Underperforming Euro auto shares reflect fear of new front in U.S. trade wars By Reuters

By Danilo Masoni and Julien Ponthus

MILAN/LONDON (Reuters) – Euphoric stock markets celebrated the China-U.S. trade truce by marking record highs but European auto shares continue to suffer, reflecting the stress the industry is under and fears U.S. President Donald Trump will target Europe next.

There’s no shortage of issues which could trigger a fresh trade row between the continent and the United States, from plans for a tax on big digital companies like Amazon (O:) and Facebook (O:) and subsidies for Airbus (PA:), to the involvement of China’s Huawei in building 5G networks and different approaches to tackling Iran’s nuclear program.

Autos look particularly vulnerable, and this week’s meeting of world leaders in the Swiss mountain resort of Davos gave Trump his latest stage from which to threaten a 25% tariff on car imports from the European Union, if the bloc doesn’t agree to a trade deal.

Tariffs would be an additional blow as carmakers struggle with an auto industry downturn, particularly in key market China, and the need to increase electric vehicle investment as several countries move to eventually ban combustion engines.

On Thursday, auto stocks () were among the top fallers in Europe, down 2%, making them the worst sectoral performers so far in 2020.

Last year, they fell 17% while the broader European Stoxx 600 index () had its best year in a decade with a 23% rise.

Since late last year, auto shares also have decoupled from Germany’s DAX (), the export oriented index of Europe’s largest economy, plunging to a 10-year low relative to the index.

(Graphic: European autos vs DAX, https://fingfx.thomsonreuters.com/gfx/mkt/13/1474/1449/European%20autos%20chart.png)

“Trump has long been lamenting about the trade imbalance with Europe and this could be another card to play during the presidential election year,” said Michele Pedroni, fund manager at Decalia in Geneva.

“(He) has already taken or threatened action, for example in the auto sector, which is among the most sensitive to trade. Not all of his threats were just rhetoric,” added Pedroni.

While the signing of a “Phase 1” trade deal between Washington and Beijing has removed some of the uncertainty hanging over markets and dampening global business sentiment, the relief could prove short-lived for Europe if Trump’s attention shifts, leaving German luxury cars first in the firing line.


Evercore ISI has estimated that VW (DE:) faces a 2.5 billion euro hit if the U.S. imposes 25% tariffs on EU imports, with Daimler (DE:) facing a 2 billion-euro blow and BMW (DE:) 1.7 billion euros.

“Investors need to be vigilant”, said Maximilian Kunkel, Chief Investment Officer Germany at UBS GMW in Frankfurt.

The U.S. is the main export destination for EU-made cars. According to Eurostat, cars from the bloc accounted for 29% of total U.S. auto imports in 2018, well ahead of China’s 17%.

“There is indeed trade war pressure on the sector, that’s something we talk about with investors”, said Roland Kaloyan, head of European equity strategy at Societe Generale (PA:).

However, he added that while European carmakers are commonly used as a proxy for trade tensions with the U.S., the risk that they won’t be able to curb emissions in time to abide by new EU rules was also weighing on the sector.

Daimler’s latest profit warning on Wednesday, one in a long line from European auto and auto parts makers, highlighted the stress the sector is under, Kaloyan said, adding that the expected upswing in global auto sales may also disappoint.

(This story has been refiled to amend capitalisation in headline)

Saudi Aramco raises IPO to record $29.4 billion by over-allotment of shares

FILE PHOTO: The logo of Saudi Aramco is seen at Aramco headquarters in Dhahran, Saudi Arabia May 23, 2018. Picture taken May 23, 2018. REUTERS/Ahmed Jadallah/File Photo

DUBAI (Reuters) – State-owned oil company Saudi Aramco said on Sunday it had exercised its “greenshoe option” to sell an additional 450 million shares, raising the size of its initial public offering (IPO) to a record $29.4 billion.

Aramco initially raised a $25.6 billion, which was itself a record level, in its December IPO by selling 3 billion shares at 32 riyals ($8.53) a share. But it had indicated it could sell additional shares through the over-allotment of shares.

