox (NASDAQ:FOX) and U.K.-based gambling group Flutter Entertainment (LON:FLTRF), after an arbitration tribunal ruled that Rupert Murdoch’s group would have to pay $4.1 billion to exercise its option on an 18.6% stake in its FanDuel unit.
4. Binance pulls liquidity from FTX in bust-up over FTT
Crypto stress is back.
FTX’s native token FTT slumped 15% over the weekend after Binance, its biggest rival and sometime backer, said it will pull all of its remaining funds from the group, a process that Binance founder and CEO Changpeng Zhao said will likely take several months.
Zhao said the move wasn’t hostile but also carped that “we won't support people who lobby against other industry players behind their backs.”
The move followed a Coindesk report last week that hinted that Alameda Research, a hedge fund affiliated to FTX, had taken a massive long position in FTT to support its value as of June. Alameda CEO Caroline Ellison and FTX owner Sam Bankman-Fried dismissed the report as misleading.
5. Oil shrugs as COP-27 begins
Crude oil prices were broadly flat after pushing higher for most of last week in hopes of China’s Covid-Zero policy being relaxed.
By 06:20 ET, U.S. crude futures were down 0.2% at $92.47 a barrel, while Brent futures were down 0.1% at $98.48 a barrel.
The market has appeared untroubled by the COP-27 climate conference, which has kicked off against a backdrop of a sharp rebound in carbon dioxide emissions this year. The world economy has had to resort increasingly to coal to fill a supply gap left by the suspension of Russian gas shipments to Europe and by droughts that have badly hit hydropower output from China to France and Latin America.