Japan likely conducted second yen intervention

Good morning. Here's what happened overnight and what you need to know today.

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1.

Yen surge: Japan appears to have conducted its second currency intervention this week, worth around ¥3.5 trillion ($34.8 billion), based on an analysis of Bank of Japan account figures that diverged significantly from market forecasts. This intervention likely occurred shortly after the Federal Reserve's policy announcement, signalling Japanese authorities are taking an increasingly aggressive stance to prop up the yen following an earlier ¥5.5 trillion intervention on Monday. The yen plunged to multi-decade lows against the dollar last year. Officials have declined to confirm the interventions publicly, but the analysis of central bank accounts points to the government's determination to combat speculative yen selling, especially ahead of key US employment data releases. (Bloomberg)(Reuters)

2.

Competition stakes: Huawei, the Chinese telecommunications giant blacklisted by the US, has been secretly funding a prestigious American research competition. The prize, administered by the Optica Foundation in Washington DC, has awarded millions of dollars since 2022 and has received submissions from top universities – many of whom have banned researchers from working with Huawei. The foundation is not required to disclose Huawei as the funder per a confidential agreement, meaning applicants, judges and universities did not know the money came from a Chinese tech firm the US sees as a national security threat. While probably allowed under US export rules, the lack of transparency about the company's role in potentially defence-relevant optics research raises concerns about undisclosed foreign influence and potential intellectual property risks, with universities now investigating the matter. (Bloomberg)

3.

Cash splash: Sony Pictures and private equity firm Apollo Global Management have submitted a non-binding all-cash offer of USD26 billion ($39.5 billion) to acquire Paramount Global, marking Apollo's second attempt to bid for the beleaguered entertainment giant. Under the proposed deal, Sony would become the significant majority shareholder with operational control, while Apollo would take a minority stake. This joint bid comes amid a months-long sales process by Paramount's controlling shareholder Shari Redstone, which has faced a shareholder revolt and executive departures. Paramount had been in exclusive merger negotiations with Skydance Media, but that exclusivity period ends Friday, opening the door for other suitors like Sony and Apollo. Redstone's prior proposed deal with Skydance drew criticism for offering her a substantial premium, prompting Skydance to revise their offer. (Wall Street Journal)

4.

Photo finish: Melbourne-based digital assets marketplace Envato, founded by Cyan and Collis Ta'eed, will be acquired by New York-listed Shutterstock for $US245 million ($375.2 million) in cash. Envato is one of Australia's most successful bootstrapped private tech companies, having never taken on external funding. It operates a range of marketplaces and tools for creative workers, offering access to creative assets such as stock photos, graphic design templates, audio, fonts, WordPress themes and code. Shutterstock, a $US1.51 billion stock photography and footage provider, has recently signed deals with Meta, Google, Amazon, and Apple to use its vast library of images, videos, and music files to train AI models. (Australian Financial Review)

5.

Search party: The US Department of Justice's landmark antitrust trial against Google over its alleged monopolistic practices in online search is coming to a close in federal court. In closing arguments, the DOJ accused the tech giant's parent company Alphabet of suppressing search rivals by paying billions annually for anticompetitive agreements that make Google the default search engine on browsers, devices and carriers. The DOJ argued these default deals, like the USD20 billion ($30.5 billion) paid to Apple in 2022, create self-perpetuating barriers that harm competition, while Google contends users have choices and it wins deals through superior products. In its closing argument, Google argued these agreements are largely the product of its counterparties like Apple and Samsung, and that it was open to other bidders. The judge questioned the lack of new search competitors and pushed both sides on the extent of consumer harm. (Financial Times)

6.

Oil crash: Russian energy giant Gazprom suffered a loss of 629 billion rubles ($10.3 billion), its biggest in at least 25 years, primarily due to the fallout from Russia's invasion of Ukraine. The company's gas sales more than halved, with revenues dropping by nearly 30% year-on-year to 8.5 trillion rubles, as gas sales plummeted from 8.4 trillion rubles to 4.1 trillion rubles. The loss highlights the impact of the war on Gazprom, which once boasted vast cash reserves and wielded a strong hold over Europe's energy supply. The company's failure to adapt to losing the European market, which previously accounted for the majority of its income, is evident in the sharp decline in its revenue from gas sales outside Russia. (Financial Times)

7.

Out of breath: Peloton CEO Barry McCarthy is stepping down after just over a year trying to turn around the fitness tech company that thrived during the pandemic but has since struggled with weak sales and demand. McCarthy, a former Netflix and Spotify executive brought in to revive Peloton in early 2022, implemented cost cuts including laying off 15% of the workforce – around 400 employees – and reducing the retail showroom footprint. However, his efforts failed to bring growth as customers returned to gyms and cut spending amid high inflation. Peloton's market value has plummeted from nearly USD50 billion ($76.1 billion) in 2020 to around $1.2 billion currently. The company reported weak quarterly results with declining revenue and trimmed its full-year forecast, leading to a 12% drop in its stock price. Given its performance, analysts are questioning Peloton's prospects as a standalone company. (Financial Times)(Reuters)

8.

Trade war: Turkey has halted all trade with Israel as of Thursday, according to Turkish officials speaking to Bloomberg. This expands on restrictions Turkey placed on some exports to Israel last month. The move is seen as Turkish President Recep Tayyip Erdogan consolidating support among conservative voters at home by ramping up criticism of Israel over the war in Gaza. Trade between the nations was worth USD6.8 billion ($10.3 billion) in 2023, with over 75% being Turkish exports to Israel. Israel plans to boost domestic manufacturing and find alternative suppliers, particularly for major Turkish exports like iron and steel and imports like refined oil. The suspension comes as Turkey joins a UN case accusing Israel of genocide in Palestinian territories. Israel condemned Erdogan for damaging Turkish businesses and violating trade agreements. (Bloomberg)