Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Stock markets have been rising this week and European markets are poised to open higher again, amid optimism about the US stimulus package, the roll-out of covid-19 vaccines, positive company results and oil prices near a one-year high. In Asia, the Nikkei closed 1% higher while the Australian market rose 0.9%.
Yesterday Democrats in the US Congress took the first steps towards advancing president Joe Biden’s proposed $1.9 trillion coronavirus aid plan without Republican support.
Last night Amazon announced in a surprise move that its chief executive Jeff Bezos will step down. He founded the company in 1994 and built it into one of the largest in the world, amassing a fortune of $185bn. Bezos, who will remain executive chair, will hand the reins to Andy Jassy, who runs Amazon Web Services, the fast-growing cloud computing business. The news came as Amazon revealed fourth-quarter results… it has thrived through the pandemic and made sales of more than $100bn for the first time between October and December.
Google parent company Alphabet had a better-than-expected fourth quarter, bolstered by a rebound in ad spending during the holiday season.
Also in the US, regulators are due to meet to discuss whether tougher rules are needed after the trading mania involving GameStop and other stocks. The head of the US Securities and Exchange Commission will meet with Treasury Secretary Janet Yellen and the heads of the Federal Reserve and the Commodity Futures Trading Commission as soon as tomorrow, a Treasury official told Reuters.
Shares in GameStop tumbled 60% to $90 on Wall Street yesterday, as the trading frenzy sparked by small investors, that sent its stock soaring and cost hedge funds billions of dollars, ran out of steam. The struggling Texas-based video game store chain has been the focal point of a battle by small traders, using online forums such as Reddit, who have been buying GameStop, AMC Entertainment and other shares to take on Wall Street hedge funds that have bet on these stocks falling in value.
Silver has also been caught up in the trading frenzy sparked by posts on the Reddit chat room and surged over 10% to $30.03 an ounce for the first time in eight-years on Monday, but also retreated yesterday. It fell more than 8% below $27 an ounce. This morning, it rose nearly 1% to $26.86.
Questions have been raised about trading restrictions imposed by the Robinhood trading app on shares such as GameStop last week. It emerged last night that US Senator Elizabeth Warren has written to Vladimir Tenev, the Robinhood CEO, to ask about the firm’s relationship with large hedge funds and other financial institutions. The letter is here.
The American billionaire entrepreneur and investor Mark Cuban yesterday joined an “Ask Me Anything” session held by Reddit’s WallStreetBets. “True to form, he didn’t hold back,” Bloomberg reported.
The billionaire has been among a group of prominent financial heavyweights, including Chamath Palihapitiya and Cameron and Tyler Winlevoss, to align with retail traders in what they see as a battle between Main Street and Wall Street.
During the chat, Cuban encouraged the forum to hold on to their GameStop Corp. shares if they could afford to do so, and predicted that institutional funds would jump back in for a second round of shorting the video-game retailer. The serial entrepreneur and reality television star said GameStop holders should take a lesson from Bitcoin investors who held on to the cryptocurrency when its price plummeted in 2017.
“I have no doubt that there are funds and big players that have shorted this stock again thinking they are smarter than everyone on WSB,” said Cuban, who doesn’t own the stock. “I know you are going to hate to hear this, but the lower it goes, the more powerful WSB can be stepping up to buy the stock again.”
CNBC sees this as a good opportunity to teach your kids about investing.
Coming up later today: a raft of business surveys for the services sectors in the main European countries, the UK and the US as well as inflation data for the eurozone.
- 8:15am GMT: Spain IHS Markit Services PMI for January
- 8:45am GMT: Italy Services and Composite PMIs for January
- 8:50am GMT: France Services and Composite PMIs Final for January
- 8:55am GMT: Germany Services and Composite PMIs Final for January
- 9:00am GMT: Eurozone Services and Composite PMIs Final for January
- 9:30am GMT: UK Services and Composite PMIs final for January
- 10:00am GMT: Eurozone inflation for January
- 1:15pm GMT: US ADP Employment Change for January
- 3:00pm GMT: ISM Non-Manufacturing survey for January