Here are some of the biggest stories that investors need to know this Monday morning before they start their day.
1. Futures fell after record close last week
After all three major benchmarks reached record closes on Friday, indexes are in the red this morning. Futures tied to the Dow Jones Industrial Average (NYSEARCA: DIA) fell 188 points, while the S&P 500 (NYSEARCA: VOO) and tech-heavy Nasdaq (NASDAQ: QQQ) also dipped in early morning trading. The cause? Ongoing uncertainty around the economic reopening and rising COVID-19 cases have spooked investors, alongside worries of heightened volatility during the holiday week when fund managers will be doing their quarter-end rebalancing among pension funds and other big portfolios. In addition, the recent rise in bond yields could force money managers to make big adjustments in their portfolios.
2. Is the Suez Canal still blocked?
Yes, unfortunately for global trade, the vital canal is still holding up ships. But, after almost a week stuck sideways across the Suez Canal, the container ship named ‘Ever Given’ was partially refloated today. However, there is still no immediate clarity on when normal traffic in the canal will resume.
The ship’s damaged hull is now stable after the push to free it and once the vessel has been cleared, authorities will start to allow traffic to resume through the canal. Since the ship got stuck, about 12% of world trade has been disrupted. Currently, 450 ships are stuck or enroute to the canal. Osama Rabie, chairman of the Suez Canal Authority, said on Saturday that the Canal’s revenues were taking a $15 million hit for each day of the blockage.
3. Tencent Music is buying back its shares
Today, Tencent Music (NYSE: TME) announced its plans to buy back up to $1 billion worth of its own shares. The streaming service company, which is the online music arm of Chinese tech giant Tencent, lost about a third of its value last week amid a sell-off in Chinese technology stocks. The selling of shares occurred after the U.S. Securities and Exchange Commission (SEC) adopted a new law that could result in the delisting of foreign firms that don’t abide by new auditing rules. However, further pressure on Tencent’s stock price came after Archegos Capital Management was forced to liquidate its positions in a number of big Chinese tech names. Archegos sold shares after a stock offering from ViacomCBS fell apart which resulted in massive selling and a margin call which forced the capital management firm out of its positions.
According to a statement made by the company, Tencent Music will repurchase Class A ordinary shares in the form of American Depositary shares. The entertainment company will start buying today for the next 12 months.
4. NIO stock is expected to fall
Last Friday, NIO (NYSE: NIO) announced that it is temporarily suspending vehicle production activity in its manufacturing plant in Hefei, China for five working days starting today due to semiconductor shortages. In addition to the manufacturing suspension, the Tesla (NASDAQ: TSLA) rival said that first-quarter EV sales will fall short. The automaker now says that it will only deliver 19,500 vehicles instead of the previously released outlook of 20,000 to 20,500. NIO shares fell over 4% upon the announcement and are expected to fall again this week.
Chinese and U.S. EV stocks are set to report March and Q1 auto sales next week. But, coupled with semiconductor shortages, NIO is also facing heightened competition in the electric vehicle market in China which is putting the stock under pressure. Last week, Geely, one of the biggest auto manufacturers in China, launched a new luxury EV brand called Zeekr.
5. Cazoo is going public via SPAC deal in the U.S.
UK-based second-hand car dealer, Cazoo, is going public for $7 billion through a merger with investor Daniel Och’s special purpose acquisition company (SPAC). Cazoo wants to fill the gap in the automotive industry as digital car sales still only account for a small part of the overall market globally but are on the rise thanks to a pandemic-fueled boost in e-commerce. The company expects sales to tip $1 billion in 2021, quadrupling year-over-year, and Cazoo believes Europe’s used car sales market is worth $700 billion. With just 2% of those sales taking place online, this SPAC is one to watch for investors.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.