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Asian shares mixed as investors await crucial Fed decision

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November 2, 2021

By Paulina Duran

SYDNEY (Reuters) – Global shares idled just below record highs on Tuesday and currencies held tight ranges as nervous investors awaited the Federal Reserve’s policy meeting, one of several central bank decisions this week that could set the tone for risk appetite.

The Reserve Bank of Australia was the main focus on Tuesday, as it took a step toward unwinding extraordinary pandemic stimulus policies by abandoning an ultra-low target for bond yields. The spotlight now swings to the Fed and then the Bank of England, which also have meetings this week.

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Asian shares were mixed with the MSCI’s gauge of Asia-Pacific stocks outside Japan holding steady at 0435 GMT, Japan’s Nikkei edging 0.4% lower and futures pointed to a weaker European and U.S. open.

The MSCI’s world equities index was down a marginal 0.02%, with Pan-region Euro Stoxx 50 futures 0.25% lower and E-mini futures for the S&P 500 index down 0.21%.

In Asia, the RBA defied investor expectations for a more hawkish pivot, pushing the Aussie and kiwi dollars lower and drove short-term bonds higher.

“The market was pricing way more,” said GSFM investment strategist Stephen Miller. “They thought that the RBA would take bigger steps to remove monetary accommodation given the upside risks to inflation and I think the RBA have made the minimum adjustment possible.”

The Aussie was 0.25% lower to be within its two-week range at $0.75 while the kiwi moved 0.1% lower to $0.7172. Australia’s S&P/ASX 200 was down 0.5%.

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Australian 3-year benchmark bond yields were 6 basis points lower at 0.98%, compared with their recent 1.267% high on Oct. 29, while 10-year bonds pared earlier losses to push yields to 1.958%.

U.S. 10-year yields held steady and 2-year treasury yields were one basis point lower to 0.491%.

Chinese shares fell 0.6%, dragged by financials and consumer firms even as the country’s cabinet pledged more support for the consumer services sector, while tech stocks drove Hong Kong’s Hang Seng index 0.6% higher.

South Korea’s KOSPI index gained 1.50%.

Overnight, Wall Street advanced to record highs helped by gains for energy shares and Tesla.

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The Dow Jones Industrial Average rose 0.26%, after eclipsing 36,000 points for the first time during intraday trading. The S&P 500 gained 0.18% while the Nasdaq Composite added 0.63%.

The yen was 0.31% weaker at 113.65 per dollar and the euro also edged 0.07% lower to $1.15995.

The Fed on Wednesday is expected to approve plans to scale back its $120 billion monthly bond-buying programme, while investors will also focus on commentary about interest rates and how sustained the recent surge in inflation is.

“The elephant in the room is headline and underlying inflation, which are higher than the (Fed) was anticipating,” said Standard Chartered’s head of G10 FX, Steve Englander.

“We expect the (Federal Open Market Committee) to state that the Fed is ready to act decisively if inflation is not moving towards target levels when tapering ends, but it still expects inflation to fall as supply constraints ease. We think investors will see this as advancing the likely timing of Fed rate hikes,” he said.

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In commodities markets, a further 4% drop in Chinese coal prices on Tuesday pushed them 50% below last month’s record high.

Oil prices were little changed as expectations of strong demand and a belief that a key producer group will not turn on the spigots too fast helped reverse initial losses caused by the release of fuel reserves by No. 1 world energy consumer China.

U.S. crude was 0.08% lower at $83.98 per barrel and Brent was trading at $84.76, up 0.03%.

Spot gold was 0.1% higher to $1,793.24 an ounce. Bitcoin was 0.7% higher at $61,365.2.

(Reporting by Paulina Duran in Sydney, Katanga Johnson on Washington and Herbert Lash in New York; Editing by Sam Holmes)

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Arnault-backed group launches second SPAC listing

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December 7, 2021

By Emma-Victoria Farr

LONDON (Reuters) – France’s richest man Bernard Arnault and former UniCredit head Jean Pierre Mustier will publicly list a second blank cheque vehicle in Amsterdam, raising 200 million euros ($226 million), the bookrunners on the deal said.

Earlier this year, the duo raised half a billion euros from their special purpose acquisition company (SPAC), Pegasus Acquisition Company Europe B.V., which is searching for takeover targets in the financial sector.

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On Tuesday, the same group of backers announced they would list a second vehicle with a similar focus, Pegasus Entrepreneurial Acquisition Company Europe, in Amsterdam.

SPACs are listed on a stock exchange by a group of entrepreneurs, who use the money raised to target a private company – allowing the target to get a stock market listing without the arduous process of launching a public listing.

Mustier is working with former Bank of America banker Diego De Giorgi and entrepreneur and investor Pierre Cuilleret in launching the 200 million euro listing.

Several SPACs have listed in Amsterdam, potentially boosting the Dutch financial capital’s credentials as a hub for fast-growing companies. London has only hosted one major SPAC in 2021, after updating its rules to make them easier.

Pegasus is backed by institutional sponsors Tikehau Capital and Financière Agache and by sponsors De Giorgi, Cuilleret and Mustier. Citi, Goldman Sachs and BNP Paribas are the bookrunners on the deal.

