Tesla stock in 2022 had its worst year since going public
Jan 2 (Reuters) – Tesla Inc (TSLA.O) on Monday reported record production and deliveries for fourth-quarter electric vehicles, but it missed Wall Street estimates, burdened by logistics problems, slowing demand, rising interest rates and fears of recession.
The world’s most valuable automaker delivered 405,278 vehicles in the last three months of the year, compared with Wall Street expectations of 431,117 vehicles, according to Refinitiv data.
The company had delivered 308,600 vehicles in the same period a year earlier.
Tesla delivered 388,131 Model 3 compact sedans and Model Y sports utility vehicles (SUVs) compared with 17,147 Model X and Model S luxury cars.
In total, Tesla made 439,701 cars in the fourth quarter.
Reuters Graphics
As logistical bottlenecks persisted – an issue CEO Elon Musk had said in October he was working to resolve – Tesla’s fourth quarter deliveries fell about 34,000 vehicles short of production.
In the third quarter, the company deliveries were about 22,000 units fewer than production.
Delivering fewer cars than it makes has been rare for the automaker, which in previous quarters delivered more or similar numbers to the vehicles produced.
Among other headwinds for Tesla, analysts have cited demand weakness in the world’s top auto market China, as well as stiff competition from legacy automakers such as Ford Motor Co (F.N), General Motors Co (GM.N) and startups such as Rivian Automotive (RIVN.O) and Lucid Group (LCID.O).
Tesla plans to run a reduced production schedule in January at its Shanghai plant, extending the lowered output it began this month into next year, according to a Reuters report, based on a review of an internal schedule.
Tesla’s stock, which did not trade on Monday due to a New Year holiday, fell 65% in 2022, its worst year since going public in 2010. Analysts and retail shareholders feared demand issues stemming from an uncertain economy would dent the company’s target to grow deliveries by 50% annually.
“This was a disappointing delivery number and the bulls will not be happy,” said Wedbush Securities analyst Daniel Ives.
Tesla said in a separate statement that it plans to host its Investor Day on March 1 and livestream the event from its Gigafactory in Texas when it will discuss longterm plans for expansion and capital allocation.
The automaker also hinted at a “generation 3” platform to show its investors on Investor Day. Musk said in October that Tesla was working on a “next-generation vehicle” which will be cheaper and smaller than the Model 3 and Model Y cars.
(This story has been refiled to remove New York dateline)
Reporting by Akash Sriram and Baranjot Kaur in Bengaluru; Additional reporting by Akanksha Khushi; Editing by Sriraj Kalluvila, Matthew Lewis, Howard Goller and Barbara Lewis
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Death toll from 5.6-magnitude earthquake expect to rise
Dozens remain trapped in the rubble – officials
President
CIANJUR, Indonesia, Nov 22 (Reuters) – Children killed when their schools collapsed accounted for many of the 162 dead in an earthquake that devastated a town on Indonesia’s main island of Java, an official said on Tuesday, as rescuers raced to reach people trapped in rubble.
Hundreds of people were injured in the Monday quake and officials warned the death toll was likely to rise.
The shallow 5.6-magnitude quake struck in mountains in Indonesia’s most populous province of West Java, causing significant damage to the town of Cianjur and burying at least one village under a landslide.
Landslides and rough terrain were hampering rescue efforts, said Henri Alfiandi, head of National Search and Rescue Agency (Basarnas).
“The challenge is the affected area is spread out … On top of that, the roads in these villages are damaged,” Alfiandi told a news conference, adding that more than 13,000 people had been evacuated.
“Most of the casualties are children, because at 1 p.m. they were still at school,” he said, referring to the time the quake hit.
Many of the fatalities resulted from people trapped under collapsed buildings, officials said.
President Joko Widodo flew in to Cianjur on Tuesday to encourage rescuers.
“My instruction is to prioritise evacuating victims that are still trapped under rubble,” said the president, who is known as Jokowi.
He offered his condolences to the victims and pledged emergency government support. Reconstruction should include earthquake-prone housing to protect against future disasters, he said.
Survivors gathered overnight in a Cianjur hospital parking lot. Some of the injured were treated in tents, others were hooked up to intravenous drips on the pavement as medical workers stitched up patients under torch light.
“Everything collapsed beneath me and I was crushed beneath this child,” Cucu, a 48-year-old resident, told Reuters.
