Economy Updates: Talks on U.S. Stimulus and Brexit Bolsters Markets

Speaker Nancy Pelosi and Chuck Schumer, the Senate minority leader, speaking to reporters this week. The prospects for a pandemic relief package rose Tuesday when the White House re-engaged in the talks.
Credit…Anna Moneymaker for The New York Times
  • Stocks rose on Wednesday and futures pointed to a small gain on Wall Street when trading begins, as negotiations over U.S. fiscal stimulus and post-Brexit trade between Britain and the European Union inched forward.

  • The Stoxx Europe 600 index rose 0.5 percent, led higher by financial and energy companies. The FTSE 100 in Britain rose 0.5 percent, and the DAX in Germany gained 0.9 percent. In Asia, the Nikkei 225 in Japan climbed 1.3 percent, and the Hang Seng Index in Hong Kong closed up 0.8 percent.

  • On Tuesday, the White House proposed a $916 billion stimulus package, re-engaging with negotiations over pandemic economic relief. Lawmakers from both parties have said Congress needs to approve a spending package before this year’s session ends. The White House’s proposal includes direct payments to Americans, amounting to $600 per person.

  • “The stimulus news helped support equities overnight,” analysts at Royal Bank of Canada wrote in a note.

  • Potential progress on a trade deal between Britain and the European Union helped the British pound rise 0.6 percent against the euro and 0.7 percent against the U.S. dollar. Prime Minister Boris Johnson of Britain will meet with Ursula von der Leyen, the president of the European Commission, later on Wednesday in an effort to unblock an impasse in trade talks. Chancellor Angela Merkel of Germany said there was still a chance of a deal, and a British cabinet minister said there was room for compromise on a key sticking point: fishing rights.

  • On Tuesday, separate talks between the two sides resulted in an agreement on how border checks would work in Northern Ireland.

  • Gains in equity markets were muted. After all, both sets of talks have been mired in disagreement for weeks. Speaker Nancy Pelosi said parts of the White House spending proposal were unacceptable. In Britain, officials are cautioning against assumptions that a Brexit deal is certain to be found.

  • Energy prices climbed higher, with futures of West Texas Intermediate, the American crude benchmark, gaining 1 percent to $46.07 a barrel. Amid the willingness of investors to take on more risk, gold prices fell 0.7 percent, the first decline in six days.

  • Deutsche Bank shares rose 1.5 percent after the German bank raised its forecasts for revenue in its investment banking unit next year. The pandemic will also allow it to save more money from reduced office and travel costs, its chief executive, Christian Sewing, said.

Employees working on the assembly line at the Smart car factory in Hambach, France, in July.
Credit…Frederick Florin/Agence France-Presse — Getty Images

When Daimler made a surprise announcement in June that it would shutter a Smart car factory in France amid a plunge in orders because of the pandemic, workers prepared for a wave of layoffs.

But the factory is being saved by Ineos, a British chemicals firm that is expanding into the automotive business. Owned by the billionaire Jim Ratcliffe, Ineos finalized a deal with Daimler this week to take over the entire facility to make its new Grenadier, an off-road vehicle powered by a diesel engine.

The takeover will preserve 1,300 jobs in Hambach, a small town in eastern France where the Smart car factory had operated for more than two decades. The plant was opened in 1997 during a politically symbolic ceremony of cooperation between Germany and France by Chancellor Helmut Kohl of Germany and President Jacques Chirac of France, and was so vital to the region’s economy that the entire town was nicknamed Smartville.

That moniker will disappear with Ineos’s purchase of the factory, and the workers will begin preparing a portion of the site, which specialized in the environmentally friendly Smart ForTwo compact electric car, to make the Grenadier. The vehicle is a hulking four-wheel drive that Mr. Ratcliffe, an oil industry magnate with a penchant for investing in sports teams, had long sought to build inspired by the Land Rover.

But for a few more years, the plant will continue to make Smart cars, too. Under the deal, Daimler will subcontract to Ineos Smart production on a part of the factory line until 2024, as well as certain components of Mercedes-Benz. After that, Daimler will transfer Smart production to China, following an accord with Geely, the Chinese automaker that became Daimler’s biggest shareholder in 2018.

