Live Markets: When Musk says something, something moves

Clubhouse Media

02/02/2021 12:44

* European shares rise for second day
    * Travel and leisure and auto stocks, best sectoral
performers
    * Profit warning hammers Fresenius Medical Care

Welcome to the home for real-time coverage of markets brought to
you by Reuters reporters. You can share your thoughts with us at
markets.research@thomsonreuters.com  
   
    WHEN MUSK SAYS SOMETHING, SOMETHING MOVES (1243 GMT)
    Elon Musk's tweets have the power to move companies on the
stock market, even the wrong ones.  
    Take Clubhouse. 
    On Sunday Musk tweeted he would go live on the namesake
social media audio app and on the following Monday shares in
Clubhouse Media Group  CMGR.PK  skyrocketed as a result.
    But there's a problem here: the privately owned Clubhouse
app has nothing to do with Clubhouse Media, formerly known as
Tongji which happened to change its name just two weeks ago.
    Clubhouse is reminiscent of what happened to Signal Advance
 SIGL.PK . 
    Shares in the U.S. healthcare company soared to $70 from 70
cents in under a week after Signal was mistaken for an unlisted
texting app also called Signal that Tesla founder Elon Musk had
tweeted about, saying "use Signal." 
    But Musk has also moved shares in the right companies. Telsa
is one, of course, but also GameStop  GME.N  and CD Projekt
 CDR.WA  more recently.
    Below Clubhouse's one year chart.    
    (Danilo Masoni)
    *****
    
    FLYING PIGS (1221 GMT) 
    There's a tad of surprise, verging to disbelief, on the
triumphant stock market debut of Moonpig. 
    The online greeting card retailer added around 300 millions
pounds to its market cap within minutes of its London bourse
debut, thanks to its share price surging 24% to 435 pence. 
    But Neil Wilson at Markets.com noted that Moonpig, now worth
about 1.5 billion pounds, had a lot going for it. 
    "Huge market share, strong growth prospects and good margins
– what is not to like?" he rhetorically asked before answering
that question himself. 
    "Maybe the valuation".  
    Michael Hewson at CMC Markets noted that indeed at the price
it managed to pull off, Moonpig's next set of financial results
better be good and much better than the 173.1 million pounds
achieved last year.  
    "It stands to reason that the revenues for this year should
come in much higher, however whether that’s enough to justify a
valuation of £500m (for the shares sold off today) remains to be
seen", he wrote.
    There's quite a lot of scepticism out there over the
market's enthusiasm to warm welcome to fund new comers, be it
through stocks or bonds, so some kind of sarcasm is to be
expected.  
    "Apparently pigs do fly, well Moonpig did at least", was AJ
Bell investment director Russ Mould's take, noting the IPO
closely followed the very successful listing of Dr Martens on
Friday. 
    The iconic shoe maker jumped over 20% for its first day on
the London, but the performance is arguably more impressive in
that Dr. Martens, with a stock market updated price tag of about
5 billion pounds, is close to 3 Moonpigs.
    There's more to come too: in London, Deliveroo and Darktrace
are expected to complete deals this year, while in Europe,
Germany's Auto1 is on track for a listing.

    Some reading : 
    Soaring valuations, low borrowing costs fuel January
fundraising bonanza  urn:newsml:reuters.com:*:nL8N2K464J 
    Big step forward for Dr. Martens as shares jump in $5 bln
London debut  urn:newsml:reuters.com:*:nL8N2K41V7
    
    (Julien Ponthus and Abhinav Ramnarayan) 
    *****
    
    
    
    A SUSTAINABLE BUBBLE? (1128 GMT)
    Issuance of sustainable debt and equity is on the rise
 urn:newsml:reuters.com:*:nL8N2JQ2ZY. Last month saw $78.4 billion in sustainable debt
raised, Refinitiv data shows, versus $24 billion a year ago. 
    Similarly, equity-raising by companies deemed compliant with
Environmental, Social and Governance (ESG) principles totalled
$2.9 billion compared to $94 million last January. And issuers
are becoming more diverse -- Egypt and Guatemala were among
those selling green and social bonds respectively last year.
    But investor interest is also growing fast, raising the
question of whether there are enough ESG assets to go around.
David Older, head of equities at Carmignac noted in a recent
call "a supply-demand imbalance" in the green space.
    Investor exuberance has driven up shares in some renewables,
electric vehicles and fuel cells as much as 1400%  urn:newsml:reuters.com:*:nL8N2JQ2ZY. 
    True, that's not entirely down to ESG fever, stockpickers
jumping on the green bandwagon are among the drivers.
    Liquidity in some 'green' segments can be an issue for
bigger investors, Older said. 
    "A lot of exuberance is just on the back of press releases
on things achieved in the laboratory but with no products to
speak about. So we invest only in the dominant players, names
with manufacturing operations," he said on the call.
    Meanwhile, ESG funds continue to attract large inflows --
already in 2021, they have absorbed $24 billion, BofA says.   
That adds to the $255 billion received last year, when 141 new
ESG funds were founded. 
    The bank also says 65% of ESG indices have outperformed
traditional benchmarks so far this year,  
    The ESG impulse will strengthen this year, Goldman Sachs
predicts. Funds that signed up to the Principles for Responsible
Investment (a United Nations-supported investor network pushing
a sustainable agenda) will need to incorporate ESG into at least
50% of their assets -- currently totalling $100 trillion.
    
