- Siemens Energy (ENR TH) +3.4%
- Siemens Energy Joins DAX Benchmark Just 6 Months After Listing
- Stellantis (8TI TH) +1.3%
- BAT (BMT TH) +1.3%
- Carnival Plc (POH1 TH) +1.3%
-
Vodafone (VODI TH) +0.7%
- Tata Consultancy expands strategic partnership with Vodafone Netherlands
- Novo Nordisk (NOVC TH) +0.5%
- Rolls-Royce (RRU TH) +0.4%
- TUI (TUI1 TH) -1.8%
- Vestas (VWS TH) -1.8%
-
Merck KGaA (MRK TH) -2.1%
- Merck KGaA Forecasts Record Earnings as Covid Boosts Demand
- ASML (ASME TH) -2.4%
-
Knorr-Bremse (KBX TH) -2.4%
- Knorr-Bremse Sees 2021 Operating Ebitda Margin 17.5% to 19%
- Prosus (1TY TH) -2.5%
- Taylor Wimpey (TWW TH) -2.8%
-
Vivendi SE (VVU TH) -3.6%
- Vivendi SE Cut to Equal-Weight at Barclays; PT 31 euros
- Vivendi Results Solid, Although Uncertainties Remain: Citi
-
Lufthansa (LHA TH) -3.9%
- Lufthansa Sees Delay in Breaking Even After $8.1 Billion Loss
-
ProSieben (PSM TH) -5%
- ProSieben 2021 Adjusted Ebitda Forecast Misses Estimates
DAX:
- Vonovia (VNA TH) +0.5%
- Vonovia Sees 2021 Group FFO EU1.42b to EU1.47b
- Henkel (HEN3 TH) +0.2%
- Henkel Sees 2021 Adjusted Ebit Margin 13.5% to 14.5%
- Munich Re (MUV2 TH) -1.1%
- Siemens (SIE TH) -1.1%
- BMW (BMW TH) -1.3%
- Infineon (IFX TH) -1.6%
- Merck KGaA (MRK TH) -1.8%
- Merck KGaA Forecasts Record Earnings as Covid Boosts Demand
MDAX:
- Siemens Energy (ENR TH) +4.8%
- Siemens Energy Joins DAX Benchmark Just 6 Months After Listing
- Hochtief (HOT TH) +0.8%
- Siltronic (WAF TH) -1.4%
- Metro AG (B4B TH) -1.6%
- HelloFresh (HFG TH) -2.4%
- Lufthansa (LHA TH) -3.4%
- Lufthansa Sees Delay in Breaking Even After $8.1 Billion Loss
- ProSieben (PSM TH) -5.3%
- ProSieben 2021 Adjusted Ebitda Forecast Misses Estimates
SDAX:
- Encavis (CAP TH) +2.2%
- Hensoldt AG (HAG TH) +1.5%
- Borussia Dortmund (BVB TH) -1.1%
- Nordex (NDX1 TH) -1.5%
- Schaeffler (SHA TH) -2.2%
- Schaeffler Sees 2021 Revenue In Constant Currency Above +7%
- VERBIO Vereinigte (VBK TH) -4.2%
- Global Fashion Group (GFG TH) -6.4%
- Global Fashion Group Prices EU375m 1.25% Convertibles Due 2028
Evergrande courts Hong Kong tycoons to rev up electric vehicle push
Poker-playing billionaire’s wife pumps cash into indebted Chinese property group’s car project
A former tabloid reporter married to a fugitive, poker-playing billionaire is among those backing the world’s most indebted property group’s bid to become a leader in electric cars, despite it not having sold a single vehicle.
Evergrande New Energy Vehicle’s Hong Kong-listed shares have risen 81 per cent this year, catapulting the Chinese group’s market capitalisation to more than $63bn — above that of traditional rivals such as Ford — even as it struggles to get its debut car to market.
