Closing Stock Market SummaryThe stock market opened decidedly higher, attempting to build on Friday's gains. The early upward momentum in the S&P 500 found some resistance around the 3,900 mark. The release of the July NAHB Housing Market Index at 10:00 a.m. ET took the steam out of the broader market. After that, the market held onto modest gains and moved mostly sideways until a Bloomberg article suggested Apple (AAPL 147.07, -3.10, -2.1%) plans to slow hiring and spending for some divisions next year to ease the impact of the economic downturn. The market sold off on the news and closed barely above session lows.
The early buying conviction was fueled by a general rebound attempt as well as positive corporate news from Goldman Sachs (GS 301.26, +7.39, +2.5%) and Boeing (BA 147.72, -0.02, -0.01%). Goldman Sachs reported better-than-expected earnings and approved a 25% increase in its quarterly dividend. Boeing traded up on news that Delta Air Lines (DAL 31.14, +1.05, +3.5%) will modernize its single-aisle fleet with up to 130 Boeing 737 MAX jets.
Also adding to the early sentiment was a Wall Street Journal article that noted the Fed is likely to hike 75 basis points at its next meeting, versus a feared 100 basis point rate hike.
The market started its deterioration today after the July NAHB Housing Market Index release came in at 55. The drop from 67 to 55 was the largest monthly drop in the 37-year series other than the drop seen in April 2020.
Each of the main indices was able to keep above the unchanged mark until a Bloomberg report suggested Apple plans to slow hiring and spending for some divisions, which let the rest of the air out of the market. With a lack of leadership, just about everything slumped into the close.
Eight of the 11 S&P 500 sectors closed in the red with losses ranging from 0.5% (financials) to 2.2% (health care). The only sectors to gain on the day were energy (+2.0%), materials (+0.2%), and consumer discretionary (+0.2%).
Market breadth was mixed with advancers slightly outpacing decliners at the NYSE and decliners slightly outpacing advancers at the Nasdaq.
The 2-yr Treasury note yield closed the session three basis points higher at 3.16% and the 10-yr note yield rose three basis points to 2.96%.
Tomorrow's economic data will be limited to June Housing Starts (Briefing.com consensus 1.598 million; prior 1.549 million) and Building Permits (Briefing.com consensus 1.680 million; prior 1.695 million) at 8:30 a.m. ET.
Ahead of tomorrow's open, the earnings reports will be headlined by Johnson & Johnson (JNJ 174.23, -4.00, -2.2%), Lockheed Martin (LMT 387.28, -11.10, -2.8%), Halliburton (HAL 28.85, +0.99, +3.6%), and Hasbro (HAS 79.42, +0.21, +0.3%).
- Dow Jones Industrial Average: -14.5% YTD
- S&P 400: -19.1% YTD
- S&P 500: -19.6% YTD
- Russell 2000: -22.5% YTD
- Nasdaq Composite: -27.4% YTD
SoftBank halts work on Arm’s London IPO following political turmoil
Japanese tech investor pauses plan for dual primary UK-US listing for chip designer after Johnson quits
SoftBank has put on hold plans for a London initial public offering of Arm because of the political turmoil in the UK government, throwing doubt on Britain’s place as the future home of the Cambridge-based tech giant.
UK prime minister Boris Johnson has personally lobbied SoftBank’s billionaire founder Masayoshi Son to secure at least a partial listing for the chip designer on the London Stock Exchange.
As Johnson’s government collapsed earlier this month, investment minister Lord Gerry Grimstone and digital minister Chris Philp resigned. They had both played leading roles in talks with the Japanese tech investor.
The departures have led SoftBank to pause discussions about a UK listing of Arm in the next year, according to people briefed on the talks. An Arm IPO would be one of the biggest-ever tech flotations for the London market.
The political upheaval could pave the way for SoftBank to pursue a more straightforward US listing, which Son had originally favoured.
SoftBank was in talks with officials and exchange executives over an unusual dual primary listing, in which it would have simultaneously floated in both New York and London, according to people with knowledge of the situation.
Companies have shunned this approach in the past because of the cost and complexity of effectively having to run two IPOs simultaneously, with prospectus and other regulatory requirements needed for both the US Securities and Exchange Commission and the UK’s Financial Conduct Authority.