“Two of my kids survived, I dug them up … Two others I brought here, and one is still missing,” she said through tears.
[1/10] Indonesia rescue members evacuate people from the site of a landslide caused by the earthquake in Cugenang, Cianjur, West Java province, Indonesia, November 22, 2022. REUTERS/Ajeng Dinar Ulfiana
Footage from Kompas TV showed people holding cardboard signs asking for food and shelter, with emergency supplies seemingly yet to reach them.
Hundreds of police officers were deployed to help the rescue effort, Dedi Prasetyo, national police spokesperson told the Antara state news agency.
“Today’s main task order for personnel is to focus on evacuating victims,” he said.
‘SWEPT AWAY’
West Java Governor Ridwan Kamil said at least 162 people were killed, many of them children, while the toll from the national disaster agency (BNPB) stood at 103, with 31 missing.
Authorities were operating “under the assumption that the number of injured and death will rise”, the governor said, with at least one village buried by landslides triggered by the quake.
Cianjur police chief told Metro TV that 20 people had been evacuated from the district of Cugenang, most of whom had died, with residents reporting missing family members.
The area was hit by a landslide triggered by the quake that had blocked access to the area.
“At least six of my relatives are still unaccounted for, three adults and three children,” said Zainuddin, a resident of Cugenang.
“If it was just an earthquake only the houses would collapse, but this is worse because of the landslide. In this residential area there were eight houses, all of the which were buried and swept away.”
Rescue efforts were complicated by electricity outages in some areas, and more than 100 aftershocks.
Straddling the so-called “Ring of Fire”, a highly seismically active zone where different plates on the earth’s crust meet, Indonesia has a history of devastating earthquakes.
In 2004, a 9.1 magnitude quake off Sumatra island in northern Indonesia triggered a tsunami that struck 14 countries, killing 226,000 people.
Reporting by Tommy Adriansyah and Ajeng Dinar Ulfina in Cianjur; and Gayatri Suroyo, Ananda Teresia, Fransiska Nangoy and Bernadette Christina Munthe in Jakarta; Writing by Kate Lamb; Editing by Ed Davies and Stephen Coates
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Scholz is first G7 leader to visit China since start of pandemic
Germany is drafting new, tougher China strategy
Hawks fear Scholz to keep prioritizing economic ties
Business delegation to accompany chancellor to Beijing on Nov. 4
BERLIN, Nov 2 (Reuters) – Chancellor Olaf Scholz makes an inaugural visit to China on Friday that will be closely watched for clues on how serious Germany is about reducing its economic reliance on Asia’s rising superpower and confronting its Communist leadership.
His one-day visit on Nov. 4, will make Scholz the first G7 leader to visit China since the start of the COVID-19 pandemic and the first to meet Chinese President Xi Jinping since he consolidated his grip on power at a Communist Party Congress.
Deep trade ties bind Asia and Europe’s biggest economies, with rapid Chinese expansion and demand for Germany’s cars and machinery fueling its own growth over the past two decades. China became Germany’s single biggest trade partner in 2016.
A recent survey by the Ifo think-tank found that nearly half of German industrial firms now rely on significant inputs from China.
But Scholz’s trip comes at a time of growing concern in the West – particularly in Germany’s top security ally, the United States – about China’s trade practices, human rights record and territorial ambitions.
It also comes amid worry at home about Germany’s dependence on another increasingly assertive, authoritarian state given the ongoing fallout of its over-reliance on Russian energy.
“It is extremely important that we never again make ourselves so dependent on a country that does not share our values,” Foreign Minister Annalena Baerbock told broadcaster ARD when asked about China.
Scholz, who will meet with both Chinese Premier Li Keqiang and Xi, will press China to open up its markets, raise human rights concerns and discuss “autocratic” tendencies, a German government spokesperson said last week.
He also hopes China can help persuade Russia to end the war in Ukraine, a government official said on Wednesday.
“This trip is an exploratory trip to find out in personal exchange where China stands, where China is going and what forms of cooperation are possible,” the official said.
Germany had already started to take a slightly more hawkish stance on China under former Chancellor Angela Merkel, for example by sending a warship to the disputed South China Sea for the first time in two decades last year.
Now Scholz’s government is drafting its first ever China strategy, on the basis of a coalition deal that struck a tougher stance on Beijing, mentioning sensitive issues such as Taiwan and Hong Kong and human rights violations in Xianjiang.
