Internet truce in China, turbulence in Brazil, job cuts at Goldman

© Reuters

By Geoffrey Smith — China has effectively ended its crackdown on big Internet companies, a senior official said, a day after the founder of Ali Baba (NYSE: ) control of financial services giant Ant Group. In Brazil, police restored order after a mob supporting ousted President Jair Bolsonaro attacked Congress and government buildings on Sunday. More than 300 arrests have been made and incoming president Lula da Silva has promised to punish the perpetrators. Stocks are expected to open higher after Friday’s gains following a “Goldilocks” jobs report, but video game publishers are under pressure after a big profit warning in the sector. And crude oil is rising, with China signaling it is preparing for a strong recovery in consumption this year. Here’s what you need to know in the financial markets this Monday, January 9.

1. China’s crackdown on Internet giants is over

A senior Chinese official said a two-year crackdown on Internet companies is over, sending tech stocks higher.

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, told state media that authorities had effectively ended their campaign against the country’s big platform companies, after months of regulatory action that has severely damaged the fortunes of the biggest entrepreneurs. of the Internet in China.

The announcement came a day after financial services giant Ant Group announced that Jack Ma had relinquished control of the company, an apparent price for getting permission to raise capital.

As a result, Alibaba’s ADRs rose 5% in premarket trading.

2. Lula returns to power after Bolsonaro’s supporters attack government buildings

Brazilian police said they had fully restored control of government and congressional buildings after they were attacked by supporters of ousted right-wing president Jair Bolsonaro on Sunday.

Bolsonaro criticized the perpetrators and denied any involvement in the riots, which echoed the January 6 unrest at the US Capitol that followed President Donald Trump’s election loss. Incoming president Ignacio “Lula” da Silva has vowed to punish those responsible and said he would “follow the money” in an investigation into sponsors. More than 300 people were arrested.

Brazil’s Supreme Court, meanwhile, suspended the governor of the capital Brasilia for 90 days over his failure to avert unrest.

3. US stocks should open higher; Job cuts on Wall Street are scrutinized

US stock markets are set to open higher, building on gains made on Friday after the release of the December jobs report fueled speculation about when the Federal Reserve will switch from raising to lower rates. of interest.

The report had shown that jobs and wage growth were slowing to a steadier level, with no signs of an imminent recession, which raised hopes that the Fed could still meet its target of a “rocket easing.”

By 1:30 p.m., it was up 85 points, or 0.3%, while and were at a similar amount. Among the stocks likely to get special attention is Deere (NYSE: ), which could come under pressure after agreeing to allow farmers to repair their Deere machines. The agreement signed over the weekend with farmers’ representatives threatens a profitable stream of after-sales services for the company.

Attention will also be on Goldman Sachs (NYSE: ), which Bloomberg says is preparing its biggest round of job cuts since 2009 after over-hiring during the pandemic.

Cannabis company Tilray (NASDAQ:) will release its results.

4. Video game publishers in spotlight after big European earnings warning

Video game publishers will also be in the spotlight on Monday, as UK-listed Frontier Developments ( LON: ) reported a sharp drop in sales of its flagship Formula 1 racing game.

Frontier said demand for its F1 Manager 2022 game was “materially below expectations” in 2022, while sales of other titles such as Planet Coaster and Jurassic World Evolution also missed estimates. He indicated that revenue could fall in 2023.

Although not a big name in the global industry, Frontier’s F1 Manager 2022 game is a benchmark in this particular field of gaming, giving the results the potential of cross-reading with other titles. such as Electronic Arts (NASDAQ: ) and Ubisoft (EPA:). The latter fell 3.5% in morning trading in Paris.

5. Oil bounces on signs of recovery in Chinese demand

Crude oil prices rose after China announced a big increase in import quotas for next year, suggesting it is bracing for a strong rebound in demand as it reopens its economy. Reuters sources indicated a 20% increase compared to import levels in 2022.

By 1:30 p.m., futures were up 3.3% at $76.17 a barrel, while they were up 3.0% at $80.89 a barrel.

The impact of China’s changing public health policies will be visible over the next week as Chinese travelers prepare to travel without restrictions during the Lunar New Year holiday for the first time since 2020.

A brief threat to the spot market quickly disappeared after a ship that capsized in the Suez Canal (EPA:) was freed by tugboats, allowing traffic on the vital waterway to quickly resume.

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