Aramco shares were flat at 35 riyals shortly after the market opened, according to Refinitiv data.

A greenshoe option, or over-allotment, allows companies to issue more shares in an IPO when there is greater demand from participants in the initial offer. Investors were allocated the additional shares during book-building, Aramco said.

“No additional shares are being offered into the market today and the stabilizing manager will not hold any shares in the company as a result of exercise of the over-allotment option,” Aramco said.

Aramco shares have been volatile amid heightened tensions between the United States and Iran, which lies across the Gulf from Saudi Arabia.

Aramco shares fell to 34 riyals on Jan. 8, its lowest since trading began on Dec. 11, but closed at 35 riyals on Thursday.

Thursday’s closing price valued Aramco at $1.87 trillion, above the IPO price but below Crown Prince Mohammed bin Salman’s coveted $2 trillion target for the IPO.

Reporting by Saeed Azhar; Editing by Christian Schmollinger and Edmund Blair

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Macy’s allays holiday season sales worries, shares rise 5% By Reuters

(Reuters) – Macy’s Inc (N:) reported just a 0.6% drop in holiday period same-store sales on Thursday, quelling fears of a more dramatic fall in the department store operator’s numbers for the crucial annual shopping season after an earlier profit warning.

The company benefited from strong online sales and demand for gifting assortments, Macy’s Chief Executive Officer Jeff Gennette said.

The reported drop was for the months of November and December.

Macy’s shares rose nearly 5% in premarket trading.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Asian shares rise on China’s policy easing, trade deal hopes By Reuters

© Reuters. Passersby are reflected on a stock quotation board outside a brokerage in Tokyo

By Andrew Galbraith

SHANGHAI (Reuters) – Asian shares kicked off the new decade higher on Thursday, after global stocks ended the previous one at record highs, and buoyed by Chinese markets after Beijing eased monetary policy to support slowing growth.

Investors also cheered news that the United States and China will sign a trade pact soon after a year of volatile negotiations between the world’s two largest economies.

MSCI’s broadest index of Asia-Pacific shares outside Japan () was up 0.35% in morning trade after rising 5.6% in December.

U.S. President Donald Trump said on Tuesday that Phase 1 of trade deal with China would be signed on Jan. 15 at the White House, though uncertainty surrounds details about the agreement.

Rising hopes for a resolution to the U.S.-China trade war helped propel global equities to record highs late last year and depress the value of the U.S. dollar.

MSCI’s all-country world index () of stock performance in 49 nations touched an all-time high of 567.80 on Dec. 27. It was last quoted at 565.46, off 0.41% from that peak.

In China, the blue-chip CSI300 index (), one of the world’s best-performing indexes last year, was 1.34% higher in early trade.

China’s central bank on Wednesday that it would cut the amount of cash that banks must hold as reserves, releasing around 800 billion yuan in funds effective Jan. 6.

“I think the monetary angle in terms of what it means for the companies, is not that important,” said Jim McCafferty, head of Asia ex-Japan equity research at Nomura in Hong Kong.

“However for what it means for the consumer point of view, then clearly if there’s easy money and … individuals can borrow cheaply, repay debt quickly, then that of course is going to help the economy and the companies.”

McCafferty said he expects a memory up-cycle and new handset development prompted by the rollout of 5G mobile technology could help to lift tech-heavy markets like Korea and Taiwan this year.

Australian shares () flicked between small gains and losses, and were last up 0.2%. Seoul’s Kospi () began the year down 0.85%, while shares in Taiwan () added 0.51%.

Markets in Japan are closed for a national holiday.

The gains in Asia follow a bullish end to the year on Wall Street on Tuesday. The Dow Jones Industrial Average () rose 0.27% to 28,538.44 and the S&P 500 () gained 0.29% to 3,230.78. The Nasdaq Composite () added 0.3% to 8,972.60.

In currency markets on Thursday, the dollar continued to weaken slightly against major peers as investors bet on a better outlook for global growth and trade.

