Live Markets: U.S.-Game on! Reddit favorites rush to raise capital

AI Financial

29/01/2021 17:19

* Major U.S. stock indexes down more than 1%
    * All S&P 500 sectors down; energy down most
    * Euro STOXX 600 index falling >1.9%
    * Dlr edges lower; gold, oil rise; US 10-Yr Treasury yield
~1.08%

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    GAME ON! REDDIT FAVORITES RUSH TO RAISE CAPITAL (1210
EST/1710 GMT)
    Well, that didn't take long.
    Some companies that have been mentioned in Reddit's
WallStreetBets forum and have seen their stocks surge recently,
are pouncing on the opportunity to raise capital.
    AMC Entertainment  AMC.N  is exploring a new capital raise,
including another possible stock sale, to help weather the
COVID-19 pandemic, Reuters reported late Thursday.  urn:newsml:reuters.com:*:nL1N2K32QR
    American Airlines  AAL.O  is another notable Reddit
beneficiary. The carrier on Friday filed to sell up to another
$1.1 billion of shares to further boost liquidity through a
brand new ATM ("at-the-market") sales program.  urn:newsml:reuters.com:*:nL1N2K41V2
    Shares of streaming platform fuboTV  FUBO.N  are up about
10% after it priced a $350 million convertible debt offering.
 urn:newsml:reuters.com:*:nL1N2K41AF
    Cannabis company Sundial Growers  SNDL.O  raised $100
million of equity  urn:newsml:reuters.com:*:nL4N2K440Z, while pain medications maker
JanOne Inc  JAN.O  announced a more modest $6 million stock
deal.  urn:newsml:reuters.com:*:nL4N2K44S9
    Shares of GameStop  GME.N , at the center of the retail
trading frenzy, along with other Reddit favorites, are soaring
on Friday after Robinhood and Interactive Brokers  IBKR.O  said
they planned to ease trading restrictions.
    Meanwhile, the U.S. SEC this morning said in a statement
it's closely monitoring potential wrongdoing amid recent price
volatility, and warned against illegal "manipulative trading
activity."  urn:newsml:reuters.com:*:nW1N2JA006
        
    (Lance Tupper)
    *****
           
    EUROPE: TECHS ARE BACK (1133 EST/1633 GMT)
    Some analysts say it is temporary, but this month reflation
trade is not in very good shape with tech stocks bucking the
trend in positive territory.
    Europe's STOXX 600 index  .STOXX  ended January down 0.7%,
with tech shares  .SX8P  staging a 3.4% rise while pandemic
worries were dampening risk sentiment across the board.
    In the chart below recent months' performance of the STOXX
600 and of the tech index.
    Investors have been taking some profits off the table and
tweaking their forecast about economic growth after delays in
vaccines and possibly bumps ahead in the inoculation campaign.
    On Friday, U.S. and European stocks were down after Johnson
& Johnson  JNJ.N  announced its vaccine was 66% effective in the
large trial.
    Virus trajectories are the main issue, but most analysts
think that EPS growth, U.S. stimulus and big Pharma increasing
their output will put the market back on the rising track.
    
