Financial Times Europe - 02.11.2019 - 03.11.2019

14 ★ FTWeekend 2 November/3 November 2019

3 Wall Street hits fresh intraday highs after upbeat jobs report 3 Haven assets retreat as investors shrug off trade war and growth doubts 3 Chinese stocks advance following solid manufacturing numbers

Global markets ended the week on a high after an upbeat US jobs report and optimistic Chinese manufacturing data led investors to brush aside trade war fears and worries about slowing growth. China’s CSI 300 index of major Shanghai- and Shenzhen-listed stocks rose 1.7 per cent after a Caixin survey found domestic manufacturing activity had expanded at its fastest pace in two- and-a-half yearsin October. The rally led Chinese stocks to end the week 1.4 per cent higher, while Hong Kong’s Hang Seng rose 1.6 per cent over the same period, having closed 0.7 per cent higher yesterday. The bullish mood in Asia was repeated in the US where all eyes were on eagerly awaited employment numbers. Non-farm payrolls rose 128,000 in October from 180,000 in September, according to data from the US labour department, a reading that eclipsed consensus forecasts of 89,000 jobs and appeared to back the US Federal Reserve’s decision early in the week to pause further interest rate cuts. “The strength of this report, together with the news earlier this week of a slightly stronger-than-expected 1.9 per cent annualised gain in third-quarter [US] GDP, would seem to support the Fed’s

shift to a more neutral policy stance,” said Michael Pearce, senior economist at Capital Economics. The S&P 500 and Nasdaq Composite indices hit intraday highs following the release of the jobs data. But Richard Flynn, UK managing director at Charles Schwab, cautioned that “slowing global growth and trade war concerns continue to fester”. Without the US striking “a comprehensive and definitive trade deal with China, we will continue to see bouts of market volatility that could undermine market confidence”, he warned. The S&P 500 was on track to hit another all-time high this week, having risen 0.8 per cent yesterday, while the

tech-leaning Nasdaq gained 0.7 per cent by midday in New York. European equities also ended the week on a strong footing with the pan-regional Stoxx Europe 600 up 0.7 per cent, while London’s FTSE 100 gained 0.8 per cent. The shift in sentiment led to the selling of haven assets such as gold and bonds. The yield on 10-year US Treasuries climbed 5 basis points to 1.74 per cent, while gold dipped 0.3 per cent but the precious metal clung above the $1,500- an-ounce level it breached this week. The price of Brent crude oil picked up yesterday, rising more than 2 per cent to $61.10 a barrel. WTI, the US marker, gained 2.8 per cent to $55.72 a barrel. Ray Douglas

What you need to know

Buoyant Wall Street underscores global rally Indices rebased

Source: Bloomberg

Aug Nov

Nasdaq Composite S&P FTSE All-World

The day in the markets

Markets update

US Eurozone Japan UK China Brazil Stocks S&P 500 Eurofirst 300 Nikkei 225 FTSE100 Shanghai Comp Bovespa Level 3060.63 1565.53 22850.77 7302.42 2958.20 108264. % change on day 0.76 0.65 -0.33 0.75 0.99 0. Currency $ index (DXY) $ per € Yen per $ $ per £ Rmb per $ Real per $ Level 97.260 1.117 108.150 1.295 7.038 3. % change on day -0.095 0.090 0.042 0.077 0.034 -0. Govt. bonds 10-year Treasury 10-year Bund 10-year JGB 10-year Gilt 10-year bond 10-year bond Yield 1.731 -0.385 -0.185 0.575 3.263 6. Basis point change on day 3.070 2.300 -4.030 3.700 -3.700 -3. World index, CommodsFTSE All-World Oil - Brent Oil - WTI Gold Silver Metals (LMEX) Level 355.21 61.23 55.75 1510.95 18.06 2815. % change on day 0.68 2.96 2.92 1.26 0.56 -1. Yesterday's close apart from: Currencies = 16:00 GMT; S&P, Bovespa, All World, Oil = 17:00 GMT; Gold, Silver = London pm fix. Bond data supplied by Tullett Prebon.

Main equity markets

S&P 500 index Eurofirst 300 index FTSE 100 index

| ||||||| |||||||| |||| Sep 2019 Nov

2880

2960

3040

3120

| || |||||||| ||||||||| Sep 2019 Nov

1480

1520

1560

1600

| ||||| |||||||| |||||| Sep 2019 Nov

7040

7200

7360

7520

Biggest movers % US Eurozone UK

Ups

Qorvo 18. Fortinet 11. Apache 10. Newell Brands 8. Skyworks Solutions 6.