The dollar was 0.06% weaker against the yen at 108.64 while the euro () gained 0.11% to 1.1222.

The (), which tracks the greenback against a basket of six rivals, was little changed, rising 0.04% to 96.427.

U.S. crude () was up 0.36% to $61.28 and global benchmark Brent crude () rose to $66.24 per barrel, building on a rise that gave oil its biggest annual gain in three years in 2019.

Gold, which has benefited from a weaker greenback, was up 0.18% on the spot market, fetching $1,519.64 per ounce. [GOL/]

Graphic: Asian stock markets https://product.datastream.com/dscharting/gateway.aspx?guid=516bc8cb-b44e-4346-bce3-06590d8e396b&action=REFRESH

Asian shares hold near 18-month highs in holiday lead-up

SYDNEY (Reuters) – Asian markets idled near 18-month highs on Monday as volumes weakened ahead of the Christmas holiday break and investors squared off their positions, taking home hefty gains made earlier this month.

FILE PHOTO: A man walks past an electric screen showing Japan’s Nikkei and Shanghai Stock Exchange markets’ indices outside a brokerage in Tokyo, Japan, July 1, 2019. REUTERS/File Photo

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was steady after rising 1.4% last week and over 5% this month. For the final quarter of the year, the index is up nearly 10% so far.

Japan’s Nikkei .N225 climbed 0.1% after reaching a 14-month top last week. It was ahead by 2.3% for the month so far. South Korea’s market .KS11 was a shade weaker after adding 5.5% so far in December.

Chinese shares were slightly lower with the blue-chip CSI300 .CSI300 down 0.1%.

E-Mini futures for the S&P 500 ESc1 held at all-time highs having put on 2.7% for the month.

Global stocks were “basking in the after-glow of the U.S. China trade deal and continued encouraging signs of stabilization in the global growth slowdown,” said David Bassanese, Sydney-based chief economist at Betashares.

On Friday, the benchmark S&P 500 extended its run of record highs to seven straight sessions, its longest streak in more than two years. All three major U.S. indexes – the S&P 500, Nasdaq and Dow – notched up gains. [.N]

“While we’re entering 2020 with more hope than last year, as is always the case, there’s never any room for complacency,” Bassanese added.

Data on Friday showed U.S. growth nudged up in the third quarter, while there were signs the economy maintained its moderate pace of expansion as the year ended. Consumer spending was stronger than previously reported, and there were upgrades to business spending.

U.S. President Donald Trump gave markets more reasons to cheer on Saturday when he said the United States and China would “very shortly” sign their so-called Phase One trade pact.

Under the deal, the United States would agree to reduce some tariffs in exchange for a big jump in Chinese purchases of American farm products.

The only major data this week is the U.S. personal consumption expenditure (PCE) deflator for November, due on Friday.

Data elsewhere reminded investors of potential weak spots in the world economy.

The mood among German consumers deteriorated unexpectedly heading into January, a survey showed, suggesting that household spending in Europe’s largest economy could weaken at the beginning of next year.

The euro EUR= held at $1.1077 after slipping 0.4% last week.

Sterling GBP= last fetched $1.3009, not far from Friday’s three-week low of $1.2976. It slid 2.6% last week for its worst weekly showing since October 2017.

The safe haven Japanese yen was treading water at 109.40. JPY=

That left the dollar index .DXY barely changed at 97.678 against six major currencies.

In commodities, Brent crude LCOc1 was off 17 cents at $65.97 a barrel, while West Texas Intermediate crude CLc1 slipped 14 cents to $60.3 a barrel.

Spot gold XAU= was slightly ahead at $1,479.30 an ounce.

Graphic: Asian stock markets (here)

Reporting by Swati Pandey; editing by Richard Pullin

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Asian shares ease from highs, reaction to impeachment muted

TOKYO (Reuters) – Asian shares pulled back from a one-and-a-half year peak on Thursday as investors booked profits ahead of holiday trade and awaited further data on the state of the global economy.