Two people familiar with SoftBank’s thinking said that work on the London side of the IPO had effectively halted within the company. One of these people added that a London listing was looking less likely than it had in the past.
Bankers close to SoftBank have warned that the group only considered a share sale in London because of the strong incentives offered by the UK government, which had tasked officials with working out the right conditions for the listing, promising to make Arm a national champion for British tech.
London has been criticised for being unattractive to fast-growing companies given the potential for higher valuations and deeper pools of investor cash in the US.
Officials in the Department for Digital, Culture, Media and Sport and Department for Business, Energy and Industrial Strategy are still working on a package to attract an Arm listing, according to a person familiar with the government’s efforts.
Philp had been replaced by new digital minister Matt Warman, a former tech journalist, they added. Executives at the London Stock Exchange were also still working to convince SoftBank of the UK’s merits.
Grimstone, who quit the government after Johnson announced he would make way for a new prime minister in the coming weeks, led the lobbying efforts as minister for investment, including flying to Tokyo to personally meet Son.
One City executive close to the lobbying efforts urged the government to step up its efforts, saying: “The main ministers that are dealing with SoftBank have left. Gerry was instrumental.”
The ruptures within the government have also prompted fears within Whitehall that SoftBank will no longer feel obliged to bring Arm to London markets because the political pressure will ease over the summer months.
“It’s a concern now that Gerry has gone,” said one official. “There is a vacuum right now and [SoftBank] never really wanted to do it anyway; they just wanted to play ball with the UK government.”
Work on a dual jurisdiction Arm IPO had reached a “mature” stage in the UK, said an official close to the talks. This unusual route would mean that Arm could get index inclusion in both markets, which would boost the number of funds that could invest in the company, and means it would be fast-tracked into the FTSE 100.
A UK banker close to Arm said that a dual listing would not “be crazy”.
“Arm used to trade at a huge premium in the UK and it had a huge fan club when it was listed over here, and that group has never found anything else as attractive to buy. The first ever company that’s in the FTSE 100 and the S&P 500 — can you imagine how excited [Son] would be?”
One option would be to include a retail offering for the IPO to attract the sort of older and wealthier private investors who remember the early days of the company when it spun out of Acorn Computers in Cambridge.
SoftBank had recently invested in PrimaryBid, which provides a platform for retail investors to buy into IPOs, which one person said could be used as a means to attract private investors to the company in the UK. PrimaryBid last year worked on a British members’ offering for the US listing of private club Soho House.
Anand Sambasivan, chief executive of PrimaryBid, said: “A retail offer in the UK would recognise Arm’s distinctive British history, be well received by investors and represent a win for the country.”
SoftBank and Arm declined to comment. Arm has previously said it planned to keep its headquarters in the UK, regardless of where it lists.
The UK government did not immediately respond to a request for comment.
Macro :
Keep an eye on :
- ADP FP : ADP Raises 2022 Passenger Traffic Forecasts
- AIR FP : Air Lease Said to Be in Advanced Talks for Large Airbus Order
- AIR FP : Easyjet Signs LOI With Airbus on Carbon Removal Solutions
- AIR FP : *AIRBUS CEO: SLIGHTLY BEHIND DELIVERY TARGET AFTER TOUGH 1H
- AAPL US : Apple Sued Over Apple Pay, Accused of Antitrust Violations
- HNSA SS : Hansa Biopharma to Get $70M Financing From NovaQuest
- ISP IM : Fondazione Cariplo Raises Stake in Intesa to 4.812% From 3.948%
- RBI AV : Raiffeisen Review of Russian Unit to Take More Time: Boersianer
- SAS SS : Scandinavian Airline SAS Says No Deal Signed With Pilots Yet
- DG FP : Vinci, Cape Verde Sign 40-Year Concession for Seven Airports
A New Threat To The European Battery Boom
- Some EU lawmakers are aiming to classify lithium as a hazardous substance.
- The move is being met with backlash from the battery and metals industries.
- Industry experts argue that the scientific evidence used to make the decision is weak.
