From Australia’s stance on Jerusalem to Liz Truss trying to outlast a head of lettuce – Here’s your October 19 news briefing
To start off, we’re looking into:
Australia reverses its Israel decision
It’s become a major point of Israel’s foreign policy for other countries to recognize West Jerusalem as its capital. But most countries see Tel Aviv as the capital. The issue is that Jerusalem is situated right outside of the West Bank and has kind of a loose status between Israel and Palestine. The disputed capital is home to sites considered holy by three major worldwide religions. Palestine considers East Jerusalem to be the capital of its future state and contends that Israel is illegally occupying the area.
Yesterday, Australia’s foreign minister reversed the previous administration’s decision to recognize West Jerusalem as Israel’s capital, instead recognizing Tel Aviv as the capital again. Australia has said Jerusalem’s status needs to be figured out via peace negotiations between Israel and Palestine. But Israel isn’t too happy, calling on the Australian ambassador to explain the shift and publicly criticizing how the policy was announced.
Microsoft’s latest layoffs
This hasn’t been a great year for a lot of companies, including in the tech industry. In the 47 years Microsoft has been around, it’s seen plenty of economic advances, with its stock growing 200% in the past five years, thanks to brands like Xbox, Windows, Azure and Office. But, just this year, its stock has fallen a whopping 29%. What gives? Tech has been especially hit hard by the effects of inflation and falling consumer demand. Fewer PC sales have been a major factor in this drop.
On Monday, a Microsoft spokesperson confirmed that the company has had to make a lot of layoffs. The company expects revenue to continue to lag with fewer sales of Windows licenses for PCs. The layoffs are affecting the entire company, even the Xbox gaming division, which was thought to be relatively safe from job cuts. The cuts are also happening all over the world. It’s not clear exactly how many jobs have been cut, but one source said it’s less than 1,000.
Iran agrees to sell weapons to Russia
Russia’s supplies have reportedly been running a bit low recently in the war in Ukraine. According to British intelligence leaders, this is noticeable with the kinds of missiles Russia is using. At the beginning of the war, it used precise missiles (called precision-guided missiles) to hit targets across Ukraine. But recently, Russia has resorted to using Iranian drones, which are slower and, therefore, easier to shoot down. It seems the stocks of other weapons are running low, and international sanctions are making it difficult for Russia to manufacture more weapons of its own.
Now, Iran has agreed to ship surface-to-surface missiles and more drones to Russia. Russia and Iran initially reached the deal back on October 6. This is a big deal, and it’s likely to make the West pretty angry. Some leaders have already called for new sanctions on Iran over the shipments. There’s also a question of whether this will jeopardize the ongoing negotiations for the Iran Nuclear Deal.
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To end, we’ll look into:
Investment bankers want that millennial dough
Younger generations are made up of a weird set of investors. Instead of stashing cash under their mattress like in the good ol’ days or investing in stocks and bonds, they’re putting their money into digital investments, like cryptocurrencies, NFTs and, of course, meme stocks.
But Hong Kong banks are looking to loop millennials and zoomers into more traditional finances. It isn’t just that they want those sweet, sweet investment dollars (though, they absolutely do), but it’s also that they think younger generations need more guidance when it comes to investing.
So, they’re rolling out programs to help ease younger investors into responsible banking. One way they’re doing this is by offering wealth-management services through apps. The idea here is to compete with the trading apps that became popular during the pandemic (think Robinhood). They’re also working on special incentives for younger people, like zero subscription fees for a period, mainly because young people tend to be more worried about fees and minimums.
But younger investors don’t always see their investments as misguided. For one, many of them don’t trust the banking and investment institutions they grew up with, especially those that led to that whole financial crisis in 2008. Instead, they’d rather do their own research, make their own calculations and, if need be, deal with losses on their own.
On top of that, plenty of young investors have faith in crypto and blockchain tech, and many have even found a sense of community through trading NFTs or meme stocks. This sense of community isn’t as easily found dealing with an investment banker on the 30th floor of a skyscraper.
What’s the key here? Well, it’s the tech – and the apps.
People from Gen Z to millennials say that accessibility to an app that helps them manage their assets is the best way to go. That’s why big banks like HSBC are working on building out apps and fitting them with virtual wealth coaches. That way, people can invest from the comfort of their own phones.
“Nowadays, nobody wants to do a phone call, they just text each other,” explains Maggie Ng, head of wealth and personal banking for Hong Kong at HSBC.
