BANGKOK (AP) — World shares were mixed on Monday after U.S. stocks capped a mostly dismal week with a broad rally that still left the benchmark S&P 500 down 2% for the week.
One shadow over markets was cleared when U.S. lawmakers passed a budget deal in the early hours of Saturday, narrowly averting a pre-Christmas government shutdown.
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Trader John Romolo works on the floor of the New York Stock Exchange, Wednesday, Dec. 18, 2024. (AP Photo/Richard Drew)
A person looks at an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
People stand near an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
Germany's DAX fell 0.3% to 19,830.42. The CAC 40 in Paris slid 0.3% to 7,251.05, while Britain's FTSE shed 0.2% to 8,068.17.
The future for the S&P 500 gained 0.3% while that for the Dow Jones Industrial Average was up 0.1%.
In Asian trading, Tokyo's Nikkei 225 index jumped 1.2% to 39,161.34, while the dollar was trading at 156.50 Japanese yen, up from 156.48 yen.
Japanese automakers Honda Motor Co. and Nissan Motor Corp. announced Monday they had agreed to work toward a possible merger that might also include Nissan's smaller alliance partner Mitsubishi Motors Corp. Honda's shares, which fell after news of the talks on a deal surfaced last week, jumped 3.8%. Nissan's, which had soared, rose1.6%.
Elsewhere in Asia, Hong Kong's Hang Seng gained 0.8% to 19,883.13, while the Shanghai Composite index slipped 0.5% to 3,351.26.
Australia's S&P/ASX 500 jumped 1.7% to 8,201.60.
South Korea's Kospi added 1.6% to 2,442.01 and Taiwan's Taiex jumped 2.6%, with TSMC, the world's biggest computer chip maker, gaining 4.4%. Hon Hai Precision Industry, which reportedly had been maneuvering to buy a big stake in Nissan, jumped 3.8%.
In Bangkok, the SET advanced 1.4%.
On Friday, the S&P 500 rallied 1.1% and the Dow jumped 1.2%. The Nasdaq composite gained 1%.
Roughly nine of every 10 stocks in the S&P 500 rose.
Superstar stock Nvidia and other Big Tech companies led the market, which got a lift after a report said a measure of inflation the Federal Reserve likes to use was slightly lower last month than economists expected. It’s an encouraging signal following recent reports suggesting inflation may be tough to get all the way down to the Fed’s 2% goal from its peak above 9%.
The threat of higher inflation was one of the reasons Fed Chair Jerome Powell gave last week when the central bank hinted it may deliver fewer cuts to interest rates next year than it earlier expected.
That warning sent a shock through the stock market, which had run to 57 all-time highs this year amid the widespread assumption the Fed would deliver a string of cuts to rates into 2025. Now traders are largely betting on one, two or perhaps even zero next year, according to data from CME Group.
Critics had been warning stock prices were vulnerable to drops after running so high and that the market likely needed everything to go correctly to justify its stellar gains for the year. Besides the diminished hopes for several rate cuts next year, Wall Street got another reminder late Thursday that everything may not go as expected.
The U.S. stock market has lost a chunk of its gain since Trump’s win on Election Day, which raised hopes for faster economic growth and more lax regulations that would boost corporate profits. Worries have risen that Trump’s preference for tariffs and other policies could lead to higher inflation, a bigger U.S. government debt and difficulties for global trade.
In other dealings early Monday, U.S. benchmark crude oil picked up 24 cents to $69.70 per barrel.
Brent crude, the international standard, was up 24 cents at $73.18.
The euro fell to $1.0415 from $1.0433.
Trader John Romolo works on the floor of the New York Stock Exchange, Wednesday, Dec. 18, 2024. (AP Photo/Richard Drew)
A person looks at an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
People stand near an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Dec. 23, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
TOKYO (AP) — Japanese automakers Honda and Nissan have announced plans to work toward a merger, forming world’s third-largest automaker by sales as the industry undergoes dramatic changes in its transition away from fossil fuels.
The two companies said they had signed a memorandum of understanding on Monday and that smaller Nissan alliance member Mitsubishi Motors also had agreed to join the talks on integrating their businesses.
Honda's president, Toshihiro Mibe, said Honda and Nissan will pursue unifying their operations under a joint holding company. Honda will initially lead the new management, retaining the principles and brands of each company. The aim is to have a formal merger agreement by June and to complete the deal by August 2026, he said.
No dollar value was given and the formal talks are just starting, Mibe said.
There are “points that need to be studied and discussed,” he said. “Frankly speaking, the possibility of this not being implemented is not zero.”
Automakers in Japan have lagged behind their big rivals in electric vehicles and are trying to cut costs and make up for lost time.
News of a possible merger surfaced earlier this month, with unconfirmed reports saying that the talks on closer collaboration partly were driven by aspirations of Taiwan iPhone maker Foxconn to tie up with Nissan, which has an alliance with Renault SA of France and Mitsubishi.