Tenaris 8. Arcelormittal 6. Thyssenkrupp 4. Norsk Hydro 3. Novo Nordisk 3.

Rio Tinto 3. Glencore 3. Evraz 3. Johnson Matthey 3. Flutter Entertainment 3. %

Downs

Arista Networks -24. Colgate-palmolive -3. Ventas -2. American Tower -2. Regency Centers -2. Prices taken at 17:00 GMT

Danske Bank -3. Beiersdorf -1. Iliad -1. Seadrill -1. Man -1. Based on the constituents of the FTSE Eurofirst 300 Eurozone

Auto Trader -3. Hargreaves Lansdown -1. Centrica -1. Rightmove -1. British Land -1. All data provided by Morningstar unless otherwise noted.

Richard Henderson

On Wall Street

T

he fallout forKen Fisher shows that a new culture pervades the finance industry. The billionaire chair- man ofFisher Investments landed himself in hot water in October with a series of lewd and sexist remarks he made at a conference, in which he comparedinvestmenttosex. A subsequent trawl through his deleted tweets revealed jokes about having sex with subordinates and ques- tions over the merits of outlawing slav- eryintheUS. In decades prior, Mr Fisher’s remarks may have elicited a warm hum of laugh- ter from the usual greying, male crowd. He may even have impressed some would-be allocator in charge of a family office or endowment with his maverick touch. Not so today. Instead, this has endedupbeingacostlymistake. Pensions that represent city and state workers quickly began pulling assets, including a $522m investment mandate from the Los Angeles Fire and Police pension fund.It had asked Mr Fisher to attend an investment committee meet- ingbuthedidnotappear. Michigan’s state employees’ pension fund pulled a $600m mandate while Iowa’s state pension fund has cut the firmfroma$386minvestmentdeal. Boston’s city pension fund has taken back$248mandPhiladelphia’scitypen- sion pulled $54m.Fidelity Investments and Goldman Sachs, two of Wall Street’s most influential firms, followed, send- ingthetotalwithdrawntonearly$3bn. The Financial Times, for which Mr Fisher wrote a monthly column, dropped him in mid-October upon learning of the allegations. In his first public statement since investors began

pulling funds, Mr Fisher apologised and attempted to distance himself from the remarks, arguing that the media had unfairly maligned his company through “false”allegations. When asked for details, however, the company gave no specific examples. Instead,itmadeabroadallusiontocriti- cisms of its corporate culture that it felt were inaccurate and highlighted what it seesasthediversityofitsstaff. Mr Fisher even permitted himself a coded sideswipe atNEPC, an influential investmentconsultantthatadvisespen- sions. It had publicly labelled Fisher Investments “unsustainable” after the

flood of outflows. The lost assets, which represent a small fraction of the $112bn the group managed at the middle of the year but a sizeable chunk of its pension assets, did “not reflect a firm... that has any sustainability problem”, Mr Fisherwroteinanopenletter. MrFisheristhelatestexampleofstale views in the finance industry but he is not alone and the offensive, out-of- touchbantercangobeyondsexistjokes. Marc Faber, the Swissmanager, was dropped as a commentator from USTV stations in 2017 after claiming the suc- cessoftheUSwasduetowhitepeople. Banking and investment still have a long way to go before casual bigotry is eliminated. “The finance industry is the archetypal boys’ club,” said Matthew

LaGarde, an attorney at Katz, Marshall & Banks who represents victims of sex- ualharassmentandretaliation. The backlash against Mr Fisher’s comments comes at a crucial moment. Fund managers are haemorrhaging assets from actively managed portfolios — the fight to win assets has never been more intense. Against this backdrop, twogrowthareashaveemerged. A boom in environmental, social and governance investing, where fund managers buy stocks and bonds in companies based on the ability of the businesses to manage changes in these fields, has nudged the focus of fund managers beyond balance sheets and quarterlyearningsscorecards. At the same time, growth in passive investing means fund managers with large index businesses face growing demands to vote in company share- holder meetings and face the scrutiny of consultants who tally the votes on behalf of pensions, foundations, endow- mentsandsovereignwealthfunds. The flare-up over Mr Fisher’s comments shows that investors expect asset managers to impose this framework on themselves, as well as on the companies whosestockstheybuy. Boston’s city pension fund is the type of institutional investor that relies on asset managers like Fisher Investments tostewarditsmoneyonbehalfofretired workers. When thefund pulled nearly a quarterofabilliondollarsfromthefund manager, Martin Walsh, the city’s mayor, said Mr Fisher’s comments showed “an attitude and mentality that run counter to our values, but that also evidenceaprofoundlackofjudgment”.