But Evergrande NEV is not just another example of the mania for electric vehicles that has swept across global markets. The rally is tied to signs that influential backers will continue to stand by parent China Evergrande and its web of subsidiaries, even as it faces pressure from Beijing to bring its more than $120bn in borrowings under control.
“If this is not a bubble, I don’t know what is,” said David Blennerhassett, an analyst at Quiddity Advisors, of Evergrande NEV’s stock.
In late January, Evergrande NEV announced that a handful of individuals with connections to its parent and its chairman had bought $3.4bn of shares, pushing the stock price up by over 50 per cent in a single session.
Hui Ka Yan, who is also Evergrande’s majority owner, was previously China’s richest man. His personal connections extend to poker games with Hong Kong property tycoons such as Chinese Estates’ Joseph Lau, who in 2014 was convicted of bribery and money laundering in Macau. In January 2020, Lau invested in Evergrande’s issuance of dollar bonds, according to Hong Kong media.
For the January 2021 fundraising Evergrande NEV tapped Lau’s wife Chan Hoi-wan for $400m, according to a bourse statement. Chan is a former entertainment reporter at Apple Daily, a Hong Kong tabloid known for its pro-democracy stance. She also owns 2.4 per cent of Evergrande itself as of the end of June and was an investor in the group’s property services prior to its November stock market listing.
Other investors in the property business include a company linked to Cheung Chung-kiu, another of Hui’s poker opponents, who last year bought London’s most expensive home and who stepped in to buy Evergrande bonds when prices fell last September.
Representatives for Lau, Chan and Cheung did not respond to a request for comment.
Maggie Hu, an expert in finance and property at the Chinese University of Hong Kong, said Hong Kong tycoons “have formed strategic partnerships [with Evergrande] over the years and their business interests are closely linked and tightly knit together”.
Evergrande NEV represents the parent’s attempt to diversify as the Chinese property market slows, experts say.
“The problem with the Chinese property market is that prices have been too high, which has created a tremendous amount of risk for the economy . . . so they are looking for an additional growth driver,” said Liu Jing, a professor of accounting and finance at Hong Kong’s Cheung Kong Graduate School of Business.
The electric vehicle subsidiary, part of a sprawling network of businesses that includes China’s largest football club, was known as Evergrande Health before being rebranded in August.
But Evergrande NEV is primarily focused on property development, believes Nigel Stevenson, an analyst at research firm GMT Research. He cites cash flow statements of the electric vehicle subsidiary that demonstrate high levels of continuing investment in property, only part of which is for factories.
Lines of credit flowing from the parent to its electric vehicle subsidiary have raised questions among analysts over what money the latter raises will be used for, at a time when Evergrande has been selling assets to raise cash.
The parent’s stock and bonds sold off in September following reports it had sought support from the provincial government in China’s Guangdong, where Evergrande is based. The company has denied the reports.
A share placement by Evergrande in October raised just $555m, versus a target of over $1bn, while its access to bank funding is limited by rules unveiled at the end of December.
“Under this tough external financing environment, it is harder for Evergrande to obtain debt financing from banks in China,” said CUHK’s Hu. “To raise more funds and to alleviate its current leverage situation, funds could be raised by Evergrande from its subsidiaries.”
Evergrande NEV has said the money raised in January would be used to help realise its goal of becoming “the world’s largest and most powerful new energy vehicle group” but added that it would also help to “repay indebtedness”. In a separate statement, the company said “most” of the proceeds would be used for research and development, as well as base construction.
Financial statements show that Evergrande NEV owed Rmb34bn ($5.3bn) to Evergrande as of June. A further Rmb31bn of borrowing is guaranteed by its parent, meaning that debt reduction at the subsidiary level would improve the group’s balance sheet. A proposed listing of Evergrande NEV shares in mainland China could raise further capital to alleviate the parent’s debt.
Some investors appear to be holding out hope that Evergrande NEV can realise its electric vehicle ambitions. A rally in the shares in February was triggered by the release of online videos showing its pre-production models being test driven. But others maintain the business’s prospects have more to do with its parent than any technological breakthrough.
