Major US indices started the week on a fairly positive note, as investors and traders dismissed rising coronavirus infections in parts of Europe and the US over the weekend. Markets in Europe, however, didn’t have quite the same optimism and pointed down. Asian markets, meanwhile, kicked off the week in a mixed fashion.
Short-sellers reap $2.6bn from Wirecard woes
Before shares in the German fintech firm collapsed more than 60% on 18 June, short-sellers had made it one of their most popular targets. Data firm S3 Partners said they notched $2.6bn in paper profits, with Slate Path Capital, TCI Fund Management, Marshall Wace, and five other funds making $1bn between them. Listen to our exclusive interview with famous Wirecard bear, Fahmi Quadir.
The food delivery wars are just beginning
The food delivery market has been soaring since Grubhub announced it would merge with Just Eat at the start of the month, with each company’s share price climbing 31% and 112%, respectively, since the start of the year.
JPMorgan bets on mean reversion
Strategists at the firm suggest investors and traders should be more selective in the second half of 2020, as asset returns are likely to diverge because liquidity “cannot paper over specific weaknesses indefinitely”, Bloomberg reports. The bank recommends investing in COVID-19 “endgame winners”, as well as gold.
Time to buy the dip?
Despite benefiting from the acceleration in online shopping caused by the coronavirus outbreak, Alibaba’s share price has been volatile since hitting an all-time high in January. Considering that its revenue and earnings growth has been strong, and the fact that it’s arguably trading at a low valuation, it seems like a good time to buy the stock.
Cash investments rise
S&P 500 companies aggressively cut costs and tapped debt in Q1, according to the Wall Street Journal, which noted an increase in cash investments from an average of 4.1% to 13.9% in the March quarter. As corporate leaders close a dismal Q2, the focus will likely remain on strengthening liquidity in the face of persistent market volatility.
A new Morgan Stanley report seen by Bloomberg outlines several investment trends that could thrive after the pandemic, including single-family housing in the US, technology spending at banks, 5G – from which Ciena corp. are well placed to benefit – food delivery and childcare. It even expects firms offering meditation podcasts – such as Peloton Interactive Inc. – to capitalise on a growing need for stress regulation.
Top fund manager warns of troubling fundamentals
Bryn Mawr Trust’s Jeff Mills told CNBC that “stocks are discounting an environment that is not necessarily reflective of economic or earnings fundamentals”. With sentiment all over the map, he suggests not to get too bearish or bullish. “Positioning needs to be somewhat nuanced.”