Energy stocks disconnect from falling oil price: More high profile crypto casualties announced
Stocks fell Thursday and bond yields jumped as Federal Reserve officials signalled their rate-hiking campaign to slow inflation is far from over.
The Dow Jones Industrial Average was flat after falling as much as 314 points in the session. The S&P 500 slipped 0.3 per cent, while the Nasdaq Composite declined 0.4 per cent.
Stocks rebounded from lows reached earlier in the day as shares of Cisco Systems jumped almost 5 per cent. The networking equipment company surpassed expectations in its fiscal first-quarter report, and issued upbeat guidance. Other tech stocks such as Apple and Intel also led gains.
In cyrpto news, FTX’s collapse appears to be connected to the broader tech industry retreat.
Bankman-Fried is already drawing comparisons to Bernie Madoff. And just as Madoff’s Ponzi scheme fell apart during the 2008 financial crisis, FTX’s collapse arrives amid a broader pullback for the tech industry. Tech stocks have crashed this year. Venture capital funding is drying up. Nearly 800 tech companies have laid off more than 120,000 workers this year, with cuts hitting Meta, Amazon and Twitter. The tough times in tech can be traced to rising interest rates which have hurt company valuations and more importantly access to capital – including those focused on crypto.
The breadth of the global fallout from FTX’s collapse has continued to emerge. Temasek, Singapore’s state-backed fund, announced that it had fully written down its $275 million investment in the crypto exchange, joining the Silicon Valley firm Sequoia Capital and SoftBank, the Japanese tech conglomerate, in declaring their stakes worthless.
Across the sectors, stocks vulnerable to a recession and higher rates led losses in the S&P 500. Materials stocks declined, as did consumer discretionary names. Defensive stocks such as health care outperformed. With Chinese US listed companies continuing to outperform.
Oil stocks have continued to show a clear disconnect from the commodity they track, with the sector finding support despite a falling oil price – The energy sector is reporting the greatest increase in net profit margin compared to its 5-year average. Whereas oil and gas prices have declined from recent highs, capital management initiatives like increased dividends and share buy backs has led the sector to outperform the broader market
In company news Bath & Body Works gained over 25 per cent. Thursday after the company beat third-quarter earnings estimates and increased its full-year guidance. Macy’s also rallied 15 per cent.
General Motors has forecast that its electric vehicle portfolio will be profitable in 2025, underscoring its investment in the nascent business by announcing a deal with the Brazilian mining company Vale for supplies of battery-grade nickel.
The largest US carmaker told investors that it expects to generate more than $50bn in revenue from sales of 30 EV models in 2025, or more than a fifth of total revenue of $225bn.
Currencies
One Australian dollar has weakened compared to the US dollar yesterday buying 66.95 US cents.
Commodities
Iron ore futures are pointing to a 2.3 per cent gain.
Gold lost 0.7 per cent. Silver fell 2.4 per cent. Copper dropped 2.4 per cent and oil lost 4.2 per cent.
Futures
The SPI futures are pointing to a 0.1 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed mixed. Paris fell 0.5 per cent, Frankfurt added 0.2 per cent and London’s FTSE closed 0.1 per cent lower.
In Asian markets, Tokyo’s Nikkei fell 0.4 per cent, Hong Kong’s Hang Seng lost 1.2 per cent and China’s Shanghai Composite closed 0.2 per cent lower.
Yesterday, the Australian sharemarket added 0.2 per cent to close at 7136.
Ex-dividends
Coronado Global Res (ASX:CRN) is paying 14.6 cents unfranked
Morphic Ethical Equities Fund (ASX:MEC) is paying 1.5 cents fully franked
Orica (ASX:ORI) is paying 22 cents unfranked
Soul Pattinson (ASX:SOL) is paying 58 cents fully franked
Dividends payable
Cromwell Property Group (ASX:CMW)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