“As it currently stands, Evergrande NEV essentially looks like a funding vehicle to upstream the proceeds to the parent,” said Blennerhassett. But the money raised by Evergrande NEV “is just a drop in the ocean for how much Evergrande Group is exposed to”.
The ice pack: how hip-hop jewellery became big business Rap stars have transformed the fine-jewellery market and become some of its biggest clients. We talk to the creatives bringing the OTT into the everyday
Private investors lose out in corporate bids
Takeover Panel must change rules to compel companies to disclose acquisition approaches sooner
A public company is owned by its shareholders. That’s a basic principle which, in my view, is too often forgotten or ignored. Directors are there to lead, steward, serve and, very importantly, to inform shareholders — but it is the shareholders who should call the shots.
This lies at the heart of a challenge I have launched at the Takeover Panel, which supervises UK bids and deals, to improve shareholder access to timely information, notably in takeovers.
My contention is that boards often fail to inform shareholders of serious takeover talks as, crucially, they are not required to do so by current panel guidelines.
Put simply, leaving aside leaks, boards have to make an announcement only when there is “a firm intention” to make a bid coming from a potential buyer.
This can mean that acquisition talks drag on for many months with any number of offers, perhaps from more than one party, without a statement being made.
Signature Aviation is a recent example of my concern. This leading global private aviation support business, was, according to unconfirmed press reports, seemingly on the receiving end of up to 10 approaches from at least two different investment groups — Blackstone and Global Infrastructure — between February and December last year.
Yet nothing was disclosed to shareholders until December. Signature then revealed it had received two approaches and a few days later that it had received an offer, which the directors were minded to accept at a significant premium to the prevailing price. Finally, last month, a deal was struck at 411p a share with Blackstone and Global teaming up in a joint approach with a third investment company, Bill Gates’s Cascade.
Any shareholder who sold in ignorance of a possible bid seriously lost out, as the takeover price was above the market price for all of 2020, and far above an April low of 153p.
I should disclose that I was a shareholder in BBA Aviation, a predecessor company to Signature, in 2008-15, and I retained an indirect interest, managing stakes for my wife and daughter, before selling out at 441p in January.
My main issue is not with the company, which kept to the rules, but with the rules themselves, though was there not, even under existing regulations, a bit of a moral obligation to inform shareholders?
It cannot be right to delay disclosure so long in an increasingly transparent corporate landscape where, for example, directors’ share transactions have to be announced immediately.
I concede that the actual trigger for an announcement is hard to define, but I suggest it is not beyond a responsible board, perhaps after consultation with the Takeover Panel, to recognise whether directors should announce those talks to the shareholder-owners.
They can add, as they often do, that “there can be no certainty that an offer will ultimately be made”. But they need to speak out earlier in the process.
After such an early announcement, shareholders have the option of retaining or selling their holdings, in the knowledge of what is happening.
Isn’t this preferable to shareholders making their decisions in total ignorance? How many hundreds of shareholders will have been disadvantaged under current panel guidelines? I am encouraged by the support of investors that I have talked to and the backing of ShareSoc, the 7,000-strong premier body representing private investors, where I am patron. Isn’t a review and change of guidelines long overdue?
Responding to a question from me in the House of Lords, the government indicated that operating the Takeover Code, and making any changes, was the responsibility of the panel itself.
Fortunately, the panel might be open to discussion, and I have a meeting arranged with its executive. In a letter to me, the panel chairman said: “The question of the appropriate regime for the disclosure of takeover approaches is an important one and one which deserves full debate”.
Turning now to my own portfolio, I cannot think of a current holding where the outlook looks negative.
Pride of place goes again to my largest holding, Treatt, the fragrance and flavours group, which soared to £10 on a healthy profits statement.
