US jobless claims drop, investors cheer

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

1.

Jobs relief: The number of new US unemployment benefit claims fell by a larger-than-expected 17,000 in the week ending August 3, to 233,000, according to the Labor Department. The drop follows a sharp increase in jobless claims the previous week that triggered the start of a decline in investor sentiment last Thursday. The lower number was below the expected 240,000 claims forecasted by economists polled by The Wall Street Journal, and represented the largest decline in nearly a year. US stock indexes and Treasury yields surged following the better-than-expected data. The S&P 500 Index closed 2.3% higher and the 10-year yield hit 4%, up from 3.968% on Wednesday. The decrease eased concerns about a rapid deterioration in the US labour market, after fears escalated last Friday due to a disappointing jobs report showing reduced hiring and a rising unemployment rate. (Capital Brief)(Bloomberg)(Reuters)(The Wall Street Journal)

2.

Swift scare: Two Austrians aged 19 and 17, arrested for plotting an attack on Taylor Swift's concerts in Vienna this week, appeared inspired by Islamic State and al-Qaida, authorities said Thursday. Swift's three concerts scheduled at Vienna’s Ernst Happel Stadium this week were cancelled following the arrests, the promoter, Barracuda Music, said late Wednesday citing safety concerns confirmed by Austrian officials. The main suspect, a 19-year-old male, confessed to planning to use explosives and knives to cause mass casualties outside the stadium, Omar Haijawi-Pirchner, the head of Austria's domestic intelligence agency said. "His aim was to kill himself and a large number of people during the concert, either today or tomorrow," Haijawi-Pirchner said. He was “clearly radicalized in the direction of the Islamic State and thinks it is right to kill infidels,” he added. The plot comes just over a week after a knife attack by a 17-year old boy at a Taylor Swift-themed event in the UK left three young girls dead and ten other people injured. (Capital Brief)

3.

Cyber sale: Trend Micro, the Japanese cybersecurity firm with a market capitalisation of about USD6.5 billion ($9.87 billion), is exploring a potential sale due to recent buyout interest, Reuters reported citing unnamed sources. The move comes amid a weakening yen and the company's underperformance relative to peers. Trend Micro is working with investment bankers to solicit interest from potential buyers, including private equity firms. Trend Micro's American Depositary Receipts surged over 15% on the news, after dropping about 10% this year. Founded in 1988, the company has expanded from antivirus software to broader cybersecurity solutions. The sector is seeing increased M&A activity, as highlighted by Alphabet's recent, albeit unsuccessful, attempt to acquire cybersecurity startup Wiz. Trend Micro declined to comment on the sale process when approached by Reuters. (Reuters)

4.

Debate dates: Former US President Donald Trump proposed three dates in September to debate Vice President Kamala Harris at its first news conference in months. Speaking at Mar-a-Lago, Trump said he is willing to participate in three debates in September on Fox News, ABC and NBC ahead of the 5 November election, The New York Times reported. “She’s barely competent, and she can’t do an interview,” he said of Harris. “But I look forward to the debates.” He attacked Harris record on crime and border issues, while dismissing the changing dynamics of the 2024 presidential race despite tightening polls and large Democratic rallies. The event was seen as an attempt to regain political momentum amid increased media focus on the Harris-Walz ticket. Meanwhile, President Joe Biden visited Harris’ campaign headquarters, and antiwar protests disrupted a Harris campaign rally in Detroit. (The New York Times)

5.

Mini redesign: Apple's upcoming Mac mini will be its smallest desktop yet and the first major redesign since its revamp under Steve Jobs in 2010, Bloomberg reported. The new model, set for release later this year, will be close to the size of an Apple TV set-top box, yet potentially taller than the current version, the publication said, citing unnamed sources. Depending on the version, the computer will incorporate AI-focused M4 and M4 Pro chips and feature an aluminium shell, multiple USB-C ports and an HDMI output, it added. The redesign is part of a broader update across Apple's Mac line, aiming to rejuvenate Mac sales, which have slowed post-pandemic. Apple did not comment on the plans. (Bloomberg)

6.

Covert target: Google and Meta secretly collaborated to target Instagram ads at teenagers on YouTube, breaching Google’s own rules on minor-targeted advertising, according to The Financial Times. Documents and sources cited by the publication revealed Google facilitated a Meta campaign aimed at 13- to 17-year-olds. They used an “unknown” audience segment on Instagram that Google knew skewed towards under 18s for the campaign, which was trialled in Canada and the US. Documents uncovered by the FT suggested steps were taken to ensure the true intent and target of the campaign remained disguised. Google has cancelled the project and is investigating the allegations, a source told the FT. A Google spokesperson said it prohibits ads targeting under-18s and that it planned to reinforce policies with sales reps to prevent circumvention. Meta argued that targeting the “unknown” group does not breach rules but did not address whether staff knew this cohort skewed to younger users. The report comes after the US Senate last month passed two bills designed to hold platforms accountable for potential harms to minors. (The Financial Times)

7.

Obesity boost: Eli Lilly, the maker of diabetes and weight loss drugs Zepbound and Mounjaro raised its 2024 revenue forecast by USD3 billion ($4.56 billion) to between USD45.4 billion and USD46.6 billion, driven by strong sales of the blockbuster drugs. Second-quarter revenue soared 36% to USD11 billion and net income surged 68% to USD2.97 billion, surpassing analyst expectations. The result, along with its second guidance upgrade this year, sent Eli Lilly's shares up as much as 13.7% before paring back some gains to close 9.4% higher. The news followed results from rival Novo Nordisk on Wednesday that missed expectations as it showed weaker-than-expected sales of its drug Wegovy amid manufacturing issues, and trimmed its full-year profit outlook. Analysts from BMO Capital Markets said the result suggested Eli Lilly was besting Novo Nordisk and “pulling ahead in the metabolic duopoly,” The Financial Times reported. (Capital Brief)(The Financial Times)(Bloomberg)

8.

Broadcast slump: Warner Bros Discovery’s shares plummeted over 11% to a hit a 15-year low, after a USD9.1 billion ($13.81 billion) write-down of its TV assets raised concerns about its broadcasting future. The company reported a USD10 billion net loss for the second quarter and fell short of revenue expectations, despite adding 3.6 million new streaming subscribers, bringing the total to 103.3 million. The loss included a USD2.1 billion charge related to its 2022 merger with Discovery. The bad news comes after Warner lost a USD76 billion broadcast rights deal with the NBA to competitors Disney, Comcast, and Amazon. Warner Bros Discovery's market valuation has dropped over USD40 billion since the merger. (Warner release)(Bloomberg)(Reuters)