Stock Market News Today 2018/08/14
Europe Open: Germany GDP, UK unemployment
Tesla founder Elon Musk declared on Monday that Saudi Arabia’s sovereign wealth fund had expressed repeated interest in funding a deal to take the electric car company private.
Tesla founder Elon Musk declared on Monday that Saudi Arabia’s sovereign wealth fund had expressed repeated interest in funding a deal to take the electric car company private.
In a 1,108-word blog post, the entrepreneur sought to justify his announcement on Twitter last week that he had “funding secured” for such a deal. The latest clarification came amid reports that the US Securities and Exchange Commission was investigating whether Mr Musk’s original tweet was accurate. There have also been expectations of legal action from investors who bought or sold shares after the tweet.
The blog post was the most comprehensive explanation so far by Mr Musk for his comments last Tuesday, which came less than an hour after the Financial Times revealed that Saudi Arabia’s Public Investment Fund had quietly built a 3 to 5 per Cent stake in Tesla.
Asian markets found their footing on Tuesday a day after concerns over Turkey’s sliding currency shook global markets. Japan’s Topix gained 1.4 per cent while the S&P/ASX 200 rose 0.7 per cent in Sydney. Hong Kong’s Hang Seng fell 1 per cent as index heavyweight Tencent shed 3.7 per cent, dropping for a second day after regulators halted the sale of video game Monster Hunter: World just days after its release.
The Turkish lira was more steady on Tuesday after falling to a record low on Monday, despite the central bank’s efforts to reassure investors. The currency was 0.4 per cent weaker at TL6.8893 having touched a record low of TL7.24 on Monday.
Futures tip both the FTSE 100 and S&P 500 to open 0.2 per cent higher.
The corporate calendar for Tuesday includes Antofagasta, Esure, Mears Group and RWE. The economic calendar has something for everyone (all times London):
06.30: France unemployment
07.00: Germany Q2 gross domestic product
07.45: France consumer price index
08.00: Spain consumer price index (final)
09.30: UK unemployment
10.00: Germany Zew economic sentiment survey
10.00: eurozone Q2 gross domestic product
10.00: eurozone industrial production
Bitcoin falls below $6,000 to lowest since June
Bitcoin slipped below $6,000 on Tuesday to its lowest in six weeks in a move echoed by other major cryptocurrencies.
Bitcoin fell as much as 6 per cent to a low of $5,880, its weakest since June 29, according to Reuters data based on the Bitstamp exchange. Ethereum, the second-largest cryptocurrency by market capitalisation tumbled 16.9 per cent to $266.32, according to coinmarketcap.com.
Tuesday’s fall brings bitcoin to within striking distance of its 2018 low of $5,774.72, which it hit on June 29. The digital currency traded at a high of $17,234.99 in January.
The cryptocurrency was dealt a blow last week after the US Securities and Exchange Commission announced that it would delay its decision on a bitcoin ETF.
Tencent subsidiary slides after $2.3bn film deal
China Literature shares tumbled on Tuesday after the Tencent-backed company announced it was buying film and television production company New Classics Media, for Rmb15.5bn ($2.3bn), in a deal that will expand its reach into the entertainment industry.
Shares in the Hong Kong-listed Tencent ebook subsidiary fell 14.6 cent in early trading, on track for their biggest one-day drop since its IPO in November and dragging the Stock toward its lowest since debut.
The company’s stock fell to HK$57.20, just ahead of its HK$55 IPO price but almost half the HK$110 mark it hit on its first day of trading.
The deal will see Chinese internet giant Tencent – which still controls China Literature with a 52.6 per cent holding – expand its interest in the television and film content industry via New Classics Media, having already bought a 27.64 per cent stake in the company in March.
New Classics Media in 2016 boasted 13 of the top 20 box office grossing films in China, 15 of the top 20 most viewed television series and 14 of the top 20 most viewed web series, China Literature said in a stock exchange filing.
Integration with New Classics Media will allow to China Literature to “adapt more high quality literary content into popular television series, web series and films leveraging [its] proven track record of script development and production across multiple literary genres”, the company said.
Shares in Tencent were down 2.4 per cent.
Asia equities mixed as China, Hong Kong stocks drop
Equities were mixed in Asia Pacific trading as stocks Hong Kong and China took a fall while those elsewhere in the region notched respectable gains a day after concerns over Turkey’s currency crisis helped send global markets lower.
Sydney’s S&P/ASX 200 index climbed 0.8 per cent, bolstered by gains of 1.1 per cent from mining stocks and a 0.8 per cent rise by financials. National Australia Bank rose 1.3 per cent despite a slight fall in third-quarter profits due to slower revenue growth amid an ongoing probe into the sector by regulators.
In Tokyo the Topix was up 0.6 with gains across the board as telecoms stocks climbed 1.1 per cent and the technology segment gained 0.9 per cent.
But Hong Kong’s Hand Seng fell 0.7 per cent as financials dropped 0.3 per cent and technology stocks shed 2.5 per cent, while the CSI 300 index of major Shanghai and Shenzhen-listed stocks fell 0.5 per cent. Tencent-owned China Literature fell as much 14.5 per cent after announcing it would buy a digital production company for more than $2bn.
On Wall Street on Monday an opening rally for the S&P 500 equity index — after it suffered its biggest one-day fall in a month on Friday — turned into a moderate loss by the close.
Lira hovers near record low in Asia trading
The Turkish lira was hovering near its previous close during Asia trading on Tuesday and most major currencies in the region were little moved after a tumultuous start to the week.
The lira was 0.4 per cent weaker at TL6.884 after falling 7 per cent during Monday’s session despite central bank efforts to shore up the financial system, as President Recep Tayyip Erdogan lashed out at economic “traitors” and accused the US of stabbing the country “in the back”.
Japan’s yen was flat at ¥110.70 per dollar while the Australian dollar rose 0.1 per cent against its US counterpart to $0.7273. The dollar index tracking the greenback against a basket of peers was off 0.1 per cent at 96.306.
Sovereign bond markets, meanwhile, were similarly quiet as yields, which move inversely to prices, on 10-year US Treasuries stood unmoved at 2.88 per cent and those on the equivalent Japanese note rose 1 basis point to 0.107 per cent.
Trump’s tariffs prove tougher obstacle than China expected
Beijing leaders weigh likely effects of retaliation on domestic economy, Xi Jinping’s administration has sought to stabilise China’s domestic economy, currency and stock markets, while also appealing to people’s patriotism.
When China’s top leaders gathered earlier this month at a seaside resort near Beijing for their annual summer retreat, US President Donald Trump loomed large over their deliberations.
The Trump administration had days earlier warned that they were considering taxing Chinese exports worth $200bn at 25 per cent — compared with a previously announced tariff of 10 per cent. In July the world’s two largest economies had formally started trade hostilities, when they slapped punitive duties on $34bn of each other’s exports.
Chinese officials hoped their unwanted trade war with the US would pause there, at least for the summer. “Everyone has been surprised by Trump,” said one Chinese economist who is close to Beijing policymakers. “Most Chinese officials assumed that Trump was just trying to push the boundary but would eventually back off.”
Mr Trump has instead pressed ahead with his efforts to turn up the heat on Chinese President Xi Jinping. The US is set to impose tariffs on a further $16bn of Chinese exports, which will be matched by Beijing.
In the face of this unprecedented economic and geopolitical challenge, Mr Xi’s administration has sought to stabilise China’s domestic economy, currency and stock markets, while also appealing to people’s patriotism.