Daimler and Ineos did not disclose the financial terms of the transaction.

French workers at the Smart factory had taken pride in making an electric engine, but unions have said they are hoping that Ineos will eventually pivot the Grenadier to a less polluting engine.

For now, however, the most important issue is jobs. The French government this summer intervened in talks between Ineos and Daimler to demand that 1,500 jobs — at the site and with nearby suppliers — be preserved.

The deal is viewed as a victory for France. But it represents a loss of potential jobs in Britain and Portugal, where Mr. Ratcliffe had previously proposed building the Grenadier. Ineos has said that the Daimler factory proved more interesting because the vehicle could be built more quickly on an existing production line.

“This acquisition marks our biggest milestone yet in the development of the Grenadier,” Dirk Heilmann, chief executive of Ineos Automotive, said.

A DoorDash delivery worker in Manhattan. The company will begin trading on the New York Stock Exchange on Wednesday under the symbol “DASH.”
Credit…Sean Sirota for The New York Times

DoorDash, the country’s largest food delivery company, said on Tuesday it would price its shares at $102 each, raising roughly $3.4 billion in its initial public offering and valuing the company at around $39 billion.

DoorDash had already raised its price range amid demand from potential shareholders as it prepares to begin trading on the New York Stock Exchange on Wednesday under the symbol “DASH.” The company was last valued at $16 billion by private market investors.

DoorDash’s I.P.O. is part of a parade of valuable start-ups rushing to go public before the end of the year. The ebullient stock market, driven in part by low interest rates and strong growth for tech companies, has made 2020 the busiest year for I.P.O.s since 1999.

The home rental start-up Airbnb is expected to price its shares on Wednesday and begin trading on Thursday. It also raised its proposed price range after indications of strong demand from investors.

Both DoorDash and Airbnb plan to use a new type of “hybrid auction” system to list their shares to prevent a share price “pop” on their first day of trading.

While the pandemic has ravaged parts of the economy, it has been a boon to many tech companies. People stuck at home have relied more on delivery services. DoorDash’s revenue more than tripled to $1.92 billion in the first nine months of the year compared to $587 million in the same period last year, though it said that growth was likely to slow in the future. The company is unprofitable.

Based in San Francisco, DoorDash has more than 18 million customers and one million drivers. It has recently expanded beyond food delivery into groceries, pet food and convenience store items.

Rolls of steel at a manufacturing plant in Baytown Tex. Britain will impose tariffs on American aluminum and steel in retaliation for President Trump’s decision to place levies on metals from Europe and elsewhere.
Credit…David J. Phillip/Associated Press

Britain said Tuesday that it would impose retaliatory tariffs on American aluminum and steel imports when it separated from the European Union on Jan. 1, but that it had decided to forgo any tariffs against the United States as part of a long-running trade dispute over aircraft subsidies.

The decision comes as Britain prepares to take over control of its own trade policy as it departs the European Union. The moves are an attempt to calm trade tensions with the United States and pave the way for their future trading relations, the British government said.

“Ultimately, we want to de-escalate the conflict and come to a negotiated settlement so we can deepen our trading relationship with the U.S. and draw a line under all this,” Liz Truss, Britain’s international trade secretary, said in a statement. “We are protecting our steel industry against illegal and unfair tariffs — and will continue to do so — but are also showing the U.S. we are serious about ending a dispute that benefits neither country.”

The tariffs on American aluminum and steel would be imposed in retaliation for President Trump’s decision in 2018 to place levies on metals from Europe and elsewhere. The European Union has already imposed retaliatory tariffs on American goods like steel bars, whiskey and orange juice, but with Britain now separating from the bloc, it will impose its own tariffs.

The United States and Europe have also placed tariffs on each other in response to twin trade cases at the World Trade Organization over airplane subsidies. One trade case authorized the United States to tax European goods to recoup losses sustained from subsidies the European Union provided to Airbus, while another case allowed Europe to put tariffs on the United States in response to subsidies given to Boeing.

Both sides have said they are interested in negotiating a settlement.

