1. Stocks Rebound From Worst Rout in Three Months
U.S. stocks rebounded from their worst loss since October as investors found the reason for optimism in strong labour data and a solid set of corporate earnings. Volatility continued in pockets of the market where retail traders have taken on an outsize role, whipsawing stocks such as GameStop Corp., American Airlines Inc. and AMC Entertainment Holdings Inc. The Stoxx Europe 600 Index slipped. Also weighing on sentiment is an ongoing dispute between AstraZeneca Plc and the European Union over vaccine supplies.
The S&P 500 Index rose 0.7% as of early morning New York time.
The Stoxx Europe 600 Index dipped 0.2%.
The MSCI Asia Pacific Index fell 1.9%.
The MSCI Emerging Market Index fell 1.5%.
2. U.S. Economic Growth Moderated to 4% in Final Quarter of 2020
The U.S. economy downshifted in the final three months of 2020 after record third-quarter growth, as the pandemic battered the labour market and limited Americans’ ability and willingness to spend. GDP expanded at a 4% annualized rate in the fourth quarter. While the output of goods and services was far slower than the record 33.4% rate in the previous three months, the growth pace still exceeded the average of the decade-long expansion that ended early last year. The deceleration in overall growth largely reflected a sudden moderation in consumer spending after a third-quarter splurge. Personal consumption, the biggest part of the economy, increased at a 2.5% rate, trailing projections for a 3.1% rise.
3. Tesla Slumps After First Results as a Blue Chip Disappoint
Tesla reported a lower-than-expected profit and record revenue, mixed results that disappointed investors used to razzle-dazzle from the newly minted member of the S&P 500 Index. The electric-vehicle market leader reported an adjusted fourth-quarter profit of 80 cents a share Wednesday, falling short of analysts’ consensus for $1.03. The results marked a sixth straight profitable quarter but also the first time the company missed Wall Street’s estimate for earnings per share since July 2019. Tesla shares fell as much as 8.1% before the start of regular trading Thursday. The stock had soared 933% since the beginning of last year.
4. Hedge-Fund Titans Lose Billions to Reddit Traders Running Amok
In a matter of weeks, two hedge-fund legends — Steve Cohen and Dan Sundheim — have suffered bruising losses as amateur traders banded together to take on some of the world’s most sophisticated investors. Driven by the frenzied trading in GameStop and other stocks that hedge funds have bet against, the losses suffered recently would rank among the worst in some of these money managers’ storied careers. Cohen’s Point72 Asset Management declined 10% to 15% so far this month, while Sundheim’s D1 Capital Partners, one of last year’s top-performing funds, is down about 20%. Melvin Capital, Plotkin’s firm, had lost 30% through Friday.
5. German Inflation Jumps by Record After Tax Cut Phased Out
German inflation surged by a record in January after the government phased out a temporary sales-tax cut and introduced a new emissions-pricing scheme. Consumer prices rose 1.4% from the previous month, pushing the annual inflation rate to 1.6%, more than three times economists’ forecasts. Prices were also boosted by an increase in the minimum wage. Inflation slowed sharply last year amid the pandemic crisis and turned negative in August as a result of a reduction in value-added taxes to stimulate demand.
6. 20% of U.K. Workforce Furloughed with the Third Lockdown
Almost one in five of the U.K. workforce was on furlough leave as a third national lockdown to combat the spread of the coronavirus got under way. The report will raise concerns that removing government lifelines for jobs could wreak havoc on the economy following the worst slump in three centuries last year. Pulling the plug would threaten to decimate consumer spending, the engine of growth. The Office for National Statistics data shows 17% were reliant on Treasury wage support in early January, the highest proportion since July after the government ordered the public to stay home and retail and hospitality businesses were closed. The program pays as much as 80% of an employee’s wage if they’re kept on the payroll.
7. Tech Stocks Drive $123 Billion Gain at Norway Wealth Fund
Norway’s sovereign wealth fund returned $123 billion last year as soaring technology stocks added to market gains fattened by crisis support packages. The result is the fund’s second-highest in over two decades, and Chief Executive Officer Nicolai Tangen has already said it will be “very difficult to replicate.” The increase was driven by a more than 12% bounce in the $1.3 trillion fund’s equity portfolio. Bonds returned 7.5% while real estate lost 0.1%. Tech stocks alone delivered a 42% return, led by the fund’s holdings in Apple and Amazon.com. Tangen said the huge gain in tech stocks was “mainly due to the pandemic resulting in a massive increase in the demand for products for online working, education, trade and entertainment.”
8. China Trucking Startup Eyes $1 Billion U.S. IPO After Profit
Uber-like Chinese startup Full Truck Alliance is preparing for a U.S. initial public offering that could raise at least $1 billion as soon as this year, after eking out a slim 2020 profit thanks to a pandemic-era shipping surge. The startup backed by Tencent Holdings Ltd. is working with Morgan Stanley and China International Capital Corp. on its American debut. The talks are preliminary and details could still change but the company aims to raise $1 billion to $2 billion. China’s economy roared back to pre-pandemic growth rates in the fourth quarter after its industrial engines fired up to meet surging demand for exports. That boom is straining a domestic logistics network already taxed by a Covid 19 resurgence in e-commerce.
9. More Share Offerings Planned by Saudi Aramco: Crown Prince
Saudi Aramco plans to sell more shares to the public in the coming years, Saudi Crown Prince Mohammed bin Salman said at a conference Thursday. “There are going to be IPOs by Aramco in the following years,” Prince Mohammed said in Arabic at the Future Investment Initiative in Riyadh. The kingdom’s de facto ruler didn’t specify if the world’s biggest oil company would list more shares locally, sell them on a foreign exchange, or both. Aramco listed shares for the first time in Riyadh’s Tadawul exchange in late 2019 in the world’s largest initial public offering. The Saudi government still owns around 98% of the company, which has a market value of $1.9 trillion, second only to Apple.
10. Dubai Stocks Tumble Amid More Virus-Linked Curbs on Travel
Dubai’s stock index slumped as the city imposed further restrictions on air travel and hospitals amid another record surge in coronavirus cases. The Middle East business hub reduced the validity of PCR virus tests to three days from four “irrespective of the country they are coming from”. It is also now mandatory to have prior appointments for hospital visits. The United Arab Emirates, of which Dubai is the second-largest emirate, is battling a rise in infections as it opened up for air travel and eased movement restrictions.