The chancellor made his inaugural Asia visit to Japan, not China, unlike his predecessor in a sign of the changing times.
MERCANTILE APPROACH?
Yet some coalition members, European officials and rights activists worry there are early signs Scholz, who has warned against decoupling, will not mark a decisive break with what they view as Merkel’s mercantilist approach towards China.
Reuters Graphics
Scholz will be accompanied by a delegation of business leaders including the chief executives of Volkswagen (VOWG_p.DE) , BASF (BASFn.DE), Siemens (SIEGn.DE), Deutsche Bank (DBKGn.DE), BMW (BMWG.DE), Merck (MRCG.DE) and BioNTech , according to sources familiar with the matter.
No company deals were planned, a German government official said.
However, “his decision to bring a business delegation shows that, for Germany, profit continues to trump human rights,” Dolkun Isa, president of the Munich-based group the World Uyghhur Congress, said on Wednesday, arguing that Scholz was overlooking a genocide taking place in the Xinjiang region.
Beijing denies any abuses there.
Last week the German chancellor also pushed through a cabinet decision to allow China’s Cosco to invest in a terminal at Hamburg port despite pushback from his coalition partners.
Reuters Graphics
Scholz’s junior coalition partners, the Greens and (FDP) Free Democrats, have long been more hawkish on China than his Social Democrats (SPD) and the Cosco decision prompted outcry.
FDP General Secretary Bijan Djir-Sarai called the decision “naive” and criticized the timing of Scholz’s trip to China as “deeply unfortunate”.
Moreover French and German government sources told Reuters French President Emmanuel Macron had suggested to Scholz they go together to Beijing to send a signal of EU unity to Beijing and counter what they see as Chinese attempts to play one country over another.
But the German chancellor declined Macron’s offer, the sources said.
EU countries should adopt a more united approach, the European Union’s industry chief told Reuters on Monday.
Reporting by Sarah Marsh and Andreas Rinke; Additional Reporting by Paul Carrel; Editing by Alexandra Hudson
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Power lines are shown as California consumers prepare for more possible outages following weekend outages to reduce system strain during a brutal heat wave amid the outbreak of coronavirus disease (COVID-19) in Carlsbad, California, U.S., August 17, 2020. REUTERS/Mike Blake
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Sept 6 (Reuters) – California’s grid operator projected record-breaking power demand on Tuesday and called on consumers to conserve energy for the seventh consecutive day to avoid blackouts amid soaring temperatures.
The California Independent System Operator (ISO) urged residents to cut power use in the late afternoon and early evening as the sun sets and the state’s vast supply of solar-generated electricity recedes.
California’s week-long run of record-breaking temperatures is projected to continue this week with highs reaching into the 110s Fahrenheit (mid 40s Celsius) in interior parts of the state, according to the National Weather Service.
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The ISO forecast demand would peak at 51,590 megawatts (MW) on Tuesday, topping the current record of 50,270 MW in 2006, before sliding to 49,868 MW on Wednesday.
Late on Tuesday morning, solar was supplying about a third of the state’s power demand.
“We need a reduction in energy use that is two or three times greater than what we’ve seen so far as this historic heat wave continues to intensify,” Elliot Mainzer, CEO of the ISO, said in a statement.
If demand for power exhausts the grid’s electric reserves, the ISO said it would instruct utilities to start imposing rotating outages. It would be the first time the state has taken such a measure since a brutal heat wave in August 2020 forced power cuts over two days to around 800,000 homes and businesses.
U.S. power prices in California and other western states for Tuesday soared to their highest since that 2020 heat wave.
Power prices at the Palo Verde hub in Arizona and SP-15 in Southern California rose to $850 and $505 per megawatt hour, respectively. That was their highest since hitting record highs of $1,311 in Palo Verde and $698 in SP-15 in August 2020 when the ISO last imposed rotating outages.
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Reporting by Scott DiSavino in New York and Nichola Groom in Los Angeles; Editing by Sandra Maler
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Zelenskiy defiant, warns of ‘brutal strikes’ by Russia
Aug. 24 holiday marks six months since invasion
U.N. nuclear agency could visit Ukraine plant in days
KYIV, Aug 24 (Reuters) – Ukraine was “reborn” when Russia invaded six months ago, President Volodymyr Zelenskiy said on Wednesday, marking 31 years of his country’s independence from the Moscow-controlled Soviet Union with a vow to drive Russian forces out completely.