FILE PHOTO: People walk past an electronic board showing Japan’s Nikkei average outside a brokerage in Tokyo, Japan, October 12, 2018. REUTERS/Toru Hanai

Investors were also watching proceedings in Washington where the Democrat-led U.S. House of Representatives voted to impeach Republican U.S. President Donald Trump for abuse of power and obstruction of Congress.

Market reaction, however, has so far been limited as the Republican-controlled Senate is widely expected not to vote to remove Trump from office.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS briefly touched the highest since June 2018 but then fell 0.2%.

Australian shares erased early gains to trade 0.14% lower due to declines in the mining sector, while Chinese shares .CSI300 drifted 0.06% lower.

The pound nursed heavy losses due to concerns Britain could still crash out of the European Union without a trade deal in place after a transition period ending in December 2020.

Traders also await a Bank of England (BoE) policy meeting later Thursday. No change in policy is expected, but the meeting could pose further downside risks for sterling if more policymakers swing to the dovish camp and vote for an interest rate cut.

Overall sentiment was supportive of equities and riskier assets, but less favorable for safe-haven assets like bonds due to expectations that economic growth will start to pick up next year after a tumultuous 2019.

“Data has been generally supportive of an improvement in economic performance,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.

“Investors can look forward to stronger growth next year, but a lot of this has already been reflected in share markets.”

U.S. stock futures ESc1 edged 0.02% lower in Asia on Thursday. The S&P 500 .SPX fell 0.04% on Wednesday, weighed by a steep drop in FedEx Corp (FDX.N) shares after the U.S. parcel delivery company cut its fiscal 2020 profit forecast.

Earlier in the session, the S&P 500 hit its fifth consecutive record high, and analysts said market sentiment remained largely upbeat following last week’s announcement of an initial U.S.-China trade agreement.

Other analysts pointed to recent data releases showing economic improvements in China, the United States and Germany as reasons to be more optimistic.

In the currency market, sterling GBP=D3 traded at $1.3089, having tumbled more than 3% from an 18-month high struck on Dec. 13 after UK Prime Minister Boris Johnson’s Conservative Party scored a landslide victory in a general election.

Against the euro, the pound EURGBP=D3 stood at 85.03 pence, close to its weakest since Dec. 4.

Johnson’s government on Tuesday ruled out an extension to the December 2020 deadline for negotiations on a trade deal with the EU, creating a new Brexit cliff-edge and cutting short sterling’s post-election rally.

The focus shifts to the BoE’s policy meeting later Thursday. At its previous meeting, two of the central bank’s nine policymakers voted to cut interest rates.

British inflation remained mired at a three-year low in November, data showed on Wednesday, and uncertainty surrounding Brexit remains high, but this is unlikely to shift expectations that monetary policy will remain on hold.

The Australian dollar jumped by 0.25% to $0.6872 after better-than-expected data on the labor market dented expectations for interest rate cuts.

The yen JPY=EBS held steady at 109.58 per dollar ahead of a Bank of Japan (BOJ) meeting later on Thursday.

The BOJ is widely expected to keep its quantitative easing in place by may offer a gloomier assessment of factory output.

U.S. crude CLc1 dipped 0.03% to $60.91 a barrel in Asia after U.S. government data showed a decline in crude inventories. <EIA/S>

However, prices are likely to be supported due to production cuts coming from the Organization of the Petroleum Exporting Countries and its allies, including Russia.

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Electrolux’s shares skid after it warns of extra U.S. costs and savings delays

STOCKHOLM (Reuters) – Shares in Electrolux (ELUXb.ST) plunged 12% on Monday after the appliance maker warned of a bigger than expected hit to fourth-quarter earnings at its North American business, and slashed its savings forecast for 2020 from its investment program.

FILE PHOTO: The Electrolux logo is seen during the IFA Electronics show in Berlin, Germany September 4, 2014. REUTERS/Hannibal Hanschk

The Swedish company, in a statement released on Sunday, forecast a $70 million earnings hit in the quarter, partly due to a slower than expected startup of its new automated refrigerator and freezer plant in Anderson, South Carolina, which has hit deliveries and entailed extra costs.

