Before the bell: nearly twice as many new jobs as expected 

More jobs in the US increase chances of a soft landing. In the auto sector, Europe resists like a devil out of a box. 

Friday’s job report surprised positively. The US added 245,500 new jobs in September, far more than the expected 150,000. The unemployment rate fell to 4.1% from 4.2%. Investors could have taken this negatively as well. But instead of being alarmed that the Federal Reserve would pause for interest rate cuts, investors opted for a positive reading. They see evidence that the economy will have a soft landing. That is, the slowdown in growth will not turn into a recession or crisis. Gains on Wall Street rose to around one percent. The 10-year government rate shot 12 basis points higher and is close to 4% again. In Europe, car manufacturers took hits all week, mostly after warnings of weaker results. On Friday, the European Union voted on new import tariffs on Chinese electric vehicles, which could require up to 35% on top of the existing 10% tariff. That was not met with joy by German car manufacturers Volkswagen, Mercedes and BMW, which manufacture and/or sell many cars in China. BYD would get off relatively cheaply with a 17% tariff. Still, these tariffs are not yet final. Until Nov. 5, the EU and China will continue to negotiate alternative solutions. 

Asia starts this morning in good spirits, Japan gains more than 2%, Hong Kong plus 1.2%. Mainland Chinese stock markets do not reopen until tomorrow, after a week’s vacation. The third quarter is barely over or on Friday JP Morgan will open the new earnings season. In Europe today, there are figures on retail sales and factory orders in Germany. 

Plant-based plastics cost investors big bucks 

Avantium says it is almost ready to produce plant-based plastic in a pilot plant. On Oct. 22, Dutch Queen Máxima will open the new plant. That is much later than expected and as much as seven and a half years after the IPO. The first factory was in Belgium. The stock market career began above 9 euros. On Friday, after climbing just under 10%, the stock closed at 2.07 euros. In terms of risk, this little company can be compared to a biotech company developing a drug, but having to go many years without significant revenue. High risk! Avantium flaunts huge sums about the size of the market: “more than 200 billion dollars!”. But don’t be fooled: that is disproportionate to Avantium’s revenues. Avantium’s plant-based plastic, like petroleum-based plastic, is not biodegradable. Avantium already had to raise a lot of additional capital and will probably have to do even more.

Chinese prey on French games 

French electronic games maker Ubisoft shot 30% higher on Friday. Press agency Bloomberg reported that Tencent, the Chinese social media giant and itself a producer of games, would like to acquire the company. Tencent already owns 10% of the shares and is the main shareholder along with the founders. Ubisoft lost three-quarters of its value last year as new games were unsuccessful and others were delayed. With a market capitalization of 1.8 billion euros, Ubisoft is nothing more than a tasty appetizer for Tencent. It will be interesting to see how France reacts to a possible Chinese takeover of a French company. Also waiting to see if Bloomberg’s report is confirmed. 

Did you know…

Jeff Chung, analyst at Citi, says that even with an additional 30% tariff, BYD would still make more profit per car in Europe than in China? Chung assumes BYD would only pass on half of the extra tax to the customer.

This article was translated from Dutch and was originally published on Spaarvarkens.be.