In other news …
📈Stocks: MSCI’s global gauge of stocks is up 1.07% to 2,457.86.
- Dow Jones went up 1.12% to 30,523.80.
- Nasdaq Composite is up 0.90% to 10,772.40.
- S&P 500 boosted 1.14%, hitting 3,719.98.
- Hang Seng Index went up 1.82% to 16,914.58.
🧠Some quick factors to bear in mind:
- Recession fears and aggressive interest rate hikes have recently dragged down the US market. But now, a good start to earnings season and better-than-expected reports in the financial sector could suggest that the economy is doing better than analysts had feared, rallying markets for the second day in a row. But, investors are still a little hesitant over the recent market rally, leaving trading a bit choppy on Tuesday.
- In China, President Xi’s congress speech held fast onto the country’s zero-COVID policy, disappointing investors who were hoping for looser restrictions in the future. But he also made some promising statements in support of the tech sector and tech self-reliance.
- Risk appetite returned across Asian markets after stocks rallied in US and European markets in response to solid earnings and a walk back on proposed UK tax cuts.
- And, on Monday, China’s state banks boosted their intervention to help a weakening yuan.
👄Some comments and chatter:
- “3Q and 4Q earnings should confirm fundamentals remain anchored in resilient labor market and COVID reopening. Equity valuation will likely remain tied to global central bank rhetoric and rates, which is turning incrementally less negative. As such, we see equities primed for upside into year-end on resilient 2H22 earnings, low equity positioning, very negative sentiment and given more reasonable valuation,” said Dubravko Lakos-Bujas, JP Morgan’s head of global macro research.
- “The market was a bit oversold leading into Monday, and people were worried of what was going to happen over the weekend. People walked into the week feeling a little better," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Conn. “You’re getting a combination of short covering and fear of missing out."
🛢Oil: Oil prices are dropping with fears of higher US stockpiles and demand starts to drop. US crude dropped 3.09% to US$82.82, and Brent went to US$90.03 per barrel, down 1.74%.
👛Bitcoin: Bitcoin dropped 1.27% today, hitting US$19,300.00 at the time of writing.
🔥Russian jet crash: A Russian fighter jet crashed into a residential building in the Russian city of Yeysk during a training flight. At least 14 people ended up dying from the incident after one of the engines caught fire.
⚡Ukrainian power stations destroyed: Ukrainian President Zelenskiy said that about a third of the country’s power stations have gone down due to Russian attacks since October 10. The power grid is still functioning, but there have been a few blackouts.
🦀What’s going on with Alaska’s snow crabs?: Concerns over a declining snow crab population are rocking Alaska’s seafood industry, as the state had to cancel harvesting season for the first time ever. This is bad. The decline is in the BILLIONS, and climate change is the biggest suspect in this shift as the waters in the Bering Sea are warmer than in previous years.
🧕Iranian climber’s hijab incident: At the Asian climbing championships in South Korea, Iranian climber Elnaz Rekabi performed without a hijab. She’s been praised by protesters in Iran, but she later posted on social media that her hijab came off accidentally. It’s unclear whether this is true or if Rekabi has been told to cover up the incident. Some friends have reported being unable to contact her, and she’s supposed to be en route back to Iran.
👩✈️Air India flies to new heights: Over the next five years, Air India is planning to triple its fleet of 113 planes. The struggling company is looking to transform its business following its takeover by Tata Group.
✈China’s international flights: A few of China’s major airlines are making plans for more international flights. For the most part, airlines like China Eastern Airlines and China Southern Airlines will be resuming services to other Asian countries, like Japan, Thailand, Indonesia and the UAE. But Air China will also be flying to Canada, the US and Greece.
🚀First British space launch: Billionaire entrepreneur Richard Branson’s space exploration company Virgin Orbit Holdings is going to launch a satellite into space this November. This launch will be the first of its kind from the UK.
🥗Can Liz Truss outlast a head of lettuce?: With laughably low approval ratings and a huge slip-up with her proposed tax plan last month, many people don’t think the UK’s newest PM Liz Truss will last very long in office. In fact, one tabloid-y news outlet has set up a YouTube live stream to see which will last longer – an unrefrigerated head of lettuce donning a blonde wig or Truss.
Written and put together by Jake Shropshire, Vanessa Wolosz, Christine Dulion and Krystal Lai