1. Stocks Climb Amid Earnings as Trading Frenzy Eases
Stocks rose in a busy day for corporate earnings as the retail-trading frenzy that fueled a surge in heavily shorted shares continued to ease. The S&P 500 posted back-to-back gains ahead of results from giants Amazon.com and Google’s parent Alphabet, United Parcel Service climbed as the courier reported a jump in profit, while Exxon Mobil advanced on pledge to safeguard dividends following its first annual loss in at least 40 years.
The S&P 500 rose 0.9% as of 9:30 a.m. New York time.
The Stoxx Europe 600 Index climbed 1%.
The MSCI Asia Pacific Index increased 1.2%.
2. Reddit Trades Crumble as GameStop, AMC and Silver Plunge
The wild run-up of trades popular with Reddit crowds is starting to come crashing down. GameStop Corp. sank 47% to $118.84 as of 9:42 a.m. in New York. It’s now down 65% from its record close of $347.51 on Wednesday. AMC Entertainment Holdings slid 39% and Express lost 26%. Silver tumbled more than 5% after surging to an eight-year high. “The short squeeze momentum met its inevitable end,” said Mark Taylor, a sales trader at Mirabaud Securities. “It seems reasonably clear that as the cheerleading and rage against the machine dies down, the man on the street is left holding the bag again.”
3. U.K., Italy Lead Moody’s Concerns in Europe Over Next 5 Years
Britain and Italy top the list of European concerns for Moody’s Investors Service in the coming half-decade as they grapple with the fallout from the coronavirus pandemic and economic headwinds. Moody’s, which downgraded the U.K. to Aa3 in October, sees the Brexit trade deal reached late in 2020 as little different from a no-deal scenario over the medium-term. For Italy — ranked just one notch above junk status — questions abound over whether the government will make the most of its “once-in-a-generation” opportunity in spending European Union recovery funds. These factors are difficult to disentangle from the pandemic, with both nations locking down their economies as they grapple with some of the highest death tolls from the coronavirus. That’s led government borrowing to soar amid the steepest recessions in decades.
4. Tin Faces Historic Squeeze as Electronics Boom Cut Stockpiles
The London tin market is facing the biggest supply squeeze in at least three decades as dwindling inventories, robust industrial demand and rising investor interest boost spot prices. Official London Metal Exchange cash prices on Monday settled at the biggest premium to three-month futures since at least 1990. The spread — which was at a discount as recently as early December — has flared out dramatically in recent weeks, in a condition known as backwardation that’s a hallmark feature of a supply squeeze. Tin prices have climbed to a six-year high as a global scramble for high-end computer chips boosts demand for the soldering metal, while a military coup in key producer Myanmar has also stoked fears about possible supply disruptions.
5. Reliance’s $3.4 Billion Deal With Future Group Temporarily Halted
An Indian court has temporarily restrained Future Group from selling its retail assets to Reliance Industries, an interim win for Amazon.com. which is opposing the deal with an eye to dominate a large and vital consumer market. The Delhi High Court on Tuesday ordered the Future Group and Indian authorities to ensure the status of the indebted Indian retailer’s assets are maintained as is, putting on hold any further steps toward completing the $3.4 billion sale to billionaire Mukesh Ambani’s Reliance conglomerate. Amazon alleges that the deal violates its own contract with Future Group and had filed an urgent petition last week seeking the suspension. The order can be challenged in a higher court.
6. Tesla Recalls 135,000 Cars After U.S. Finds Screens to Be Faulty
Tesla will recall about 135,000 Model S and X vehicles in the U.S. after a months-long investigation by the nation’s auto-safety regulator concluded their touch screens are defective.
Tesla equipped certain Model S sedans from 2012 to 2018 and Model X crossovers from 2016 to 2018 with Nvidia processors that are prone to wearing out, Tesla said in a recall report. The flaw can lead to the loss of rear-view camera display and other issues. Earlier this month, the National Highway Traffic Safety Administration sent a letter to Tesla saying it had determined the failures constituted a defect. While the company disagrees with the finding, it will voluntarily initiate a recall and replace memory devices within the processors.
7. Jack Ma’s Ant Posted $2.3 Billion Profit Before Halt of IPO
Billionaire Jack Ma’s Ant Group delivered about 14.5 billion yuan ($2.3 billion) in profit in the quarter right before Chinese regulators brought down the hammer on the financial technology giant’s record public offering and ordered it to scale back its sprawling business. The earnings offer a taste of what investors will be missing out on after regulators abruptly halted the firm’s $35 billion IPO in November. Growth is set to be curtailed in the future as regulators have issued a battery of proposals that threaten to curb its dominance in online payments and scale back its expansion into consumer lending and wealth management.
8. Richard Branson Richer Than Ever From Reddit Traders
Richard Branson is expected to fly into space this year, but his fortune has already hit the stratosphere. The billionaire has added about $2 billion to his wealth since the start of January as shares in Virgin Galactic Holdings. have surged to a peak after a succession of positive events. Virgin Galactic was drawn into the Reddit-fueled frenzy of retail investors pouring into shorted stocks. And finally, the news on Monday that the venture would resume test flights of its rocket-powered spaceplane. The stock has already more than doubled this year.
9. Dubai Closes Bars, Limits Activities After Virus Cases Spike
Dubai announced Monday it would close all bars and pubs for the entire month of February and limit other activities after a spike in coronavirus cases followed New Year’s Eve celebrations that drew visitors from around the world. The sheikhdom also ordered restaurants and cafes to close by 1 a.m., as well as instituted crowd limits on cinemas, hotels, malls and other destinations. The decision comes as coronavirus testing facilities and hospitals came under pressure from 17 straight days of record reported daily coronavirus figures across the wider United Arab Emirates.
10. Saudi Wealth Fund May Double Loan for New Deals to $15 Billion
Saudi Arabia’s sovereign wealth fund may raise a loan that’s more than double what it sought late last year for new investments following strong demand from lenders. The Public Investment Fund is set to increase the loan size to as much as $15 billion from an initial plan to raise $5 billion to $7 billion. The fund is looking to agree on terms of the loan in the next few weeks, although a final decision on the size of the loan has not been made. The $347 billion sovereign investors is a key lever for the kingdom’s efforts to revive economic growth after what may be the deepest recession the world’s largest crude exporter has experienced in decades.