As the global demand for batteries looks set to continue rising in line with the growth of the EV market and renewable energy projects, the E.U. may soon throw a spanner in the works by labeling lithium batteries as harmful to humans. As the battery and metals industries fight against this move, some European countries are going all-in in their battery investments, demonstrating the wide support for battery industry growth across the region.
Many experts worry that if the E.U. classifies lithium as a hazardous substance, it could delay progress being made in the development of green energy. With governments across Europe battling to balance energy security with a rapid transition away from fossil fuels to renewable alternatives, the new regulations could make it that bit harder.
Europe is quickly becoming a hub for electric vehicles (EVs), vying with Asia to develop the most efficient, longest-range EVs as the market expands. Several countries have already announced a ban on the sale of new internal combustion engine (ICE) vehicles in the 2030s, and many industry groups fear that the labeling move could hinder these efforts. China has been dominating the EV sector in recent years, rapidly establishing its lithium industry and battery manufacturing capabilities to solidify its position in the global market. But Europe has gradually expanded its position in the battery market to meet European demand as uptake increases.
A letter from seven industry groups – the European Battery Recycling Association, the European Geothermal Energy Council, Eurobat, Eurometaux, Euromines, the International Lithium Association and Recharge – has been sent to E.U. legislators voicing their “deep concern” over a proposal by the European Chemicals Agency's (ECHA) risk assessment committee aimed at labelling three lithium compounds as dangerous for human health. The compounds include lithium carbonate, chloride, and hydroxide. The final decision is expected to be made in late 2022 or early 2023.
But industry experts argue that the scientific evidence used to make the decision is weak. While the classification does not place a ban on the import of lithium products, it could mean higher prices due to stricter processing, packaging, and storage regulations. It could also allow countries without these regulations to undercut costs to produce cheaper lithium products, making their markets more competitive.
The letter states, “Europe is at a critical period in its energy transition, needing to stimulate new investment into a full Electric Vehicle battery value chain. This European Commission can be proud of real industrial success in already mobilising high levels of investment into new battery gigafactories. Its looming challenge is now to secure the battery metals that will be in very short supply over the next 15 years.” Adding, “This is a race where Europe is playing catch-up to China, which is already over a decade ahead, now controlling most global processing for lithium and other battery metals.”
But the move by the E.U. isn’t stopping some countries from developing their battery manufacturing capabilities. Norway’s oil and gas giant Equinor announced this week that it will be acquiring U.S.-based battery storage developer East Point Energy, taking on a 4.1-gigawatt pipeline of “early to mid-stage battery storage projects focused on the US East Coast.” The purchase is expected to be finalised in Q3 of this year
Equinor stated, “Battery storage will play an important role in the energy transition as the world increases its share of intermittent renewable power.” The company added, “Battery storage is key to enabling further penetration of renewables, can contribute to stabilizing power markets and improve the security of supply”.
With greater numbers of battery cell plants being announced, Europe is experiencing a gigafactory boom. Several gigawatt-scale battery cell manufacturing plants have been announced over the last year, and more are expected to follow, giving it the potential to become a global hub for battery production.
In fact, Europe’s EV battery market is expected to reach a value of $94.41 billion by 2029, at a CAGR of 45.8 percent between 2022 and 2029. Greater EV uptake will support the growth of the battery market. As well as seeing significant levels of private investment from companies such as Tesla and several Asian automakers, the European Commission and several state governments are supporting the development of a European-made battery industry. In 2017, the E.U. established the European Battery Alliance for manufacturing, charging infrastructure, and electric-car uptake. Following this, in 2021, the European Commission announced funding of $3.5 billion to subsidize Tesla, BMW, and other companies looking to produce batteries in Europe.
While the introduction of new regulations by the E.U. classifying lithium as harmful may increase the price of lithium product production, it is unlikely to dissuade companies from investing in their battery sectors. With EV uptake increasing substantially year-on-year in Europe, the region is expected to quickly become a battery manufacturing hub. However, increased restrictions on lithium could make the European battery industry less competitive if means an increase in costs.
