The week was a challenging one for investors as global stocks ended the momentum seen this year. In the past five days, the Shanghai Composite, S&P 500, Nikkei, FTSE, and DAX have declined by 0.76%, 0.50%, 0.80%, 0.50%, and 0.92% respectively. This article explains the key themes that investors were following through the week.
On Sunday, Donald Trump sent a tweet, saying that the US will impose a 25% tariff on Chinese imports worth more than $200 billion. This was an unexpected tweet because traders were initially expecting the two countries to seal a deal soon. Throughout the week, investors continued to worry about an escalation of the tensions. Yesterday, China’s Liu He arrived in Washington and held discussions with Robert Lighthizer, Steve Mnuchin, and their teams. These talks are scheduled to continue today but the tariffs are still expected to go on.
In the IPO market, all eyes were in Wall Street, where Uber is expected to make a debut in the public markets today. In the past few weeks, the company’s executives have been on a roadshow explaining their business to investors. Yesterday, it was revealed that the company will price its IPO at the lower end of the range. It will be valued at more than $86 billion. This is much lower than the $120 billion that was being expected by the market. Still, after becoming public, the stock could jump by more than 30%. Its IPO has been hampered by the weak performance of Lyft, its closest competitor.
Investors also focused on Anadarko, the oil giant that is being taken over. A few weeks ago, Chevron announced that it would acquire the company for $33 billion. A few days later, Occidental announced that it would take over the company in a $38 billion deal supported by Warren Buffet. This week, Anadarko announced that it would accept the Occidental deal, which was much more superior. At the same time, it will have to pay Chevron a $1 billion break up fee.
Riksbank and BOJ
This week, investors got a chance to read the minutes from Riksbank. The Swedish central bank released the minutes of the previous meeting. In the minutes, the bank said that it would leave rates unchanged for a little longer. The minutes also showed that the bank would start a SEK 45 billion in July. This decision was opposed by some members of the committee.
The Bank of Japan also released its minutes for the previous meeting. The minutes showed that some members of the committee were cautious about the prolonged period of low interest rates.
There were a few geopolitical issues this week. First, Iran announced that it would suspend some parts of the JCPOA. At the same time, Washington sent a bomber near the country’s waters. Second, North Korea tested a number of projectiles after the breakdown of talks with the US. The US then captured the country’s ship for violating sanctions. In South Africa, Cyril Ramaphosa won the election but the ANC party continued being weakened.