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($1 = 0.8860 euros)

(Reporting by Emma-Victoria Farr; editing by John O’Donnell and Louise Heavens)

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Bulls back in charge as Omicron worries wane

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December 7, 2021

By Marc Jones

LONDON (Reuters) – Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds again.

The FTSEurofirst 300 index was on track for its first back-to-back run of plus 1% gains since February while Asia saw record bounces from some of China’s biggest firms such as Alibaba and Baidu. [.SS][.EU]

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The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen,, which had lost 0.6% overnight, as the confidence-sensitive Australian dollar also found buyers. [FRX/]

Safe-harbour government bonds went the other way with yields – which move inverse to bond prices – up 2.5% on Germany’s benchmark 10-year Bund after falling to a three-month low on Monday. [GVD/EUR]

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top U.S. infectious disease official, Anthony Fauci, told CNN “it does not look like there’s a great degree of severity” so far.

“Good news relating to the severity of Omicron should be taken with a pinch of salt. Faster transmission could offset the benefits of milder symptoms,” researchers at ING said in a note. “More broadly, it is still early days, even if markets are starting to display Omicron fatigue.”

The gains also came after China’s central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.

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There was still uncertainty about its property sector as Evergrande teetered on the brink of default again but data showing much stronger import growth was “a positive sign on the strength of domestic demand”, RBC analyst Adam Cole said.

Elsewhere, Australia’s S&P/ASX200 rose 0.95%, while Japan’s Nikkei advanced 2.1% as risk-on sentiment pushed markets higher.

MSCI’s main Asia ex-Japan benchmark has lost about 5% so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks outperformed.

Shares in embattled developer Evergrande edged up 1.7% after hitting a record low on Monday as markets waited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.

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“While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week’s brutal sell-off ought to have been milder,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

“After all, early assessments of Omicron cases have been declared mild, spurring half-full relief.”

Also supporting the dollar in FX markets was the expectation the Federal Reserve will accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market.

Oil prices jumped another 2% to $74.60 a barrel, adding to a near 5% rebound the day before as concerns about the impact of Omicron on global fuel demand eased. [O/R]

Copper prices also ticked higher while gold was steady at $1,778.5 per ounce on expectations U.S. consumer price data due later this week will show inflation quickening.

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(Additional reporting by Anshuman Daga in Singapore; Editing by Nick Macfie)

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Exclusive: EU antitrust regulator seeks input on Microsoft’s $16 billion Nuance deal

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December 7, 2021

By Paresh Dave

(Reuters) – EU’s antitrust regulator is taking a deeper look into Microsoft Corp’s $16 billion deal for transcription technology company Nuance Communications Inc, asking customers and competitors to draw up a list of concerns, according to a questionnaire from last month seen by Reuters.

The previously unreported outreach is the most extensive by an antitrust authority since the companies announced the acquisition in April, according to a person familiar with the matter.

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Microsoft declined to comment, and Nuance did not respond to a request for comment.

After minimal review, the U.S. Department of Justice in June and the Australian Competition Commission in October said they would not contest the deal. The companies filed for approval from the European Commission’s competition bureau last month, and the regulator has until Dec. 21 to clear the deal or open a bigger investigation.

The companies had expected to close the deal by the end of this year, but said last month the timeline could slip to early next year.

The questionnaire asks whether Microsoft and Nuance are competitors and whether a tie-up could affect clients and rivals, including whether Microsoft could favor Nuance over competing services.

Nuance primarily sells transcription technology that is popular among doctors and call centers that want to automate note-talking. Analysts view the deal as bolstering Microsoft’s presence in the healthcare market, and bringing it new voice and medical data to train artificial intelligence offerings in health, speech and biometric security.

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Like other big tech companies, Microsoft for years has grown its business through acquisitions, such as in advertising and video gaming. But in the last decade, Microsoft has avoided the target that recently has dogged its competitors Alphabet Inc’s Google, Facebook Inc, Apple Inc and Amazon.com Inc, all of which are facing antitrust lawsuits and investigations on numerous issues.

Steven Weber, a University of California Berkeley professor studying the intersection of technology and health care, said possible concerns about the pending deal could include Microsoft forcing its Office suite on Nuance customers by bundling them together.

Nuance has said it serves 77% of U.S. hospitals.

A key to its success has been has ensuring in deals with customers that it could use their data to advance its voice recognition systems, according to former chief executive Paul Ricci and another former employee.

For instance, a Nuance contract with Augusta University Medical Center, obtained by Reuters this year through a public records request, reads, “Customer shall provide Nuance access to voice and text data…and grants Nuance a perpetual, royalty-free license to copy, use and analyze such data for speech recognition research.”

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Big cloud vendors such as Amazon and Microsoft typically do not have unfettered access to customers’ data for research and development. But the opportunity to acquire those relationships and data explains Microsoft’s interest in Nuance, the former employees said.

Other providers of health transcription technologies include 3M Co and Philips.

(Reporting by Paresh Dave; Editing by Kenneth Li and David Gregorio)

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