The company is increasingly seen as a beneficiary of the health and wellbeing trend. Unsurprisingly, profit-taking, perhaps driven partly by concerns about capital gains tax, has brought the shares back to £9. But Treatt remains a core holding, with every sign of further growth to come.
The share prices of three other major holdings have similarly come off the top. But I think that Anpario, a provider of natural stimulants for animal growth, Concurrent Technologies, a manufacturer of specialist computer boards, and Lokn’Store, an operator of self-storage centres, all have considerable scope for further appreciation.
Another five — Appreciate, Christie, STV, Vianet, and Vitec — are in recovery mode and their figures will almost certainly pick up as we emerge from lockdown.
During the last quarter, I have modestly added to both food ingredients maker Tate & Lyle and ventilation products manufacturer Titon. Tate, capitalised at over £3bn, appeared to me to be undervalued. Titon, a cash- and property-rich company, has been overlooked as a long term beneficiary of Covid-19, with new building regulations increasingly requiring better ventilation.
For the first time in 35 years, I am withdrawing my ISA dividend income, so new purchases have to be funded from sales or takeovers. Thus Treatt has been slightly trimmed, rather more so Legal & General, to fund two new purchases — Duke Royalty and Tatton Asset Management.
Duke, under experienced Anglo-Canadian management, provides an unusual form of finance for established companies through royalty or revenue-based financing, somewhat akin to corporate mortgages.
Current financial pressures on business are providing an increased flow of opportunities for Duke, enabling the group to selectively make perhaps four new investments a year. Tatton offers platform-based discretionary fund management and mortgage services to UK financial advisers. I expect both companies to grow over the medium term.
China led Asian stocks lower and U.S. futures declined Thursday after a surge in sovereign bond yields reignited concerns about valuations. Treasuries held those losses.
MSCI Inc.’s Asia-Pacific gauge suffered its worst loss this week with China and Hong Kong bearing the brunt of the selloff. The technology sector struggled while real estate, finance and energy shares outperformed as part of a global shift to value segments. S&P 500 and Nasdaq 100 futures dipped after a slump in the indexes took the tech-heavy gauge to a two-month low. European contracts slid.
Australian bonds tumbled after benchmark Treasury yields approached 1.5% in U.S. trading. A market gauge of inflation expectations over the next five years hit its highest level since 2008.
US After Hours RMNI +6.7%, AEO +6.3%, SPLK +5.4%, RRGB +4.8%, SNOW +3.7% trade up on earnings; YEXT -15.4%, VRM -12%, OKTA -10.5% down sharply on earnings; MAXN +12.3% higher on amended solar supply agreement
Nikkei -2.13% Hang Seng -2.17% CSI -2.78% Shanghai -1.78% Shenzen -2.44%
Eur$ 1.2058 CNH 6.4727 CNY 6.4677 JPY 107.14 GBP 1.3954 CHF 0.9194 RUB 73.85 TRY 7.74307 WTI$ 61.65 +0.60% GOLD 1,715.65 BTC 49,450 -1900
S&P -0.50% Nasdaq -0.75% EuroStoxx -1.02% FTSE -0.56% Dax -0.90% SMI
Macro :
- U.S. Investor Bull-Bear Spread 15: AAII
- London Sees Rise in Virus Cases as National Decline Slows
- Melvin Capital Surged 22% in February After GameStop Disaster
- Bitcoin Drops Below $50,000 Level as Investors Turn Cautious
Spacs :
- SPAC Bosses Flip to More Aggressive Terms as Buyer Mania Builds