After days of warnings that Moscow could use the anniversary of Ukraine’s Independence Day to launch more missile attacks on major cities, Kyiv was unusually quiet and the second biggest city Kharkiv was under curfew after months of bombardment.
The anniversary fell exactly six months after Russia sent tens of thousands of troops into Ukraine.
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In an emotional speech to his compatriots, Zelenskiy said the attack had revived the nation’s spirit.
“A new nation appeared in the world on Feb. 24 at 4 in the morning. It was not born, but reborn. A nation that did not cry, scream or take fright. One that did not flee. Did not give up. And did not forget,” he said.
The 44-year-old leader, speaking in front of Kyiv’s central monument to independence in his trademark combat fatigues, vowed to recapture occupied areas of eastern Ukraine as well as the Crimean peninsula, which was annexed by Russia in 2014.
“What for us is the end of the war? We used to say: peace. Now we say: victory,” he said, days after his government laid out the hulks of burnt-out Russian tanks and armoured vehicles in central Kyiv in a show of defiance.
Russia’s war effort in Ukraine has made little progress in recent months, after its troops were pushed back from Kyiv in the early weeks of the war.
Russian Defence Minister Sergei Shoigu told a meeting of defence ministers in Uzbekistan that Russia had deliberately slowed down what it refers to as its “special military operation” in Ukraine to avoid civilian casualties. read more
WARNINGS
On Tuesday evening, Zelenskiy warned of the possibility of “repugnant Russian provocations”.
“We are fighting against the most terrible threat to our statehood and also at a time when we have achieved the greatest level of national unity,” Zelenskiy said.
Ukraine’s military urged people to take air raid warnings seriously.
“Russian occupiers continue to carry out air and missile attacks on civilian objects on the territory of Ukraine. Do not ignore air raid signals,” the General Staff said in a statement on Wednesday.
Zelenskiy told representatives of about 60 countries and international organisations attending a virtual summit on Crimea on Tuesday that Ukraine would drive Russian forces out of the peninsula by any means necessary, without consulting other countries beforehand. read more
The war has killed thousands of civilians, forced more than a third of Ukraine’s 41 million people from their homes, left cities in ruins, and jolted the global economy and security. It is now largely at a standstill with no immediate prospect of peace talks.
As well as Crimea, Russian forces have seized areas of the south including the Black Sea and Sea of Azov coasts, and chunks of the eastern Donbas region comprising the provinces of Luhansk and Donetsk.
Almost 9,000 Ukrainian military personnel have been killed in the war, its military said this week.
Russia has not publicised its losses but U.S. intelligence estimates 15,000 killed in what Moscow describes as an operation necessitated by threats to its security. Kyiv says the invasion is an unprovoked act of imperial aggression.
Ukraine broke free of the Soviet Union in August 1991 after a failed putsch in Moscow, and an overwhelming majority of Ukrainians voted in a referendum to declare independence.
‘INTENSIVE’ TALKS ON PLANT
International Atomic Energy Agency chief Rafael Grossi said the U.N. nuclear watchdog hoped to gain access to the Russian-occupied Zaporizhzhia nuclear power plant in southern Ukraine within days if negotiations succeed. read more
Both sides have accused the other of firing missiles and artillery dangerously close to the plant, Europe’s biggest, raising fears of a nuclear catastrophe.
Pro-Moscow forces took over the plant soon after the invasion began but Ukrainian technicians are still operating it. The United Nations has called for the area to be demilitarised.
Russia accused Ukraine on Tuesday of attacking the plant with artillery, guided munitions and a drone, drawing a denial from Kyiv’s U.N. ambassador, Sergiy Kyslytsya.
“Nobody who is at least conscious can imagine that Ukraine would target a nuclear power plant at tremendous risk of nuclear catastrophe and on its own territory,” Kyslytsya told an emergency U.N. Security Council meeting in New York called by Russia.
Ukraine’s allies offered more military support on Wednesday.
Norway said it and Britain would jointly supply micro drones to help with reconnaissance and target identification.
The United States, which has sent $10.6 billion in security assistance to Ukraine, will announce a new package of about $3 billion as early as Wednesday, a U.S. official said. read more
Advanced U.S. missile systems appear to have helped Ukraine strike deep behind the front lines in recent months, taking out ammunition dumps and command posts.