“The transition to the new facility has resulted in temporary capacity constraints impacting deliveries to some customers in the fourth quarter,” Electrolux said.

The new plant will replace manufacturing at St Cloud, Minnesota and at another facility in Anderson.

Electrolux shares were down 12% by 0942 GMT on Monday, after rising 34% since the start of 2019 partly boosted by the expected benefits of the shift to the new factory.

“This is a setback for Electrolux, which was previously confident that this material factory transition would be more successful than prior big moves that had resulted in significant issues over the past 20 years,” JP Morgan said in a research note.

Electrolux, which is investing about $250 million in the new Anderson plant, said it will now run its two Anderson facilities in parallel into the second half of next year to meet market demand and ensure a continued high product quality.

“This is a temporary setback and I am confident that the measures we are taking to strengthen our competitiveness in North America are the right ones,” Chief Executive Jonas Samuelson told a conference call.

The company said its investment program and streamlining measures were still on track to generate about 3.5 billion crowns ($364 million) of annual cost savings, with full effect from 2024. But it slashed the forecast for 2020 to 200 million crowns from 800 million crowns.

Electrolux, which previously forecast a negative impact of $25 million on fourth quarter earnings from the move to the new factory, said it expected the capacity constraints in Anderson to be gradually resolved in the first half of 2020.

It said the $70 million impact now foreseen also included effects from accounting adjustments from previous quarters and a reduction in inventory by a large U.S. customer.

Reporting by Johannes Hellstrom in Stockholm and Shubham Kalia in Bengaluru; Editing by Edmund Blair and Susan Fenton

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Boost for Saudi Arabia as Aramco shares surge 10% on debut By Reuters

© Reuters. Investors monitor a screen displaying stock information at the Saudi Stock Exchange (Tadawul), in Riyadh

By Marwa Rashad and Saeed Azhar

RIYADH/DUBAI (Reuters) – Saudi Aramco (SE:) shares surged the maximum permitted 10% above their IPO price on their Riyadh stock market debut on Wednesday, closing in on the $2 trillion valuation long sought by Saudi Crown Prince Mohammed bin Salman.

The shares leapt to 35.2 riyal ($9.39) each, up from the initial public offering (IPO) price of 32 riyals and at the daily limit of price moves allowed by the Tadawul exchange.

That gives the state-owned oil giant a market value of about $1.88 trillion, comfortably making it the world’s most valuable listed company, although it will have one of the smallest “free floats” of publicly tradeable shares, at just 1.5%.

The market value is more than six times that of U.S. oil major Exxon Mobil Corp (); more than twice the size of Saudi Arabia’s annual gross domestic product; and far ahead of U.S. tech giant Apple’s (O:) market value of about $1.2 trillion.

Saudi Arabian Oil Co (Aramco) raised a record $25.6 billion in its IPO last week, the culmination of a years-long effort by the Crown Prince to open up the energy giant to outside investors and raise funds to help diversify the economy away from oil.

The flotation, a major challenge for the Riyadh stock exchange, propels the bourse into the world’s top 10 by value of listed companies.

But Saudi Arabia relied on mainly domestic and regional investors to buy Aramco shares after lukewarm interest from abroad.

“This is a successful IPO and the Aramco listing will add depth to the local market by providing exposure to a vital sector of Saudi Arabia’s economy,” said Bassel Khatoun, managing director, frontier and MENA at Franklin Templeton Emerging Markets Equity.

“We are hopeful that Saudi Aramco uses the Tadawul listing as a springboard to an eventual international listing.”

Finance Minister Mohammed al-Jadaan told Reuters the bulk of the IPO proceeds would be used on domestic projects, while the global buzz around the listing would help attract foreign capital into the Saudi economy.


Aramco shares began trading half an hour after the market open as the bourse allowed extra time for investors to place bids in the “opening auction” in anticipation of high demand.

Aramco chairman Yasir al-Rumayyan and Tadawul’s top executives rang the bell to start trading. Within the first hour, 766.8 million shares had changed hands, more than for any other Riyadh listed stock.

