Futures point lower, WeWork files for bankruptcy — what’s moving markets

U.S. futures decline as traders try to assess the durability of a recent surge in Wall Street. WeWork declares bankruptcy due to a decrease in demand for office space after the COVID-19 pandemic, and UBS records its first quarterly loss in four years due to expenses related to its merger with competitor Credit Suisse.

This report was created by OXShare

1. Futures slip

On Tuesday, stock futures in the U.S. dropped, indicating a slight decrease from the recent increases, as investors considered the level of strength in the current market upswing.

At 04:58 ET (09:58 GMT), the contract had dropped 88 points or 0.3%, declined by 11 points or 0.3%, and fell by 32 points or 0.2%.

Both the primary stock market indicators on Wall Street concluded the previous trading day with gains, as both the benchmark and 30-stock indices achieved a six-day winning streak for the first time since summer. Additionally, the technology-focused index also experienced its seventh consecutive session of positive growth.

After a successful week, stock markets opened again on Monday with high hopes that the Federal Reserve will lower interest rates. Nonetheless, traders remain cautious and uncertain about the future of economic growth and inflation as they try to determine the direction of the U.S. central bank’s policies.

2. WeWork files for bankruptcy

WeWork, a popular flexible co-working space provider founded by Adam Neumann and supported by SoftBank, has recently submitted a bankruptcy filing in a New Jersey court. This decision comes as a result of challenges faced by the company due to a drop in office occupancy following the pandemic and the burden of costly leases..

On Monday, WeWork announced that it plans to restructure its operations in order to improve its financial performance and strengthen its capital structure. The company stated that it has the support of its stakeholders to significantly decrease its current debt. Previously, in August, WeWork expressed concerns about its ability to operate due to its considerable net long-term debt of $2.9 billion and long-term leases exceeding $13 billion.

The company stated that its operations in countries other than the United States and Canada, as well as its franchise partners globally, would not be affected by the bankruptcy proceedings.

WeWork, once considered a promising contender for the future of worldwide office spaces, experienced a lower occupancy rate than expected in the most recent quarter and faced negative cash operating profits in the first half of the year. As a result, its market value has plummeted to approximately $40 million, a significant drop from the previously estimated $47 billion valuation by private equity firms in 2019.

UBS has reported a loss for the quarter, primarily due to the expenses incurred from acquiring Credit Suisse.

UBS has disclosed a larger-than-expected loss of $785 million in the third quarter due to expenses associated with the ongoing merger of Credit Suisse.

Earlier this year, the Swiss government supervised the merger of two critically important banks, which was the first of its kind. The purpose of this merger was to avoid the collapse of Credit Suisse. As a result, Credit Suisse is now a subsidiary of UBS and is anticipated to be formally merged with its longstanding competitor in the upcoming year.

UBS CEO Sergio Ermotti emphasized that the integration of Credit Suisse into their operations is proceeding quickly. He also highlighted that their wealth management division experienced significant growth, with a substantial influx of new clients contributing to a net increase in funds of $22 billion.

On another day this week, ride-sharing company Uber Technologies and energy company Occidental Petroleum will also be announcing their most recent financial results.

4. Chinese imports grow

In October, China experienced an unexpected expansion, which has led to cautious optimism for a potential recovery in domestic demand. However, the decrease in exports was larger than anticipated, revealing potential risks for the world’s second-largest economy.

The country experienced a 3% growth in imports, which was higher than the anticipated 4.8% decline. This improvement is a positive indication that various support measures implemented by Beijing might be aiding in a possible recovery. Nevertheless, China continues to confront challenges from an ongoing real estate crisis and a relatively weak global economy.

On the other hand, there was a 6.4% decrease in Chinese figures for the month of October compared to the previous year. This was lower than the anticipated decline of 5.4% and was a sharper drop than the 6.2% decline seen in the previous month.

Data on business activity for October, which was released last week, indicated that domestic companies, especially in manufacturing, were being negatively impacted by a decline in international demand. This was due to foreign importers facing heightened pressure from higher interest rates and persistent inflation.

5. Saudi Aramco profit slumps

During the third quarter, Saudi Aramco (listed on TADAWUL) reported a 23% decrease in their income. This decline was a result of lower oil prices and volumes, although it was partly balanced out by a decrease in production royalties.

During the three-month period ending on September 30, net profit decreased to $32.6 billion, which was still higher than the estimated $31.8 billion according to forecasts compiled by the company. On Tuesday, the company’s shares remained unchanged..

Earnings for energy companies, such as Exxon Mobil and Chevron, have experienced annual declines, mirroring the results seen at other similar companies. The decrease in profits can be attributed to concerns surrounding the global economy, which have caused crude oil prices to decline and consequently impact the financial performance of these firms.

On Tuesday, the prices of oil declined due to worries about slow demand in the world’s leading crude oil importer, triggered by the combination of Chinese trade data showing mixed results.

At 04:58 Eastern Time, the futures were trading at a decrease of 2.0% at $79.20 per barrel, while the contract dropped by 1.9% to $83.53 per barrel. Both contracts had experienced significant losses in the previous week, as there was an increasing belief that the ongoing Israel-Hamas conflict would not have a negative impact on the oil supply in this region known for its abundance of oil.