Major stocks on Wallstreet fell at close on Friday driven by escalating geopolitical tensions amid worries that postponed reopenings and renewed shutdowns induced by the pandemic will drag recovery of the global economy. Investors have begun to pull off profits following the quarterly earnings releases which began this month.
At market close, the Dow Jones fell by 183 points, the S&P 500 lost 0.62% while the Nasdaq 100 fell 0.92%.
The DAX, which consists of 30 major German companies trading on the Frankfurt Stock Exchange fell over 250 points on Friday. Major events in Europe include the latest round of Brexit talks which failed to produce satisfying progress. According to various media reports, the UK and the EU are preparing for a no-deal scenario.
On Friday, the DAX fell 2.00% at 08:50 am GMT, while in London, the FTSE 100 lost 1.64%.
Tesla Rally Over?
Shares of American electric vehicle and clean energy company Tesla fell by over 6% on Friday, representing its biggest daily drop since May. Tesla traders decided to pull off some profits following the stock’s rally that sent shares up by about 300% on a year to date basis.
The company this week announced its Q2 earnings which beat analysts expectations with net income for the period coming in at $104 million, compared to a net loss of $408 million posted in the same period last year. During the Q2 briefing, CEO Elon Musk announced plans to build its next Gigafactory in Austin, Texas.
Gold prices soared to levels last seen in 2011 on Friday as it topped $1,900 per ounce, near its record high of $1,921.25. The rally was driven by coronavirus concerns and geopolitical tensions between the United States and China.
The US this week decided to close China’s consulate general in Houston. China responded and ordered the closure of the American consulate in Chengdu citing spying allegations from the US.
Meanwhile, U.S. Secretary of State Mike Pompeo said on Wednesday that China had displayed “unacceptable behavior” by “initiating” the border clash with India. India is the world’s second-largest gold consumer, after China.
US initial jobless claims
The number of initial jobless claims in the US for the week ending July 17 rose by 109,000 to land at 1,416,000, US Labor Department said in a statement on Thursday.
Goldman Agrees $3.9B 1MDB scandal settlement
Goldman Sachs on Friday said it had reached a settlement with the Malaysian authorities over the 1MDB scandal.
In a media statement, the bank says will pay $2.5 billion in cash to Malaysia, while also guaranteeing that the government will receive at least $1.4 billion in proceeds from assets related to 1MDB seized by authorities around the world.
In turn, the country’s authorities to withdraw the pending criminal charges against Goldman executives and not pursue any new ones in relation to the scandal.
SpaceX to raise up to $1B at $44B valuation
American aerospace manufacturer and space transportation services company Space Exploration Technologies Corp (SpaceX) plans to raise between $500 million and $1 billion in series N funding, CNBC reported on Thursday.
Cash raised through the funding will be used for Starlink satellite broadband service operational as well as for conducting suborbital and orbital test flights of its Starship and SuperHeavy aircraft. SpaceX intends to eventually operate interplanetary flights from the Earth to the moon and Mars on a regular basis.
Social media company Twitter Inc on Thursday reported its earnings for the second quarter with revenue falling by 19% year on year to $683 million.
During the three month period ended June 30, it reported a net loss of $1.2 billion from a net income of $1.1 billion in the same quarter last year. Twitter’s advertising revenue fell 23% to $562 million and said civil unrest in the US impacted its advertising business.
Twitter’s CEO Jack Dorsey said the company grew its mDAU [average monetizable daily active users] to 186 million, a 34% year over year increase in Q2. This was the highest quarterly year-over-year growth rate they delivered since they began reporting mDAU growth.
Vodafone Group PLC on Friday released its financial results for the first fiscal quarter of 2021. The telco’s quarterly revenue came in at €10.51 billion.
The company further announced plans to list its mobile towers business in Frankfurt in a float worth between €10 billion and €20 billion, but keep the majority stake.
Blackstone Group, a multinational private equity alternative investment management firm this week reported its earnings for the second fiscal quarter of 2020 with revenue rising 69% YoY to stand at $2.51 billion. Total expenses rose 36% to $1.17 billion while net income spiked 109% to $1.35 billion.
Total assets under management rose 3% to $564.3 billion while fee-related earnings jumped by 28% to $541 million.
Dow In Q2
Dow Inc on Thursday reported earnings for the second quarter of 2020 with revenue falling by 24% to $8.35 billion. Cash provided by operating activities – continuing operations reached $1.6 billion, up by $639 million or 66.6% on an annual basis.
“Recognizing the significant impact that COVID-19 would have on-demand in the quarter, Dow took proactive actions to electively focus on cash and maintain our financial strength with a continued emphasis on safe, reliable operations and disciplined capital allocation. As a result, Dow once again generated higher cash flow in the quarter,” company Chairman and CEO Jim Fitterling said in a statement.
American telecommunications company Verizon Communications revenue for the second quarter fell 5.1% to $30.4 billion, the company announced on Friday.
“Through extraordinary circumstances, Verizon delivered a strong operational performance in the second quarter. We remain focused on our strategic direction as a technology leader, quickly adapting to the new environment and providing our customers with reliable and vital connections and technology services while working to keep our employees safe and accelerating our 5G network deployment,” Verizon CEO Hans Vestberg said in a statement.
AT&T revenue for the second quarter fell 8.9% YoY to $40.95 billion. Its diluted EPS declined 67% to $0.17 from$0.51. Net loss for the period came to $1.2 billion from an income of $3.7 billion reported in the second trimester of 2019.
“Our resilient cash from operations continues to support investments in growth areas, dividend payments, and debt retirement. We are aggressively working opportunities to sharpen our focus, transform our operations, and continue investing in growth areas, with the customer at the centre of everything we do,” CEO John Stankey said.
Intel’s revenue for the second quarter of 2020 rose by 20% to $19.7 billion. GAAP earnings per share rose 29% to $1.19 while GGAP net income was up 22% to $5.1 Billion. Operating income for the period was up 23% to $5.7 billion.
“It was an excellent quarter, well above our expectations on the continued strong demand for computing performance to support cloud-delivered services, a work- and learn-at-home environment, and the build-out of 5G networks,” CEO Bob Swan stated.