“It’s a great day for Saudi Arabia and the leadership of Saudi Arabia and for the people of Saudi Arabia. It’s a D-Day for Aramco, it’s a day of reckoning and vindication,” Energy Minister Prince Abdulaziz bin Salman told Reuters in Madrid.

Prince Abdulaziz said last week that Aramco was worth well over $1.7 trillion and predicted investors who didn’t buy into the IPO would be “chewing their thumbs” after missing out.

Aramco stock will become part of Tadawul index by next week and global benchmarks such as MSCI and later this month, which analysts said should fuel demand, particularly from investors who track such indexes.

The Saudi index () was up 0.9% in early trade.

Saudi retail investors who hold their Aramco shares for six months from the first day of trading can get up to 100 bonus shares, or one for every 10 held, which could limit supply of the stock, said Zachary Cefaratti, CEO of Dalma Capital.

Aramco will have the second biggest weighting on the Tadawul index of 9.7%, according to Al Rajhi Capital. Al Rajhi Bank (SE:) has the biggest weighting at 14.6% due to its larger free float.

Earlier this month, Tadawul introduced an index weighting cap of 15% to address concerns about the potential impact of Aramco’s flotation and limit the index’s correlation to the oil price.

Aramco’s debut comes as oil prices are being supported by a Saudi-orchestrated move by OPEC and oil producing allies to commit to some of the industry’s deepest output cuts in a decade to try to avert oversupply.

But Riyadh scaled back its global ambitions by only listing Aramco on the Tadawul and cancelling roadshows in New York and London due to muted interest from foreign investors.

Most foreign actively managed funds told Reuters they would likely steer clear of the IPO, citing concerns about governance, the environment and regional tensions, particularly after drone attacks on major Saudi facilities in September.

If Aramco shares gain 10% on both Wednesday and Thursday, it will exceed the $2 trillion valuation coveted by Prince Mohammed. The company is expected to be included in the MSCI emerging markets index on Dec. 17.

Aramco has not named its investors during the IPO process, but sources familiar with the matter have told Reuters the Abu Dhabi Investment Authority (ADIA) and Kuwait Investment Authority (KIA) were among Gulf sovereign funds to buy shares.

(This story changes shortened reference to Prince Abdulaziz bin Salman in paragraph 17, and adds additional reporting credit)

Asian shares drift as tariff deadline looms, pound eases on YouGov poll By Reuters

© Reuters. FILE PHOTO: A woman points to an electronic board showing stock prices as she poses in front of the board after the New Year opening ceremony at the Tokyo Stock Exchange (TSE), held to wish for the success of Japan’s stock market, in Tokyo


By Tom Westbrook

SINGAPORE (Reuters) – Asian stocks drifted on Wednesday as Sino-U.S. trade talks showed little progress ahead of a weekend deadline for the imposition of additional U.S. tariffs, and the pound wobbled as opinion polls pointed to a tight British election on Thursday.

MSCI’s broadest index of Asia-Pacific shares outside Japan drifted 0.1% higher, as markets in the region wavered either side of flat. Japan’s traded 0.2% lower, Australia’s rose by the same margin.

Shanghai blue chips added 0.1%. U.S. stock futures were 0.1% lower.

Faced with often conflicting reports, investors have begun to suspect that even if U.S. tariffs due to take effect on Sunday are delayed, it could take until 2020 before Washington and Beijing can agree a preliminary deal to wind back their trade war.

“Every day we get a little bit of a nudge one way or the other,” said Rob Carnell, Asia-Pacific chief economist at ING in Singapore. “You just don’t know who to believe, whether these comments have any basis in reality or whether they’re a negotiating tactic.”

In the absence of harder news on the trade front, investors’ focus was locked on the U.S. Federal Reserve’s policy meeting and its outlook for the economy due at 2000 GMT, as well as Britain’s election.

The Fed is widely expected to hold rates steady, with investors interested in whether the central bank changes its view of the economy and its 2% growth forecast for next year.

