What to watch in Asia today
Turkey’s interest rate: Turkey’s central bank could make a dramatic pivot as the country’s new economic leadership shifts from policies that have sent inflation soaring and investors fleeing. Economists expect the policy rate to be raised by 500 basis points to 20 per cent, according to a Reuters poll.
Economic data: The People’s Bank of China announces its loan prime rate decision, while Japan releases June trade figures and Australia publishes unemployment numbers.
Taiwan Semiconductor Manufacturing Co: The world’s largest contract chipmaker releases earnings for the second quarter. TSMC last month defended its push to diversify manufacturing beyond Taiwan.
Women’s World Cup: The football tournament gets underway in Australia and New Zealand, with opening games between each of the co-hosts and Ireland and Norway, respectively.
Wall Street banks spend over $1bn on severance costs amid sharp job cuts
The biggest US banks spent more than $1bn on severance costs during the first six months of 2023, underscoring the steep price of unwinding Wall Street’s overexpansion during the coronavirus pandemic.
Goldman Sachs on Wednesday became the latest big bank to take a charge for recent job cuts, telling investors it had spent $260mn in the first half of the year in severance costs. Goldman has laid off about 3,400 employees, or about 7 per cent of its overall staff, this year.
On Tuesday, Morgan Stanley, which has let go about 3,000 employees this year, said that it had spent more than $300mn on staff reductions.
Read more on the job cuts here.
United Airlines lifts outlook as demand underpins record earnings
United Airlines has raised its guidance for the year after reporting record adjusted earnings per share in the second quarter, boosted by demand for international travel.
The Chicago-based airline said on Wednesday it expected adjusted earnings this year of $11 to $12 per share, raising the bottom of the range from $10. That came as it reported adjusted earnings of $5.03 a share between April and June, beating Wall Street expectations of $4.04.
Second-quarter revenue rose to $13bn, up 20 per cent compared to the same period last year. While domestic travel revenue grew 8 per cent to just under $8bn, revenue from travel to Europe grew 42 per cent and jumped 161 per cent to Pacific destinations.
US car dealer Carvana’s shares surge 40% on plan to cut $1bn from debt
Carvana shares closed more than 40 per cent higher after the used auto retailer announced a debt restructuring plan to knock off more than $1bn from its $5bn of unsecured bond debt.
The Arizona-based company said on Wednesday morning the terms of the new secured bonds to be offered in an exchange would slash more than $400mn of annual cash interest expense in the next two years.
Carvana also said it would sell $350mn of new equity with the company’s founding family putting in more than $100mn as a part of the share sale.
Carvana’s share price has soared from under $5 in January to more than $55.80 on Wednesday.
Price cuts eat into Tesla’s profit margins
Tesla’s profit margins slipped in the latest quarter as a series of price cuts this year weighed on its earnings, according to figures released late on Wednesday.
However, profitability held up better than many analysts on Wall Street had expected and the company’s shares rose more than 1 per cent in after-market trading.
The company’s gross profit margin from automotive operations, excluding the impact of regulatory credits, slid to 18.2 per cent in the last three months compared to 26.2 per cent a year ago. Wall Street had been expecting a steeper decline.