Gapping down
In reaction to earnings/guidance:
- ASH -1.5% (guidance), BAC -0.9%
Other news:
- AL -3% (announced long-term lease placements for six new Airbus (EADSY) A220-300 aircraft with TAAG Angola Airline)
- FNKO -2% (files for $100 mln mixed securities shelf offering; also files for 17,318,008 share common stock offering by selling shareholders)
- EVLO -0.9% (announces appointment of Marella Thorell as Chief Financial Officer)
- GSK -0.7% (completes demerger of Haleon and share consolidation of GSK)
- SOFI -0.6% (files for $1 bln mixed securities shelf offering)
Analyst comments:
- BL -2.4% (downgraded to Underperform from Neutral at BofA Securities)
- AEVA -2.2% (downgraded to Neutral from Overweight at Piper Sandler)
- EFC -1.4% (downgraded to Mkt Perform from Outperform at Keefe Bruyette)
- ACT -1% (downgraded to Mkt Perform from Outperform at Keefe Bruyette)
- EAT -0.8% (downgraded to Neutral from Buy at Goldman)
Gapping up
In reaction to earnings/guidance:
- ODP +4.7% (guidance) SYF +4.2%, GS +4.2%
Select Index ETFs showing strength:
- QQQ +1.2%, IWM +1.1%, DIA +1.1%, SPY +1%
Select semiconductor stocks trading higher:
- NVDA +2.8%, AMD +2.1%, MU +1.7%, SMH +1.6%, SWKS +1.4%, NXPI +1.3%, INTC +1.1%, STM +0.9%
Other news:
- QD +57.1% (Provides QD food progress report; as of July 18, 2022, the Company has 15 warehousing, assembly and packaging facilities)
- ADN +24.3% (announces that its Green HiPo project under the framework of the Important Projects of Common European Interest Hydrogen -- Technology, has now received official ratification from the European Commission of the European Union)
- ITHX +20.7% (shareholders approve previously announced business combination with Mondee Holdings II)
- APYX +10.3% (receives FDA 510(k) clearance for the use of Renuvion)
- ACTD +7% (receives shareholder approval for business combination with OPAL Fuels)
- IMCR +5% (announces $140 million private placement financing)
- PRMW +4.9% (announced that Primo Water North America, a wholly-owned subsidiary of Primo, has acquired Highland Mountain Water, located in Atlanta, Georgia)
- BA +3.8% (Delta Air Lines to modernize single-aisle fleet with up to 130 Boeing (BA) 737 MAX jets; also BA forecasts demand for more than 41K new airplanes by 2041)
- RYTM +3.6% (NICE recommends Rhythm's IMCIVREE (setmelanotide) for treating obesity and controlling hunger caused by POMC or LEPR deficiency)
- JD +3.5% (positive Barrons article)
- DNA +3.3% (announces collaboration with Sumitomo Chemical)
- CVNA +3.2% (Luxor increased passive stake to 5.9% (prior ~1.1%))
- KWEB +2.9% (positive Barrons article)
- BABA +2.8% (positive Barrons article)
- STLA +2.7% (agree on a share repurchase framework with Dongfeng Motor; implements asset-light approach to grow Jeep brand in China; negotiates termination of local joint venture with GAC Group)
- BALY +2.6% (Standard RI notifies of its election to tender 360,000 common shares in modified Dutch auction)
- BIDU +2.6% (positive Barrons article)
- CRNT +2.3% (Largest Ceragon Networks Shareholder Sends Letter to Board of Directors)
- ESTE +2.2% (files for 5,650,977 share common stock offering by selling shareholders; also files for 29,837,033 share common stock offering by selling shareholders)
- TCOM +2.2% (positive Barrons article)