[email protected]

Fisher’s offensive

remarks collided with

new culture of finance

Mr Fisher is not alone in

finance and the offensive,

out-of-touch banter can

go beyond sexist jokes

Qorvo it its best level since 2001 afterh the chipmaker announced a $1bn share buyback withstrong results. As well as noting robust demand from Apple and Samsung, the company said orders for 5G network chips from Chinese manufacturers had been arriving faster than hoped. Colgate-Palmolive ained after itsg third-quarter update showed a surprise improvement in earnings, albeit mostly on a lower tax rate. Volume growth and improved pricing meant organic sales rose 4.5 per cent but higher materials costs ate into margins. Fitbit umped after Google ownerj Alphabet confirmed it was buying the fitness tracker maker for up to $2.1bn. Paratek Pharmaceuticals lid to as record low on disappointing results from mid-stage trials of its flagship Nuzyra drug for urinary tract infections. US-listed shares inBeiGene urged ons news that Amgen had agreed to pay $2.7bn in cash for a 20.5 per cent stake in the Chinese drug developer as part of a partnership deal. Pinterest as under pressure after thew social media site reported a sharper than expected slowdown in USadvertising revenue growth. Arista Networks, the cloud computing infrastructure specialist, dropped after warning on fourth-quarter sales because one key customer, widely rumoured to be Facebook, had suddenly reduced purchases.Bryce Elder

Wall Street Eurozone London

ASM International ed the Stoxx Europel 600 index gainers as ABN Amro repeated “buy” advice based on positive comments from the chip equipment maker’s management after results earlier in the week. “The company is off to a strong start in the fiscal first half 2020, growth will likely stay strong in the medium term and we continue to expect meaningful double- digit earnings upgrades for consensus estimates,” ABN said. Danske Bank lipped after a strategys update from the lender set return-on- equity targets that were below forecasts. Pipe makerTenaris allied, havingr slipped earlier in the week after quarterly results showed that oilfield maintenance was holding back profit. Repeating “buy” advice, Jefferies said investors were undervaluing Tenaris’s “transformational” acquisition of Ipscto, a North American division of Russian peer TMK, which awaits US regulatory approval. Loomis, the Swedish cash-handling company, climbed after posting a 17 per cent gain in third-quarter operating earnings. Deutsche Bank “buy” advice helped Nemetschek, the maker of architect software. The stock had slipped on Thursday after Nemetschek left targets unchanged with quarterly results but Deutsche called the weakness an opportunity to buy. Bryce Elder

Rightmove etreated after Shore Capitalr downgraded the online portal to “sell”. Estate agents were increasingly likely to rebel against further fee hikes given weak residential transaction volumes, aggressive competition, and Brexit uncertainties, Shore said. Agents were unlikely to delist from Rightmove entirely but might opt for more basic lower-cost listings packages, the broker said. Lookers ed the auto dealerships lowerl on a profit warning.Auto Trader nda Inchcape etreated after Lookers warnedr of weaker demand and supply issues, exacerbated by operational problems that cut full-year earnings expectations by more than half. HomeServe ained after Peel Huntg advised buying ahead of interim results due this month from the home repairs warranty provider. Headline results were unlikely to surprise but management’s confidence about UK regulation, potential acquisitions and free cash flow growth should drive investor interest, it said. BookmakerFlutter ained on a reportg that DraftKings, a competitor to its US fantasy betting site FanDuel, was in talks to be bought by an acquisition vehicle founded by Hollywood producer Jeff Sagansky and actor Eli Baker. Citigroup “buy” advice liftedMorgan Advanced Materials. Metro Bank umped on fresh talk thatj the lender might be a takeover target for Lloyds Banking Group.Bryce Elder

MARKETS & INVESTING

NOVEMBER 2 2019 Section:Markets Time: 11/20191/ - 18:57 User: stephen.smith Page Name:MARKETS2, Part,Page,Edition:EUR , 14, 1