In its announcement, the British government said it would begin a process to consult with British businesses and ensure its tariffs on American metals were tailored to the British economy.

It said that it was suspending the Boeing tariffs “in an effort to bring the U.S. toward a reasonable settlement and show the U.K. is serious about reaching a negotiated outcome,” but that it reserved the right to impose tariffs again if such a compromise could not be reached.

The Senate on Tuesday confirmed a Trump administration lawyer to the Federal Communications Commission, a move that critics say could leave the agency deadlocked early next year as it confronts the digital divide widened by the pandemic.

Lawmakers voted 49-46 to approve the nomination of Nathan Simington, a Commerce Department lawyer who previously worked for the private sector. His confirmation to a five-year term makes it likely that the agency will be evenly divided by party during the first days of President-elect Joseph R. Biden Jr.’s administration.

The agency’s chairman, Ajit Pai, a Republican, has said he will leave on Inauguration Day. That would leave the balance of the commission at two Republicans and two Democrats, making it difficult for Democrats to move forward with their agenda until Mr. Biden’s nominee is confirmed.

Senator Richard Blumenthal, a Connecticut Democrat, said that the confirmation would leave an agency “that is gridlocked and dysfunctional” as it votes on proposals and would be a boon to major media and telecommunication companies.

Mr. Simington’s nomination has also been contentious because this year he worked on a petition by the Commerce Department that asked the F.C.C. to limit legal protections for social media platforms. Critics of Mr. Simington’s nomination worry that it is part of Mr. Trump’s larger campaign against the law, known as Section 230, set off by frustration with how social media platforms handle his posts.

A model of a flying taxi co-developed by Uber on display in January in Las Vegas. Uber announced Tuesday that it was transferring its flying car unit to a start-up, Joby Aviation.  
Credit…Etienne Laurent/EPA, via Shutterstock

Uber is handing its flying car project, Uber Elevate, to the air taxi start-up Joby Aviation, the two companies said on Tuesday. Uber will also invest $75 million in Joby’s effort to build a flying taxi, while agreeing to become partners with the start-up when the flying car reaches the market, reports Cade Metz for The New York Times.

Uber announced the move the day after it said it would offload its autonomous car project to another start-up.

“I know there are questions about whether Uber has any ‘big, bold’ bets left,” the Uber chief executive, Dara Khosrowshahi, said in an email to company employees that was viewed by The Times. “I understand that question, but I think it misses the big, bold bets right in front of us: to become the undisputed global leaders in both Mobility and Delivery.”

The company declined to comment further.

With the new investment from Uber, Joby Aviation, based in Santa Cruz, Calif., has raised more than $820 million. The company is trying to build an air taxi service that provides an alternative to overly crowded roadways in large urban areas. It hopes to start a service in at least one city by 2023. But first, government regulators must approve the use of its aircraft, which is a cross between a plane and helicopter that takes off vertically.

  • FireEye, a top cybersecurity firm, revealed on Tuesday that its systems were pierced by what it called “a nation with top-tier offensive capabilities.” The company said hackers used “novel techniques” to make off with its own toolkit, which could be useful in mounting new attacks around the world. The $3.5 billion company, which partly makes a living by identifying the culprits in some of the world’s boldest breaches — its clients have included Sony and Equifax — declined to say explicitly who was responsible. But its description, and the fact that the F.B.I. has turned the case over to its Russia specialists, left little doubt who the lead suspects were.

  • Elon Musk said on Tuesday that he had moved to be near a new factory that Tesla is building outside Austin, Texas. Speaking at a conference hosted by The Wall Street Journal, he said California has become less accommodating to successful entrepreneurs and start-ups, comparing the state to a sports team that takes winning for granted. “They do tend to get a little complacent, a little entitled, and then they don’t win the championship anymore,” he said.

  • The Federal Trade Commission is suing to block Procter & Gamble’s proposed acquisition of Billie, a direct-to-consumer company that sells women’s razors and body care products. The F.T.C., whose responsibilities include enforcing antitrust law, said on Tuesday that the deal would allow Procter & Gamble, the leading supplier of wet-shave razors, to eliminate competition, which would drive up prices for women’s shaving products.