    (Sujata Rao)
    *****
    
    
    
    MILDER THAN EXPECTED BANK STRESS TESTS? (1058 GMT)
    Stress tests for European banks are back and their results
will be a major input in banks dividend decision.
    “Methodology and assumptions seem more pessimistic versus
previous tests, but possibly milder versus expectations,” Citi
analysts say in a research note.
    The MDA buffer, namely the portion of a bank's earnings that
may be distributed whenever buffer requirements are not fully
satisfied, will be important for future dividends.
    Citi found highest MDA buffer and RoTE (Return on Tangible
Equity) for Nordea  NDASE.ST , Mediobanca  MDBI.MI , KBC Groep
 KBC.BR , and BAWAG  BAWAG.VI .
    Generally speaking, Nordic and Benelux banks generally have
higher capital buffers versus minimum requirements, they add.
    The European Banking Authority (EBA) said the combination of
pandemic theoretical shocks for the top 50 banks was among its
toughest yet.  urn:newsml:reuters.com:*:nL8N2K45U7
    (Stefano Rebaudo)
    *****
    
    
    
    STOXX REGAINS GROUND, AUTO AND TECH BOOST, FRESENIUS SHOCKER
(0849 GMT)
    European shares are off to a positive start this morning
with the STOXX 600  .STOXX  rising for a second day, after
closing January with its worst weekly performance since October.
    It seems investors are looking past the volatility spike
caused by the retail trading fever that gripped Wall Street last
week. Numbers from Amazon and Alphabet due later today are also
supporting the mood.
    The rebound is evenly spread, although autos  .SXAP  stand
out with a gain of more than 2% amid hopes of a sharp earnings
recovery for the sector later this year.
    Tech  .SX8P  and travel and leisure  .SXTP  shares are also
in demand, underscoring the risk-on mood.
    In terms of single companies, a profit warning from
Fresenius Medical Care  FMEG.DE  was a shocker though that sent
its shares falling 13% to the bottom of the STOXX.
    The world's No. 1 kidney dialysis firm said the significant
acceleration in patient deaths seen in November and December was
expected to continue as the pandemic takes a heavy toll.     
    (Danilo Masoni)
    *****
    
    
    
    
    CAPTAIN TECHNOLOGY: THE WINTER SOLDIER (0759 GMT)
    Gamestock, what Gamestock? After notching the biggest weekly
drop in three months last week, tech shares resumed their upward
move. Indeed, Wall Street's Monday rally had a familiar whiff
about it, led as it was by familiar mega-cap names.
    It's too early to say the short-squeeze mania is subsiding
but the tech gains helped spark rallies globally, with indexes
in tech-focused Taiwan and Hong Kong up by a percent each.
    Retail euphoria seems to be ebbing with Gamestock shares
down in Germany while silver pulling back from 8-year highs hit
on Monday, weighing on small silver miners shares in Australia.
    Wall's Street volatility gauge, the VIX, has pulled off near
three-month highs, Treasuries are inching lower and equity
futures point to firmer sessions across Europe and in New York.
    Consumer discretionary stocks were gainers too in Asia as
lacklustre PMI readings in China and Japan sparked hopes of more
targeted stimulus.
    Then the Reserve Bank of Australia surprised markets
pleasantly by extending its bond purchase plan and postponing
the timing of its first rate increase until 2024. Rest assured,
stimulus will be around for a very long time indeed.
    Chunky equity gains were all the more impressive considering
the U.S. dollar's rise to seven-week highs. The greenback
benefited too from a bit of a short-squeeze, as speculators
unwound some of the biggest short bets against the dollar in
five years.
    The dollar remains buoyant as U.S. President Joe Biden
prepares to negotiate with Republican senators on the size of a
new COVID support bill.
    On the corporate earnings front, BP shocked with an annual
$5.7 billion loss, its first in a decade. But spending on
appliances by stay-home workers boosted Q4 profits at
Electrolux.
    The wait is now on for the last of the FAANGs --Amazon and
Alphabet -- which report after the closing bell in New York. And
to see if results from ExxonMobil and ConocoPhillips are as
gloomy as BP.
    Key developments that should provide more direction to
markets on Tuesday:
    UK house prices fell in Jan for first time in 7 months
    Fed speakers: New York Fed's John Williams and Cleveland
Fed's Loretta Mester
    Germany auctions 2-yr notes, UK 10 yr gilt
    European earnings: Virgin Money sets aside another 726
million pounds to guard against potential loan losses
    E-card retailer Moonpig prices IPO at 350 pence per share,
setting market cap around 1.2 billion pounds
    US corporate events: Pfizer, UPS, Alibaba, Harley Davidson,
ExxonMobil, ConocoPhillips, Alphabet 
    
    (Saikat Chatterjee)
    *****
    

    EUROPEAN SHARES SET TO RISE (0644 GMT)
    European stock futures are pointing north this morning after
gain in Asia overnight where shares were propped up by increased
optimism about and global economic recovery. 
    While silver  XAG=  overnight retreated and GameStop
 GME.N , the videogame retailer at the centre of the "Reddit
rally," slid more than 30%, investors appeared to be upbeat amid
the ongoing fiscal stimulus debate in the United States.
    Shares in Asia  .MIAPJ0000PUS  rose 1.5% and the good mood
looks set to spill over to Europe where futures indicate a 0.4%
gain for the DAX  FDXc1  and a 0.6% rise for the FTSE  FFIc1 .
    S&P 500 e-mini futures were up 0.4%.
    Earnings will be a focus too. 
    A shocker arrived from Fresenius Medical Care  FMEG.DE . Its
shares are down 6% pre-market after the world's No.1 kidney
dialysis firm warned that adjusted net profit would likely drop
by a quarter this year as the pandemic takes a heavy toll.
    
    (Danilo Masoni)
    ***** 

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