Market Summary #6

IG Group Buys Online Broker TastyTrade for $1 Billion

The deal is comprised by $300 Million in cash and the issuance of 61 million IG shares to TastyTrade shareholders. IG’s CEO, June Felix, said in an interview: “We see a secular shift in the market for self-directed investing and trading”. IG mainly focuses on CFD’s, and this move will allow them to explore the options and futures market which is rapidly expanding in the US. TastyTrade is an educational broker and is going after educating and serving the more active and informed older group of traders.

Melvin Capital Receives a $2.75 Billion Lifeline after Gamestop short squeeze

Following the short-squeeze that drove Gamestop’s stock from $20 to a high of more than $450, Melvin Capital, who had a short position on the stock, recieved an injection from Point72 Asset Management and Citadel Securities of almost $3 Billion. The short-squeeze orchestrated by reddit group wallstreetbets saw brokers like Robinhood taking action by only allowing clients to close their existing positions in the stock and later the brokerage closed these positions automatically.

Equity Futures dropped over retail- trading frenzy

On January 28th, a Wall Street retail-trading frenzy and a liquidity squeeze in China left investors uncertain and disrupted the markets. European and U.S. stock futures fell, while Asian equities headed for their steepest loss in months. The S&P 500 futures fell 1.2%, MSCI’s broadest index of Asia-Pacific shares fell 0.5%, while FTSE futures and EuroSTOXX 50 futures all fell by just over 1%. In addition to nerves, the disruption in equity markets comes as COVID-19 vaccine rollouts are slower than expected and as global economic data is not looking as positive.

Asian stocks slump over stimulus worries

Asian stocks fell on January 26, retreating from all-time highs on lingering concerns about potential headwinds in the hopeful $1.9 trillion economic aid package from the Biden administration, weighing on sentiment and drangging down bond yields from the U.S Treasury to three-week lows. Hong Kong and South Korea fell 1.7%, Japan was down 0.6%, and Chinese stocks loss 1.5%. On top of that, Japan reported that factory output had its second consecutive decline at -1.6%.

IMF more upbeat on global economy, but warns new Covid variants could derail growth

The International Monetary Fund is concerned aboout the risk that the new Covid variants pose to the post-pandemic recovery. The IMF expects the global economy to grow 5.5% in 2021, a 0.3 percentage point increase from October’s forecasts. It sees global GDP expanding by 4.2% in 2022. The IMF also said governments will need to keep supporting their economies via fiscal stimulus in order to bolster economic recovery.

Digital Disruption in Africa: Mapping Innovations for the AfCFTA in Post-COVID Times

The governments of some African countries plunged into digital innovation by using drones and other technologies to deliver food, medication and other materials to rural communities. Other countries have commissioned national studies on the potential effects of and policies on the 4IR. African startups are leading the way in using blockchain to enable African economies to fully unlock the socioeconomic potential of their land and create ethical markets.

Railroad Stocks Post Quarterly Revenue Declines

CSX Corporation (CSX) is trading lower on Friday after beating fourth quarter 2020 toop- and bottom- line estimates, reporting a profit of $1.04 per share on a 2.1% decline in revenue to $2.83 billion. Also, Kansas City Southern (KSU) posted an equally mixed report in the pre-market, booking a profit of $1.89 per share, $0.03 worse than estimates. Revenue fell 4.9% year over year to $693.4 million, also worse than expectations. Quarterly revenue declines matched Union Pacific Corporation’s.

Business conditions in Lebanon unlikely to improve in 2021, says economist

Lebanese business conditions in 2021 and the near future won´t be any better tha last year when thousands of jobs went to the wall, according to a senior economist. The latest BLOM Lebanon Purchasing Manager´s Index (PMI) reading of 43.2 in December up from 42.4 in November pointed to a softer deterioration in Lebanese business conditions although the rate of decline was still sharper than the historical average. Lebanese businesses continued to cut staff numbers at the end of the fourth quarter with the rate accelerating to the quickest seince July.