- AER +1.8% (signs lease agreement with GOL Linhas Aereas Inteligentes)
Analyst comments:
- CHK +2.1% (initiated with a Buy at Goldman)
- CLNN +0.9% (initiated with a Buy at H.C. Wainwright)
- Enel (ENL TH) +4.7%
- Wienerberger (WIB TH) +2.2%
- Thyssenkrupp (TKA TH) +2%
- ASML (ASME TH) +1.8%
- Uniper (UN01 TH) +1.7%
- AstraZeneca (ZEG TH) +1.5%
- ING (INN1 TH) +1.2%
- Novo Nordisk (NOVC TH) +1.2%
- Zalando (ZAL TH) +1.2%
- BAE (BSP TH) -1.1%
- Delivery Hero (DHER TH) -1.3%
- Swedish Match (SWMC TH) -1.7%
- Just Eat Takeaway (T5W TH) -1.8%
- Deliveroo Cuts FY Global Gross Transaction Value Y/y Forecast
DAX:
- Vonovia (VNA TH) +1.4%
- BASF (BAS TH) +1.3%
- VW (VOW3 TH) +1.3%
- Covestro (1COV TH) +1.2%
- Zalando (ZAL TH) +1.2%
MDAX:
- Thyssenkrupp (TKA TH) +2.6%
- Uniper (UN01 TH) +2.5%
- What to Watch in Commodities: Gas, China, BHP, Alcoa, Oil
- Rheinmetall (RHM TH) +1.4%
- Commerzbank (CBK TH) +1.2%
- Lufthansa (LHA TH) +1.2%
- Evotec SE (EVT TH) -0.5%
- Delivery Hero (DHER TH) -0.8%
SDAX:
- Heidelberger Druck (HDD TH) +2.2%
- Deutz (DEZ TH) +1.8%
- ADTRAN Holdings Inc (QH9 TH) +1.8%
- flatexDEGIRO (FTK TH) +1.8%
- PVA TePla (TPE TH) +1.2%
- Kloeckner (KCO TH) -1%
- Hensoldt (HAG TH) -1.5%
Stocks and US equity futures rose Monday amid scaled back bets on how aggressively the Federal Reserve will hike interest rates and as investors assessed Chinese pledges to shore up economic growth. A gauge of Asian shares added more than 1%, boosted by a jump in Chinese technology firms. S&P 500, Nasdaq 100 and European contracts pushed higher following a Wall Street rally Friday. Japan is shut for a holiday. China’s central bank has indicated it will step up implementation of prudent monetary policy. Its banking regulator has asked lenders to provide credit to eligible developers so they can complete unfinished residential properties. China faces rising Covid cases, hobbling lockdowns and property-sector woesthat now span a boycott of mortgage payments on some unfinished projects. The dollar slipped, with a gauge of the greenback’s strength down from a record high. Faster inflation bolstered New Zealand’s currency. Oil fell as the market digests slowing demand and whether supply will be increased after President Joe Biden’s visit to Saudi Arabia.
Treasuries won’t trade in Asia due to the Japan break. Treasury futures edged up. Inversions on parts of the yield curve are a sign the bond market views the Fed’s tightening cycle against inflation as still tough enough to risk recession. Investors continue to be whipsawed by concerns over inflation and the potential for a US recession. At the same time, equity valuations have fallen back from pandemic-era peaks. Data last week showing a drop in long-term US inflation expectations eased some fears that elevated price pressures are becoming entrenched. Strong retail sales underscored a resilient economy despite monetary tightening.
Traders are back to expecting a 75 basis points July Fed rate hike, after last week flirting with the prospect of a 100 basis points move to hammer inflation. Still, the outlook remains troubling for many investors. The International Monetary Fund will cut its global economic growth outlook “substantially” in its next update as nations run out of options to tackle worsening risks. BTC is trading at 21,300.