- SPAC Bandwagon May Come to London After Rule Change: ECM Watch
Keep an eye on :
- ABNB US : Airbnb Prices $2b Convertible Senior Notes
- ABIO FP : Albioma Sees 2021 Ebitda EU206M to EU216M
- AML LN : Aston Martin to Have Electric Sports Car, SUV by 2025: Chairman
- BBVA SM : BBVA to Carry Out Early Redemption of CoCos Issued in 2016
- BEI GY : Siemens Energy to Replace Beiersdorf in Germany’s DAX Index
- BT/A LN : BT Group Welcomes Government Support for New Investment
- COFB BB : Cofinimmo Offering of 1.49m Shares Prices at EU121/Share
- BN FP : Danone Plans to Sell its Argentina Water Brands: La Nacion
- PBB GY : Deutsche PBB Sees Higher Profit Before Taxes in 2021
- DRW3 GY : Draegerwerk FY Ebit Beats Estimates
- ENX FP : Euronext Buys Remaining Interest in Ibabs for EU53.2M
- G1A GY : GEA Group FY Dividend Per Share Beats Estimates
- GLEN LN : Glencore Is Said to Seek Buyer for South American Zinc Mines
- HEN3 GY : Henkel Sees 2021 Adjusted Ebit Margin 13.5% to 14.5%
- INRN SW : SER Opens Probe Into Interroll Over Potential Ad-Hoc Violation
- JMT PL : J. Martins FY Net Income Misses Estimates (1)
- KARN SW : Kardex Holding AG FY Revenue Misses Estimates
- FORN SW : Forbo FY Sales Match Estimates
- LHA GY : Lufthansa Sees 2021 Adj. Ebit Loss Lower Than 2020 EU5.45b Loss
- LHA GY : Lufthansa Sees Delay in Breaking Even After $8.1 Billion Loss
- ORA FP : Orange Seeking Partner to Replace Groupama: Richard
- RNO FP : Nissan COO Says More Electric Sedans, SUVs Coming to U.S.
- PSM GY : ProSieben 2021 Adjusted Ebitda Forecast Misses Estimates
- RSW LN : Renishaw, Weir to Replace Morrison, Pennon in FTSE 100
- RBREW DC : Royal Unibrew Sees 2021 Ebit DKK1.48B to DKK1.63B, Est. DKK1.60B
- SHLF NO : Shelf Drilling 4Q Total Revenue Beats Estimates
- ENR GY : Siemens Energy to Replace Beiersdorf in Germany’s DAX Index
- ENTRA NO : Entra Block of 10m Shares Crosses Following Dropped Bids (2)
- SDRL NO : Seadrill Makes $2.9B Impairment as Offshore Slump to Continue
- SIOE BB : Sioen FY Adjusted Ebitda Beats Estimates
- GLE FP : Societe Generale to Cut Bonuses at Investment Bank by About 20%
- STM GY : Stabilus Issues 95 Million-Euro Promissory Note
- STLA IM : Stellantis Shelved U.K. Car Investment Plan Over Combustion Ban
- SEV FP : Suez Is Said in Talks to Sell Australian Arm to Cleanaway
- TIT IM : Telecom Italia: Asset Management Cos. Filed Slates of Candidates
- HO FP : Thales 2021 Sales Forecast Misses Estimates
- UCG IM : UniCredit Submission Indicates Padoan as Chairman, Orcel as CEO
- URW NA : Iliad’s Niel Lifts Unibail-Rodamco-Westfield Stake to 11.4%: AMF
- UN01 GY : Uniper Sees 2021 Adjusted Ebit EU700M to EU950M
- VACN SW : VAT FY Net Sales Beat Estimates
- VIFN SW : Vifor Expects to Conclude at Least Two Deals in 2021, CEO Says
- RN FP : Vilmorin Sees FY Like-for-like Sales +4% to +6%
- VIV FP : Vivendi SE FY Ebita Beats Estimates
- VIV FP : Vivendi Tops Estimates Thanks to Music Unit It Plans to List (1)
- VOW3 GY : EV Battery Battle Has Carmakers Urging Peace Before Biden Acts
- VOW3 GY : Porsche & Volkswagen Group considering entering F1 - BBC Sport exclusive https://t.co/Zr1uPqKfns
- WEIR LN : Renishaw, Weir to Replace Morrison, Pennon in FTSE 100
>>> Up
* Also Raised to Buy at Baader Helvea; PT 314 Swiss francs
* Dufry Raised to Reduce at Baader Helvea; PT 55 Swiss francs
* EDP Renovaveis Raised to Buy at SocGen; PT 22.50 euros
* Handelsbanken Raised to Buy at Citi
* Kuehne + Nagel Raised to Add at AlphaValue
* Mayr-Melnhof Raised to Accumulate at Erste Group