In the latest mysterious fire at a Russian military facility, Russian officials said ammunition stored in southern Russia near the border with Ukraine spontaneously combusted on Tuesday.
Vyacheslav Gladkov, the governor of Belgorod region, blamed hot weather for the fire, drawing ridicule from Ukraine.
“In a few months we will find out whether Russian ammunition can explode because of the cold,” Ukraine’s defence ministry said on Twitter.
“The five main causes of sudden explosions in Russia are: winter, spring, summer, autumn and smoking.”
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Reporting by Reuters bureaux; writing by Stephen Coates and Philippa Fletcher; Editing by Robert Birsel and Gareth Jones
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The logo of Amazon is seen at the company’s logistics center in Bretigny-sur-Orge, near Paris, France, December 7, 2021. REUTERS/Gonzalo Fuentes/Files
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NEW YORK, June 6 (Reuters) – Amazon’s (AMZN.O) stock split may provide some solace to shareholders who have seen the e-commerce giant’s shares battered this year.
Amazon shares were up 3.1% to $126.17 in afternoon trading after the 20-for-1 split, announced earlier this year but which took effect Monday. They have fallen 24% year-to-date, roughly comparable to the loss in the Nasdaq Composite (.IXIC), as rising interest rates slam risk appetite and pressure shares of high-growth companies.
While a split has no bearing on a company’s fundamentals, it could help buoy its share price by making it easier for a wider range of investors to own the stock, market participants said.
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“Stock splits are certainly associated with successful stocks,” said Steve Sosnick, chief strategist at Interactive Brokers. “The psychology remains that stock splits are good. We can debate whether they are or aren’t, but if the market perceives them to be a positive, then they act like a positive.”
Analysts at MKM Partners believe the rally in Amazon shares since May, during which they have cut their year-to-date loss by a third, has been aided by anticipation of the split.
“While we view this event as a largely non-fundamental one, we believe a stock split and potential retail trading activity could provide an incremental catalyst to turn sentiment on AMZN shares,” MKM’s Rohit Kulkarni said in a note on Monday.
Stock splits may drive additional participation from retail investors, who, on average, tend to trade in smaller sizes due to their limited capital, relative to institutional investors, according to a Cboe report published in May.
The effect was most pronounced for stocks with larger market capitalization, according to the report, which analyzed 61 stocks across all market capitalization categories that have split since 2020.
Peng Cheng, head of big data and AI strategies at JPMorgan, said retail investors’ ownership in Amazon’s shares had been comparatively low, compared to robust retail activity in the company’s options – a sign that a four-digit share price may have been turning off individual traders.
“Psychologically, it doesn’t feel good to spend $1,000 and own a third of a share,” he said.
BofA Global Research has found that splits “historically are bullish” for companies that enact them, with their shares marking an average return of 25% one year later versus 9% for the market overall.
Reuters Graphics
Stock splits may increase the pool of investors able to dabble in options, especially for stocks with high dollar value, analysts said.
For instance, on Friday, a trader looking to bet on Amazon shares rising by 12% by July 1 would have had to pay roughly $2,900. On Monday, a bet on the same percentage gain in the shares by July 1 cost about $135, according to Reuters calculations.
Still, options are not quite as big a force in the market as they were last year at the height of the so-called meme-stock mania.
“Had this happened a year ago, when individual traders were enamored with call speculation in a way none of us had seen before, this would have been much more explosive,” Sosnick said.
stock splits
Of course, a stock split alone is unlikely to overcome the host of other factors that have driven shares lower this year, including worries over tighter monetary policy and decades-high inflation.
At the same time, the rise of commission-free trading and the advent of fractional shares have taken away some of the immediate appeal of stock splits for investors, said Randy Frederick, vice president of trading and derivatives for the Schwab Center for Financial Research.
“It’s not nearly as big a deal as it used to be in the old days,” Frederick said.
Amazon is the latest megacap company to split its stock. Other companies that have split their shares since 2020 include Apple (AAPL.O), Tesla (TSLA.O) and Nvidia (NVDA.O).
Alphabet Inc (GOOGL.O) also announced a 20-for-1 stock split in February, with its split expected to take effect next month.