U.S. inflation data due at 1330 GMT, expected to hold steady, may further reduce chances for rate cuts next year should it surprise on the upside.

The biggest mover of the morning among currencies was the British pound, which shed 0.3% to hit $1.3128 after a closely watched YouGov poll showed the ruling Conservatives tracking toward a much slimmer majority than forecast a fortnight ago.

The pound recouped some losses during the day, but still sat well under the eight-month high struck overnight, when investors were more confident of a Conservative victory and expected it could end uncertainty over Britain’s exit from the European Union.

YouGov’s research director, however, said the results showed a hung parliament was possible.

“Granted, this still portrays a Tory (Conservative) majority but given what is already priced … the actual outcome has resulted in some of the heat coming out of a fairly frothy market,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.


While China and the United States have still to settle differences on trade, officials from Canada, Mexico and the United States signed a fresh overhaul of the quarter-century-old North American trade pact.

A Wall Street Journal report that said U.S. and Chinese officials were preparing for a delay to the Dec. 15 round of tariffs knocked bonds but did not shift stocks since it suggested no resolution to the trade conflict.

White House trade adviser Peter Navarro said on Tuesday that U.S. President Donald Trump would make a decision soon on whether to enforce or suspend the tariffs.

Overnight the and the each fell 0.1%, while the Nasdaq dropped by a little less.

The yield on benchmark , which moves inversely to price, last stood a little higher at 1.8329%.

Elsewhere among currencies, the dollar nursed overnight losses against the euro after German economic sentiment sharply rose after an unexpected rebound in October exports.

The dollar drifted 0.3% lower to $0.6526 as the government trimmed its growth forecasts and announced a long-term fiscal spending program.

dipped 0.5% to $58.92 a barrel, while gold was steady at $1464.80 per ounce.

Peloton Backpedals Sharply as Short Seller Says Shares Worth $5 By Investing.com

© Reuters.

Investing.com – Peloton Interactive (NASDAQ:) shares slumped on Tuesday after famed-short seller Citron Research warned that the exercise-equipment maker’s shares could slide by more 80%.

Its current valuation has been running too hot at a time when the competition is starting to catch-up, the firm said.

“Peloton at $10 billion or even $5 billion makes zero sense,” Citron Research said, estimating its value at about $1.3 billion, or $5 a share. Peloton Interactive (NASDAQ:) fell as much as 9%, prompting some bargain hunting that trimmed the loss to about 6% by 2:30 p.m. ET (17:30 GMT).

In the good days, when the competition was low, Peloton (NASDAQ:) used its first-mover advantage to scoop up the high-income, low hanging fruit. But with competition heating up over recent years, and a lack of innovation from the company, its glory days of hardware sales are in the rear-view mirror, Citron Research said.

“While Peloton (NASDAQ:) has enjoyed a first-mover advantage, the lack of differentiation of its bike has finally caught up to it as the competition is not only making virtually identical exercise bikes but ones that are both more affordable and functional,” the firm added.

In another blow to Peloton (NASDAQ:), its competitors have been able to expand their digitally integrated at home fitness hardware offerings to new segments like mirror, tonal, boxing and rowing.

Competitors include privately held Echelon Fitness and Flywheel Sports.

Peloton’s (NASDAQ:) efforts to expand its offering have done little to inspire confidence; its treadmill product fell short of expectations. Importantly, the company has missed the mass movement to mirrored interactive home gyms and digital weights.

Citron sees a wave of red coming in the not-too-distant future and warned that the upcoming lockup expiratjon in March will see an additional 240 million shares become available for sale.

Peloton (NASDAQ:) went public at $29 on Sept. 27 and moved to as high as $37.02 on Dec. 2. The decline since the peak is now 12%.

The issue for some investors has been that it continues to lose money despite rapid sales growth. It lost $50 million in the quarter ended Sept. 30 even as revenue more than doubled to $228 million.

That makes the stock attractive to short sellers like Citron Research, who are betting they can borrow shares, sell them short and profit by buying them back at a lower price.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.