* Neoen Raised to Buy at Stifel; PT 59 euros
* Nel Raised to Buy at Norne Securities; PT 35 kroner
* Reckitt Raised to Buy at SocGen; PT 7,000 pence
* Safran Raised to Overweight at JPMorgan; PT 136 euros
* Tryg Raised to Buy at SEB Equities; PT 172 kroner
* Whitbread Raised to Overweight at JPMorgan; PT 4,000 pence
>>> Down
* InterContinental Hotels Cut to Underweight at JPMorgan
* Kering Cut to Add at AlphaValue
* Novartis Cut to Hold at Intron Health; PT 83 Swiss francs
* Roche Cut to Hold at Intron Health; PT 300 Swiss francs
* Sampo Cut to Underweight at JPMorgan; PT 38.21 euros
* Swiss Life Cut to Hold at HSBC; PT 498 Swiss francs
* Weir Cut to Hold at Deutsche Bank; PT 2,000 pence
>>> Initiation
* Iberdrola Rated New Buy at Jefferies; PT 12.70 euros
>>> Call
* Prospects Attractive for Nordic Banks; Citi Raises Handelsbanken
* Iberdrola Seen Among Best Plays on Energy Transition: Jefferies
* Royal Unibrew Results In Line, Guidance Cautious: Jefferies
* Telia Execution Risks Seen High After Strategy Update: Citi
* Vivendi Results Solid, Although Uncertainties Remain: Citi
After Hours Summary: RMNI +6.7%, AEO +6.3%, SPLK +5.4%, RRGB +4.8%, SNOW +3.7% trade up on earnings; YEXT -15.4%, VRM -12%, OKTA -10.5% down sharply on earnings; MAXN +12.3% higher on amended solar supply agreementAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: RMNI +6.7%, AEO +6.3%, SPLK +5.4%, RRGB +4.8%, SNOW +3.7%, TCOM +3.5%, DSGX +0.1%
Companies trading higher in after hours in reaction to news: MAXN +12.3% (SPWR amends solar supply agreement with MAXN), FUBO +4.5% (secures market agreements for fubo Sportsbook in IN and NJ thru CZR; also AMZN in talks to broadcast many NFL games exclusively on Prime Video, according to WSJ), PRVB +2% (announces publication of extended follow-up date from "At-Risk" TN-10 Study), CBOE +1.8% (announces February trading volumes), QELL +0.8% (in talks to merge with Lilium, a flying-taxi startup, according to Bloomberg), SPWR +0.6% (SPWR amends solar supply agreement with MAXN), DKNG +0.4% (Amazon in talks to broadcast many NFL games exclusively on Prime Video, according to WSJ), AMZN +0.3% (Amazon in talks to broadcast many NFL games exclusively on Prime Video, according to WSJ), DIS +0.2% (plans to close 20% of its brick-and-mortar stores in a shift towards more eCommerce, according to CNBC; also AMZN in talks to broadcast many NFL games exclusively on Prime Video, according to WSJ), Y +0.1% (CEO to retire, new CEO named), SHO +0.1% (COO to retire)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: YEXT -15.4%, VRM -12%, OKTA -10.5% (also to acquire Auth0 for $6.5 bln in stock), MRVL -3.5%, SQM -2.5%
Companies trading lower in after hours in reaction to news: RADA -5.9% (stock offering), LASR -5.6% (stock offering; also files for $150 mln mixed securities shelf offering), AES -3.4% (announces offering of equity units), FOXA -3.1% (Playfly Sports acquires three sales divisions of FOX Sports), DX -2.9% (stock offering), CUTR -2.8% (convertible notes offering), STKL -0.4% (stock offering), TYL -0.1% (convertible notes offering), DD -0.1% (expanding production of its MOLYKOTE Specialty Lubricants)
Closing Stock Market SummaryThe S&P 500 fell 1.3% on Wednesday, as the growth stocks continued to face valuation-oriented and rotational headwinds amid a rise in long-term interest rates. The Nasdaq Composite (-2.7%), which has greater exposure to these names, dropped 2.7%. The Russell 2000 declined 1.1%, and the Dow Jones Industrial Average declined 0.4%.