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Reporting by Saqib Iqbal Ahmed and Lewis Krauskopf; Additional reporting by John McCrank; Editing by Ira Iosebashvili and Nick Zieminski
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June 6 (Reuters) – Elon Musk on Monday warned that he might walk away from his $44 billion offer to acquire Twitter Inc (TWTR.N) if the social media network failed to provide data on spam and fake accounts.
In a letter to Twitter, the billionaire reiterated his request for details on bot accounts and said he reserved all rights to terminate the merger as the company was in a “clear material breach” of its obligations by not providing him with the information.
Twitter shares fell as much as 5.6% to $37.92 and were trading at a steep discount to Musk’s offer of $54.20 per share, suggesting that investors did not expect the deal to close at the agreed price. The stock was last down 2%, while Tesla rose 1.2%.
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“Twitter has and will continue to cooperatively share information with Musk to consummate the transaction in accordance with the terms of the merger agreement,” the company said in a statement.
It intends to close the deal at the agreed price and terms, Twitter added
Musk put the deal “temporarily on hold” in mid-May, saying he will not move forward with the offer until Twitter showed proof that spam bots account for less than 5% of its total users.
Since then, the takeover saga has seen several twists and turns, raising questions about Musk’s intentions to complete the deal at the set price.
Although Musk has extensively used the social-media platform to air his views on the deal and the company, this is the first time that he has formally threatened to walk away.
An image of Elon Musk is seen on smartphone placed on printed Twitter logos in this picture illustration taken April 28, 2022. REUTERS/Dado Ruvic/Illustration
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“It’s fairly obvious that he has buyer’s remorse and he is trying whatever to get a reduction in price, and I think he may succeed,” said Dennis Dick, a proprietary trader at Bright Trading LLC.
“You can see the sell-off in social media stocks and he has realized that he overpaid … all these are tactics just to get a reduction in price.”
Musk has questioned the accuracy of Twitter’s public filings about spam accounts, claiming they must be at least 20% of the user base. Twitter has disagreed, with Chief Executive Parag Agrawal providing details on how the company handles spam accounts in one of his recent tweets.
A self proclaimed free-speech absolutist, Musk has said one of his priorities will be to remove “spam bots” from the platform. The Tesla Inc (TSLA.O) CEO owns 9.6% of Twitter and has over 95 million followers on the network.
As part of the deal, Musk is contractually obligated to pay a $1 billion break-up fee – a sliver of his fortune of $219 billion estimated by Forbes – if he does not complete the deal. Twitter can sue for “specific performance” to force Musk to complete the deal and obtain a settlement from him as a result. read more
In his letter, Musk said he needed the data to conduct his own analysis of Twitter users and did not believe in the company’s “lax testing methodologies.”
“He is trying to walk away from the Twitter deal, this is the first shot across the bow,” Wedbush analyst Dan Ives said.
Musk has lined up several high-profile investors, including Saudi Arabian investor Prince Alwaleed bin Talal and Sequoia Capital, to fund the deal.
Elon Musk threatens to walk away from deal
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Reporting by Nivedita Balu in Bengaluru; Additional reporting by Tiyashi Datta; Writing by Sweta Singh; Editing by Anil D’Silva
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LONDON/NEW YORK, March 30 (Reuters) – The U.S. and European equities rally paused on Wednesday as investors took stock of economic and geopolitical risks, while oil prices jumped back around $4 on the prospect of more Russian sanctions.
The broad Euro STOXX 600 (.STOXX) fell 0.6% after three positive sessions that had taken the index back to levels reached before Russia invaded Ukraine.
By late morning, the Dow Jones Industrial Average (.DJI) had lost 0.18%, to 35,229.04, the S&P 500 (.SPX) was down 0.25%, and the Nasdaq Composite (.IXIC) was little changed.
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The MSCI world equity index (.MIWD00000PUS), which tracks shares in 50 countries, was also little changed.
The relative cheer among stock investors contrasted with the circumspection in the bond market, where some investors are betting aggressive tightening of policy by the U.S. Federal Reserve could harm the world’s biggest economy over the longer term.
“I’m very worried that U.S. equities do not price any risk of slowdown in the U.S. economy – that is extremely worrying,” said Ludovic Colin, a senior portfolio manager at Swiss asset manager Vontobel.
The widely tracked U.S. 2-year-10-year Treasury yield curve briefly inverted on Tuesday for the first time since September 2019.