    (Stefano Rebaudo)
    *****
    
    FRIDAY DATA: CONSUMERS FEEL A CHILL (1115 EST/1615 GMT)
    U.S. consumers see more stormy weather in the forecast,
according to data released on a chilly Friday morning, and
despite rising incomes they continue to tighten their purse
strings and beef up their savings.
    Is this a prelude to a spring spending spree?         
    The American consumer, who accounts for about 70% of U.S.
economic growth, spent less in December even as incomes jumped,
according to the Commerce Department's personal consumption
expenditures (PCE) report.  urn:newsml:reuters.com:*:nL1N2K32KQ
    Consumption  USGPCS=ECI  edged down 0.2%, the second
straight monthly decline following November's downwardly revised
0.7% dip, but not as steep as the 0.4% consensus drop.
    But personal income  USGPY=ECI  blew past analyst estimates,
gaining 0.6% versus the 0.1% expected, and a partial rebound
from the prior month's 1.3% drop.
    Does this suggest a growing reservoir of pent-up demand?
    "Beyond the near-term headwinds, we see stronger consumer
spending growth percolating," writes Gregory Daco, chief U.S.
economist at Oxford Economics. "Notwithstanding the likely
gradual jobs recovery, we believe increased vaccinations, stable
household finances and rebounding confidence will lift consumer
spending growth to 6.4% in 2021."
    Rising income and a dip in spending pushed the saving rate,
seen by many as a gauge of consumer expectations, up to an
elevated 13.7% of disposable income.
    Speaking of which, consumer expectations soured a hair more
that originally reported, per the University of Michigan's
consumer sentiment index  USUMSF=ECI .
    The aforementioned rise in the saving rate is reflective of
a U.S. consumer who expects trying days ahead, with the
expectations subcomponent well below current conditions.
    Still, according to UMich's chief economist Richard Curtain,
sentiment has held remarkably steady, and rising savings
positions the consumer for a rebound.
    "Despite continuing job and income disparities, as
precautionary motives begin to ease, accumulated savings will
spark a significant gain in spending in late 2021," Curtin
writes.
    On the housing market beat, spiking demand and low mortgage
rates continue to pressure supply and drive home prices beyond
some homebuyers' reach.
    Pending sales of pre-owed U.S. homes  USNAR=ECI  dropped for
the fourth straight month in December, per the National
Association of Realtors (NAR).
    While the booming housing sector has sent NAR's pending home
sales index hovering above pre-pandemic levels, these latest
declines hint at some cracks in the foundation.
    "This elevated demand without a significant boost in supply
has caused home prices to increase and we can expect further
upward pressure on prices for the foreseeable future," says
Lawrence Yun, chief economist at NAR.
    Circling back to the Commerce Department's personal
consumption report, the PCE price index increased at a faster
pace than economists forecast.
    Year on year, core PCE   USPCE2=ECI  - which excludes
volatile food and energy prices and is the U.S. Federal
Reserve's preferred inflation yardstick - unexpectedly rose to
1.5%, edging closer to the central bank's average annual 2%
target.
    In other economic data released today, employment costs
 USEMPC=ECI  ticked up more than expected in the fourth quarter,
but remain below pre-COVID levels, according to the Labor
Department.
    Manufacturing in the midwest expanded this month at a
significantly faster pace than forecast, with the Chicago PMI
 USCPMI=ECI  jumping 4.3 points to a reading of 63.8, according
to MNI indicators.
    Overall, the manufacturing sector has remained surprisingly
resilient, responding to strong demand even as elevated rates of
infections have restricted activity," says Rubeela Farooqi,
chief U.S. economist at High Frequency Economics.
    Investors, like consumers, felt the chill of caution in the
air as underwhelming vaccine data from Johnson & Johnson  JNJ.N 
 prompted market participants to shy away from risk.
    But while all three major U.S. stock indexes were red,
smallcaps were having a good day.
    
    (Stephen Culp)
    *****
    
    MORE BEARS THAN BULLS FOR FIRST TIME SINCE OCTOBER (1003
EST/1503 GMT)
    The level of pessimism among individual investors about the
short-term direction of the U.S. stock market rose to its
highest level in 15 weeks in the latest American Association of
Individual Investors Sentiment Survey (AAII). With this,
optimism fell to its lowest level in 11 weeks.
    AAII reported that bearish sentiment, or expectations that
stock prices will fall over the next six months, increased 3.8
percentage points to 38.3%. Pessimism was last higher on October
7, 2020 (39.0%). Pessimism is above its historical average of
30.5% for the third time this year. 
    Bullish sentiment fell 4.9 percentage points to 37.7%.
Optimism is below its historical average of 38.0% for the first
time this year. 
    Neutral sentiment bounced 1.0 percentage points to 24.0%.
Neutral sentiment remains below its historical average of 31.5%
for the 51st time out of the past 54 weeks. 
    With these changes, the bull-bear spread fell to minus 0.6
from +8 in the previous week.  urn:newsml:reuters.com:*:nL1N2JX1S7 This is the first
negative reading since Oct. 21 of last year:
    
    
    In this week's special question asked AAII members which
factors are most influencing their six-month outlook for stocks.
    About  28%  of respondents , said that the country's ability
to manage the coronavirus pandemic and distribute the vaccine
are the biggest influential factors on their market outlook. 
    This compares to  22% of respondents who said that  the new
administration and its policies are the most influential
factors. 

    (Terence Gabriel)
    *****

    U.S. STOCK INDEX FUTURES FALL AFTER VACCINE DATA (0910
EST/1410 GMT)
    U.S. stock index futures were lower and indexes were set to
open down on Friday after concern about COVID-19 vaccine data
from Johnson & Johnson  JNJ.N .
    The drugmaker said its single-dose vaccine was 72% effective
in preventing COVID-19 in the United States, with a lower rate
of 66% observed globally.
    Shares of GameStop  GME.N  and other Reddit favorites surged
after Robinhood and Interactive Brokers  IBKR.O  said they
planned to ease restrictions after imposing buying halts a day
earlier.
    Here is the early U.S. market snapshot:
     
    
    (Caroline Valetkevitch)
    *****    
    FOR FRIDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
- CLICK HERE:  urn:newsml:reuters.com:*:nL8N2K45BF

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
US early mkt snapshot    https://tmsnrt.rs/39ywkVX
AAII01292021    https://tmsnrt.rs/2YpGIsz
Personal consumption    https://tmsnrt.rs/3oqBaZf
Consumer sentiment    https://tmsnrt.rs/3cjSeOk
Pending home sales    https://tmsnrt.rs/3adOStv
Inflation    https://tmsnrt.rs/36mNJ1N
Employment costs    https://tmsnrt.rs/36ko2Pe
tech    https://tmsnrt.rs/3ahMi5B
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Lance Tupper and Terence Gabriel are Reuters market analysts.
The views expressed are their own)