Nikkei +0,54% Hang Seng +2,58% CSI +1,15% Shanghai +1,49% Shenzen +1,48%
Eur$ 1,0091 CNH 6,7522 CNY 6,7466 JPY 138,33 GBP 1,1884 RUB 57 TRY 17,3540 WTI$ 97,95 Gold 1,714.43 BTC 21,400 +2% ETH 1,415+2,5%
S&P +0,51% Nasdaq +0,89% EuroStoxx +0,78% FTSE +0,56% Dax +0,70% SMI +0,63%
Macro :
- White House Anticipates More Saudi Arabia Oil: Resources Wrap
- ECB Seeks Credibility as Recession Nears: MLIV Pulse
- Germany Expects Regional Gas Emergencies This Winter: Bild
- Italy Stocks May Be Active With Draghi’s Government on the Brink
Keep an eye on :
- AIR FP : Delta to Announce 100 Boeing Max 10 Planes Deal, Reuters Reports
- AIR FP : Boeing CEO ‘Comfortable’ About FAA Approving 787 Deliveries: FT
- ARCAD NA : Arcadis to Buy IBI Group for C$19.50 Per Share in Cash
- DFDS DC : DFDS Boosts FY Ebitda Pre-Items Forecast, Beats Estimates
- DNO NO : DNO Got $264.6M Net From Kurdistan Regional Government in 2Q
- ERM LN : *ASTORG, EPIRIS AGREE TO BUY EUROMONEY FOR 1,461P/SHARE IN CASH
- EOAN GY : EON, Igneo in High Speed Broadband JV to Spur German Rollout
- FINGB SS : Fingerprint Cards Reduces Staff Due to China Mobile Market Slump
- FLOW NA : Flow Traders Starts Venture Capital Unit With EU50M Commitment
- FGP LN : Cites speculation that I Squared is improving its offer ahead of a bidding deadline next week - Times
- GAM SW : GAM Sees CHF264M Non-Cash Impairment After AuM Fall In 1H
- LSEG LN : LSE’s Hoggett to Head UK Capital Markets Task Force, Sky Says
- MOWI NO : Mowi Sees 2Q Ebit Rising From a Year Earlier to About EU320M
- NDA SS : Nordea Bank 2Q Net Interest Income Matches Estimates
- NEL NO : Nel Gets Order for 200MW of Alkaline Electrolyzer Equipment
- PCELL SS : PowerCell Signs MOU With ZeroAvia for Fuel Cell Stacks Delivery
- PRU LN : Malaysia Said to Set 2023 Cutoff for Foreign Insurer Stake Sales
- RATOB SS : Ratos 2Q EPS SEK1.83 Vs. SEK1.84 Y/y
- RLF SW : Relief Therapeutics Pact Partner Resubmitts ACER-001 to FDA
- RBREW DC : Royal Unibrew to Buy Amsterdam Brewery W/ EV of DKK250M
- RR/ LN : Rolls-Royce Plans Engine Tests with Hydrogen
- SAN SM : *SPAIN MULLS IMPOSING TAX ON BANK FEES, INTERESTS: EL PAIS
- SOLB BB : Solvay to Raise FY Outlook As Pricing Helps Overcome Inflation
- TEL NO : Telenor Grameenphone 2Q Operating Profit Rises to NOK1.74B
- TSCO LN : Amazon Targets Tesco With Clubcard Price Match in Expansion Push
- UN01 GY : German Regulator Says Gas Prices May Have Stalled, Bild Reports
- VOD LN : Vodafone Sells NZ Mobile Tower Assets to PE Firms for NZ$1.7B
- ZURN SW : Malaysia Said to Set 2023 Cutoff for Foreign Insurer Stake Sales
>>> Up
* Addnode Group AB Raised to Buy at Handelsbanken
* Balder Raised to Buy at SEB Equities; PT 80 kronor
* CD Projekt Raised to Hold at HSBC; PT 97 zloty
* Heba Fastighets Raised to Hold at Handelsbanken
* Orkla Raised to Neutral at SpareBank; PT 82 kroner
* Pandox Raised to Buy at Handelsbanken
* Richter Raised to Buy at HSBC; PT 9,200 forint
>>> Down
* Admiral Cut to Underperform at Jefferies; PT 1,525 pence
* Bekaert Cut to Neutral at Oddo BHF; PT 44.50 euros
* Direct Line Cut to Hold at Jefferies; PT 215 pence
* Erste Cut to Equal-Weight at Morgan Stanley; PT 34 euros
* Home24 Cut to Hold at Berenberg; PT 3.10 euros
* Sats Cut to Neutral at SpareBank; PT 16 kroner
* Social Chain Cut to Hold at Berenberg; PT 5.60 euros
* TKH GDRs Cut to Neutral at Oddo BHF; PT 42 euros
>>> Initiation
* Jet2 Reinstated Buy at Panmure Gordon; PT 1,470 pence
* Nvidia Rated New Buy at TF Securities
>>> Call
* Admiral, Direct Line Cut at Jefferies on Rising Claims Inflation
* Erste Cut at Morgan Stanley as Pressure Builds on Earnings
* Nordea Stock Set for Neutral Open, Handelsbanken Says