Longer-dated yields falling below shorter ones indicate a lack of faith in future growth, with 10-year yields falling beneath 2-year rates widely viewed as a harbinger of recession.
Sebastien Galy, senior macro strategist at Nordea Asset Management, said fixed income and equity markets were diverging.
“Equity markets are overly optimistic and the fixed income markets are probably being overly pessimistic.”
An inverted Treasury curve has in recent decades been followed by a recession within two years, including the 2020 downturn caused by the COVID-19 pandemic.
Benchmark indexes in Frankfurt (.GDAXI) and Paris (.FCHI) lost 1.5% and 1.1% respectively, with London shares (.FTSE) up a touch at 0.19%.
U.S. yield curve inverts
A day after rising above 0% for the first time since 2014, Germany’s two-year bond yield was up six basis points at 0.01% – keeping the previous day’s highs in sight.
Shares rallied in Asia overnight after Ukraine proposed on Tuesday it adopt neutral status, a move seen by investors as a sign of progress in face-to-face peace negotiations. read more
On the ground, however, reports of attacks continued and Ukraine reacted with scepticism to Russia’s promise in negotiations to scale down military operations around Kyiv.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) jumped 1.46% to its highest in nearly a month, with most Asian stock markets in positive territory.
JAPAN IN FOCUS
The benchmark U.S. 10-year yield was last at 2.3762% , having risen as high as 2.557% on Monday for its highest since April 2019, as traders positioned themselves for quick-fire increases to U.S. interest rates.
The impact of rising U.S. yields played out elsewhere, dragging Japanese government bond yields in their wake in a threat to Japan’s ultra-loose monetary policy.
The Bank of Japan increased efforts to defend its key yield cap on Wednesday, offering to ramp up buying of government bonds across the curve, including unscheduled emergency market operations. read more
The widening gap between U.S. and Japanese yields has caused the yen to weaken sharply, but it managed to regain some lost ground on Wednesday.
The Japanese currency rose 0.9% to 121.80 per dollar , compared with Monday’s low of 124.3, amid concerns Japanese authorities might step in to bolster the yen.
Elsewhere in currency markets, the euro rose 0.6% to $1.1157, its highest in four weeks, supported by the Russia-Ukraine peace talks.
In energy markets, oil prices jumped around $4 on supply tightness and the growing prospect of new Western sanctions against Russia even as Moscow and Kyiv held peace talks.
Brent crude LCOc1 futures were up $3.96, or 3.6%, at $114.19, while U.S. crude rose 3.66% to $108.05 per barrel.
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Reporting by Tom Wilson in London, additional reporting by Dhara Ranasinghe and Alun John in Hong Kong
Editing by Bernadette Baum and Mark Potter
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A driver recharges the battery of his Tesla car at a Tesla Super Charging station in a petrol station on the highway in Sailly-Flibeaucourt, France, January 12, 2019. REUTERS/Pascal Rossignol/File Photo/File Photo
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March 28 (Reuters) – Tesla’s (TSLA.O) announcement on Monday that it will seek shareholder approval to increase its share count in order to enable a stock split adds to a recent wave of megacap companies splitting their shares in a bid to attract more investors.
Tesla said in a filing it would hold a vote at its upcoming annual shareholder meeting to increase the number of authorized shares in order to enable a stock split. read more
A stock split by Tesla, which would have be approved by its board of directors, would be the electric car maker’s second since 2020, and it would follow stock split announcements by other major U.S. companies in recent years.
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In the past two years, Apple (AAPL.O), Nvidia (NVDA.O) and Tesla (TSLA.O) have split their shares, while Amazon (AMZN.O) and Google-parent Alphabet (GOOGL.O) have recently announced upcoming share splits.
Megacap stock splits
Companies split their shares to make their stock prices appear less expensive and appeal to more investors. However, splitting a stock does not affect its underlying fundamentals.
Still, BofA Global Research said in recent research note that stock splits “historically are bullish” for companies that enact them, with their shares marking an average returns of 25% one year later versus 9% for the market overall.
Tesla’s stock surged 8% on Monday, adding over $100 billion to its stock market value.
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Amazon has gained about 20% since March 9, when the ecommerce heavyweight announced a stock split that will take effect on June 6. That compares to a 7% gain in the Nasdaq (.IXIC) during the same period. During that time, Wall Street has also seen a broad rebound in megacap growth stocks following losses earlier this year, as well as volatility related to rising interest rates and Russia’s invasion of Ukraine.