Long-term interest rates moved higher partly due to lingering growth optimism and pestering inflation concerns. The 10-yr yield rose six basis points to 1.47%, although it settled below its intraday high of 1.50% and well below last week's high of 1.61%. The 2-yr yield increased two basis points to 0.14%. The U.S. Dollar Index increased 0.2% to 90.96.
Growth optimism was linked to new expectations from the Biden administration to have vaccines available for every adult by the end of May, versus prior guidance of July. Inflation concerns stemmed from the February ISM Non-Manufacturing Index showing the Prices Index rise to 71.8% from 64.2% in January.
As it pertained to equities, the higher rates worked against the growth stocks within the S&P 500 information technology (-2.5%), consumer discretionary (-2.4%), and communication services (-1.6%) sectors. The Philadelphia Semiconductor Index fell 3.1%, the Vanguard Mega Cap Growth ETF (MGK 199.71, -5.32, -2.6%) fell 2.6%, and the ARK Innovation ETF (ARKK 125.11, -8.40, -6.3%) fell 6.3%.
On the flip side, the gains in the cyclical energy (+1.4%), financials (+0.8%), and industrials (+0.1%) sectors were symptomatic of a rotational interest as investors sought areas with direct exposure to the economy. Financial stocks additionally benefited from the curve-steepening activity in the Treasury market; energy stocks followed oil prices ($61.31, +1.52, +2.5%) higher.
Lyft (LYFT 61.76, +4.70, +8.2%) contributed to the so-called reopening thesis after raising its Q1 adjusted EBITDA loss expectation to $135 million from $145-150 million and observing that average daily ride-shares were up 4% m/m in February despite severe weather. LYFT shares rose 8%.
A separate note on inflation, the Fed's Beige Book for economic activity in February highlighted that "several districts reported anticipating modest price increases over the next several months." Chicago Fed President Evans (FOMC voter) said he doesn't see inflation as a risk at this point. These observations might have tempered any inflation angst.
For what it's worth, the S&P 500 closed just above its 50-day moving average (3818) despite a weak finish.
Reviewing Wednesday's economic data:
- The ISM Non-Manufacturing Index fell to 55.3% in February (consensus 58.6%) from 58.7% in January. The dividing line between expansion and contraction is 50.0%. The February reading marks the ninth straight month of growth for the services sector, but it is the slowest pace since May 2020.
- The key takeaway from the report for a market focusing increased attention on inflation trends, as economic activity picks up, is the upward move in the Prices Index to 71.8% from 64.2% in January. This elevated reading follows on the heels of Monday's ISM Manufacturing Index, which showed the Prices Index at its highest level (86.0%) since May 2008.
- The ADP Employment Change report estimated 117,000 jobs were added to private-sector payrolls in February (consensus +180,000) following an upwardly revised 195,000 increase (from 174,000) in January.
- The IHS Markit Services PMI for February was revised higher to 59.8 from 58.3 in the preliminary reading.
- The weekly MBA Mortgage Applications Index increased 0.5% following a 11.4% drop in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the revised Q4 readings for Productivity and Unit Labor Costs, and Factory Orders for January on Thursday.
- Russell 2000 +11.8% YTD
- Dow Jones Industrial Average +2.2% YTD
- S&P 500 +1.7% YTD
- Nasdaq Composite +0.9% YTD