SoftBank’s mega IPO; Oil surges; Brexit hits the pound

Posted at 3:23 AM, Nov 12, 2018
and last updated 2018-11-12 05:23:15-05

1. SoftBank’s IPO plans: SoftBank is gearing up for one of the world’s biggest IPOs ever. The Japanese company said Monday it plans to sell 2.4 trillion yen ($21 billion) worth of stock in its mobile telecoms unit.

SoftBank (SFTBY) will also have the option of selling another 240 billion yen ($2.1 billion) of shares if investor demand is strong. That would make the IPO bigger than $23 billion.

It would be the world’s biggest listing since Alibaba (BABA) went public in New York in 2014. The listing is set to take place on the Tokyo Stock Exchange on December 19.

The IPO is a key part of CEO Masa Son’s efforts to reposition SoftBank as a global tech investor.

2. Oil surges: Oil prices jumped early on Monday after Saudi Arabia said it would cut production next month.

Speaking at a conference in Abu Dhabi, Saudi energy minister Khalid Al Falih said the kingdom’s oil output would fall by 500,000 barrels per day in December.

Members of the Organization of Petroleum Exporting Countries and its allies could reduce supply further next year.

“The consensus among all members is that we need to do whatever it takes to balance the market,” Al Falih said. “If that means trimming supply by a million [barrels per day], we will do it.”

Brent crude, the international benchmark, jumped as much as 2.4% to $71.80 per barrel. US crude futures were 1.6% higher, trading just above $61 per barrel.

Global oil prices tumbled into a bear market last week, down more than 20% from their peak. Fears of a global economic slowdown and a decision by the United States to allow some countries to keep buying Iranian crude oil following the reintroduction of sanctions have hit market sentiment.

3. Brexit troubles: The pound dropped as much as 1.2% against the dollar on Monday as Prime Minister Theresa May found herself under growing pressure over her plan for Brexit.

Boris Johnson, the former UK Foreign Secretary, said cabinet members ought to mutiny over the plan. Writing in the Daily Telegraph, he said May’s plan would turn the United Kingdom into “a vassal state.”

The warning came just two days after Boris’ brother Jo Johnson, an opponent of Brexit, resigned from the UK government over Brexit. He said the 2016 referendum campaign was based on a “fantasy set of promises” that could not be delivered.

Britain is set to leave the European Union in March next year. A divorce agreement between the two sides has not yet been finalized, stoking fear among investors and businesses of a chaotic no-deal Brexit.

4. Global market overview: US stock futures were mixed early on Monday.

European markets opened mostly lower, except for London’s FTSE 100, which got a boost from the weaker pound. The index contains many international conglomerates that benefit when the pound drops.

Stocks in Asia were mixed. Equities in China and Hong Kong were higher, while Korea and India recorded losses.

The Dow Jones industrial average closed 0.8% lower on Friday, but still ended the week 2.8% higher, its best week since March.

The S&P 500 was 1% lower on Friday, while the Nasdaq dropped 1.7%.

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5. Companies and economics: Eventbrite (EB) is set to report its latest result after the closing bell on Monday. The company is weathering a rough market for tech companies.

Alibaba (BABA) was trading lower premarket despite smashing the record for its online retail blitz known as Singles Day. China’s biggest e-commerce company said sales topped $30 billion over a 24-hour period Sunday, soaring past last year’s record of about $24 billion.

Diageo (DEO) said Monday it is selling a portfolio of 19 spirit brands to Sazerac for $550 million in order to focus on premium US brands. The stock was little changed after the announcement.

Shares in British American Tobacco (BTI) dropped 8.3% in London on Monday on reports that menthol cigarettes might be banned in the United States.

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6. Coming this week:

Monday — Eventbrite (EB) earnings; Markets open for Veterans Day
Tuesday — Aramark (ARMK), L Brands (LB), Childrens Place (PLCE), Home Depot (HD) and Tyson Foods (TSN) earnings
Wednesday — Blue Apron (APRN), Progressive (PGR), Cisco Systems (CSCO), Gap (GPS), and Macy’s (M) earnings; Inflation numbers for October
Thursday — Nvidia (NVDA), Nordstrom (JWN), Walmart (WMT), and Manchester United (MANU) earnings; October retail sales
Friday — Williams-Sonoma (WSM) earnings