Tesla was the most traded stock among Fidelity’s online brokerage customers on Monday, with buy and sell orders almost evenly split, suggesting retail investors are cautious about the company.
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Since joining the S&P 500 in December 2020, Tesla has been one of its most heavily weighted stocks, currently accounting for over 2% of the index. It has gained about 300% since announcing its first stock split in August 2020.
Other S&P 500 companies with nominally high share prices, which analysts say could hint at a future stock split announcement, include Chipotle Mexican Grill (CMG.N), up 0.1% on Monday at $1,558, as well as Booking Holdings (BKNG.O), trading near flat at about $2,247.
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Reporting by Noel Randewich; Editing by Cynthia Osterman
Our Standards: The Thomson Reuters Trust Principles.
WASHINGTON, March 21 (Reuters) – U.S. President Joe Biden’s warning of “consequences” for any aid China may give to Russia’s Ukraine war effort could force Chinese President Xi Jinping to choose between a longstanding lucrative trade relationship with the West and a growing strategic partnership with Moscow.
Based on trade flows alone, Beijing has a lot at stake following Biden’s nearly two-hour video call with Xi on Friday, with the White House confirming that sanctions on China were an option. read more
Despite growing trade ties to Southeast Asia and an economy that is less dependent on trade over the past decade, China’s economic interests remain heavily skewed to Western democracies, trade data reviewed by Reuters showed.
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Siding with political ally Russia would make little economic sense for China, according to analysts, as the United States and European Union still consume more than a third of China’s exports.
“On the pure economic question, if China were to have to make the choice – Russia versus everyone else – I mean, it’s a no-brainer for China because it’s so integrated with all of these Western economies,” said Chad Bown, a senior fellow at the Washington-based Peterson Institute for International Economics think tank who tracks China trade closely.
China’s ambassador to the United States, Qin Gang, on Sunday emphasized China’s close relationship with Russia.
“China has normal trade, economic, financial, energy cooperations with Russia,” Qin told the CBS program “Face the Nation” when asked if Beijing would provide financial support to Moscow. “These are normal business between two sovereign countries, based on international laws, including WTO (World Trade Organization) rules.”
Targeting Beijing with the type of broad economic sanctions that have been imposed on Russia would have potentially serious consequences for the United States and globally, given that China is the world’s second-largest economy and the largest exporter. As China’s economy has ballooned to $16 trillion in the past 20 years, its dependence on trade with other countries for its economic well-being has diminished.
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As Chinese citizens become wealthier, domestic consumption and services are playing a bigger share in China’s economy.
However, China is still more dependent on trade, at about 35% of GDP, than the United States at 23% or Japan at 31%.
The wealthy G7 countries that form the heart of an anti-Russia alliance following last month’s invasion of Ukraine still consume more than a third of China’s exports. That is a drop from almost half of China’s exports nearly two decades ago, but a relatively steady share since 2014, when Russia annexed Ukraine’s Crimea region.
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The share of China’s exports to Association of Southeast Asian Nations (ASEAN) countries, with which China recently has forged new trade agreements, has doubled to about 15%, eclipsing Japan in importance. But China’s January-February 2022 trade data showed that exports to the European Union grew the most at 24%. read more
OIL FOR CELLPHONES
Russia’s overall trade with China has grown since the West first imposed sanctions on Moscow in response to its annexation of Crimea. read more
But China’s exports to Russia have remained between 1% and 2% for the past 20 years.
Russian imports from China track those of many other countries, with electronics and consumer goods including cellphones, computers, apparel, toys and footwear topping the list.
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China exported 10 times as many cellphones, by value, to the United States alone, at $32.4 billion in 2020, based on UN Comtrade data.
China’s imports from Russia are dominated by oil. At $27 billion in 2020, crude oil and other petroleum dwarfs all other imports from Russia, mainly commodities including copper, softwood lumber, liquefied natural gas, coal, metals and ores.
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Although the United States has banned Russian energy imports, Western sanctions have not specifically targeted Russia’s oil and gas exports. But the U.S.-led sanctions on Russian banks that prohibit dollar transactions have hampered China’s ability to provide trade finance for oil Russian oil cargoes.
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Reporting by David Lawder; Editing by Will Dunham and Heather Timmons
Our Standards: The Thomson Reuters Trust Principles.