A merger could result in a behemoth worth more than $50 billion based on the market capitalization of all three automakers. Together, Honda and the Nissan alliance with Renault SA of France and smaller automaker Mitsubishi Motors Corp. would gain scale to compete with Toyota Motor Corp. and with Germany’s Volkswagen AG. Toyota has technology partnerships with Japan’s Mazda Motor Corp. and Subaru Corp.
Even after a merger Toyota, which rolled out 11.5 million vehicles in 2023, would remain the leading Japanese automaker. If they join, the three smaller companies would make about 8 million vehicles. In 2023, Honda made 4 million and Nissan produced 3.4 million. Mitsubishi Motors made just over 1 million.
Nissan, Honda and Mitsubishi announced in August that they would share components for electric vehicles like batteries and jointly research software for autonomous driving to adapt better to dramatic changes centered around electrification, following a preliminary agreement between Nissan and Honda set in March.
Honda, Japan's second-largest automaker, is widely viewed as the only likely Japanese partner able to effect a rescue of Nissan, which has struggled following a scandal that began with the arrest of its former chairman Carlos Ghosn in late 2018 on charges of fraud and misuse of company assets, allegations that he denies. He eventually was released on bail and fled to Lebanon.
Speaking Monday to reporters in Tokyo via a video link, Ghosn derided the planned merger as a “desperate move.”
From Nissan, Honda could get truck-based body-on-frame large SUVs such as the Armada and Infiniti QX80 that Honda doesn’t have, with large towing capacities and good off-road performance, Sam Fiorani, vice president of AutoForecast Solutions, told The Associated Press.
Nissan also has years of experience building batteries and electric vehicles, and gas-electric hybird powertrains that could help Honda in developing its own EVs and next generation of hybrids, he said.
But the company said in November that it was slashing 9,000 jobs, or about 6% of its global work force, and reducing its global production capacity by 20% after reporting a quarterly loss of 9.3 billion yen ($61 million).
It recently reshuffled its management and Makoto Uchida, its chief executive, took a 50% pay cut to take responsibility for the financial woes, saying Nissan needed to become more efficient and respond better to market tastes, rising costs and other global changes.
“We anticipate that if this integration comes to fruition, we will be able to deliver even greater value to a wider customer base,” Uchida said.
Fitch Ratings recently downgraded Nissan’s credit outlook to “negative,” citing worsening profitability, partly due to price cuts in the North American market. But it noted that it has a strong financial structure and solid cash reserves that amounted to 1.44 trillion yen ($9.4 billion).
Nissan’s share price also has fallen to the point where it is considered something of a bargain.
On Monday, its Tokyo-traded shares gained 1.6%. They jumped more than 20% after news of the possible merger broke last week.
Honda's shares surged 3.8%. Honda's net profit slipped nearly 20% in the first half of the April-March fiscal year from a year earlier, as sales suffered in China.
The merger reflects an industry-wide trend toward consolidation.
At a routine briefing Monday, Cabinet Secretary Yoshimasa Hayashi said he would not comment on details of the automakers' plans, but said Japanese companies need to stay competitive in the fast changing market.
“As the business environment surrounding the automobile industry largely changes, with competitiveness in storage batteries and software is increasingly important, we expect measures needed to survive international competition will be taken," Hayashi said.
Kurtenbach reported from Bangkok.
Nissan Chief Executive Makoto Uchida, left, and Honda Chief Executive Toshihiro Mibe, center, and Takao Kato CEO of Mitsubishi Motors, right, arrive to attend a joint news conference Monday, Dec. 23, 2024, in Tokyo, Japan. (AP Photo/Eugene Hoshiko)
FILE - This is the Honda logo on a Honda automobile on display at the Pittsburgh International Auto Show in Pittsburgh, Feb. 15, 2024. (AP Photo/Gene J. Puskar, File)
Nissan Chief Executive Makoto Uchida, left, and Honda Chief Executive Toshihiro Mibe, center, and Takao Kato CEO of Mitsubishi Motors, right, arrive to attend a joint news conference Monday, Dec. 23, 2024, in Tokyo, Japan. (AP Photo/Eugene Hoshiko)
FILE - This combination of photos shows the logo of Nissan, left, and Honda, right, seen at the Pittsburgh International Auto Show in Pittsburgh, Feb. 15, 2024. (AP Photo/Gene J. Puskar, File)
Nissan Chief Executive Makoto Uchida, left, and Honda Chief Executive Toshihiro Mibe, center, and Takao Kato CEO of Mitsubishi Motors, right, attend a joint news conference Monday, Dec. 23, 2024, in Tokyo, Japan. (AP Photo/Eugene Hoshiko)
FILE - Nissan Chief Executive Makoto Uchida, left, and Honda President Toshihiro Mibe attend a joint news conference in Tokyo, Friday, March 15, 2024. (Kyodo News via AP, File)
FILE - A Nissan logo is displayed on a Nissan Pathfinder SUV at the Pittsburgh International Auto Show in Pittsburgh, Feb. 15, 2024. (AP Photo/Gene J. Puskar, File)
