Economic digest 19.05.21
Financial news
World News
European stocks headed lower on Wednesday, tracking weakness on Wall Street, as investors grew wary of rising inflationary pressures increasing the odds of an early tightening of monetary policy.
The pan-European STOXX 600 index fell 1.1%, but was trading less than 2% below its all-time high. Miners, travel and technology stocks were the top decliners.
A jump in regulated electricity and gas bills and clothing and footwear prices saw British consumer price inflation more than double in April, data showed on Wednesday.
Central bank policymakers expect the surge to be temporary, but investors are worried that the price rises may last for a prolonged period of time, pushing central banks to counter it with policy tightening.
The worries that you see around inflation and long bond yields starting to tick up, particularly in the U.S., are concerns on a global equity level and they will impact Europe, said Aaron Barnfather, European equities portfolio manager at Lazard (NYSE:LAZ) Asset Management.
But Europe has lot less risks because we haven’t performed as well, and from the quantitative easing point of view, the ECB has been clear that they will continue for some period of time.
The European Central Bank chief Christine Lagarde said on Tuesday it was “essential that monetary and fiscal support are not withdrawn too soon”.
Investors will be watching for more clues on inflation when the U.S. Federal Reserve releases its minutes from the latest policy meeting later in the day.
A volatility gauge of European equities rose to its highest almost a week.
Chip stocks came under pressure, with ASM International (OTC:ASMIY), ASML and Infineon (OTC:IFNNY) Technologies down more than 2% on concerns about a global semiconductor shortage.
A report by German Economic Institute showed bottlenecks in the supply of raw materials could cost Germany a rapid recovery from the economic impact of the coronavirus pandemic, with two-thirds of the sectors reporting supply constraints.
European banks posted the smallest declines, helped by rising euro zone government bond yields.
Swiss wealth manager Julius Baer gained 2% after it posted an 8% rise in assets under management for the first four months of 2021.
British infrastructure investor John Laing Group surged 11.3% after U.S. private equity firm KKR agreed to buy the company in a deal valued at about 2 billion pounds ($2.84 billion).
Defects affect shares
Royal Enfield, owned by Eicher Motors, said on Wednesday it would recall about 236,966 motorcycles of certain models due to ignition coil defects that can cause misfires and, in rare cases, short circuits.
Royal Enfield is an iconic brand in India, the world’s largest motorcycle market, with dedicated fans of its line of cruisers and classic motorcycles.
The recall will apply to Meteor, Classic and Bullet motorcycles sold in India, Thailand, Indonesia, the Philippines, Australia, New Zealand and Malaysia, Royal Enfield said in a statement.
The defect was discovered during routine internal testing, and the problem was isolated from specific batches of materials received from our external supplier between December 2020 and April 2021, the company said, adding that the problem occurs rarely and does not affect all motorcycles produced between December 2020 and April 2021. period.
Shares in Eicher Motors, which also makes trucks and buses through a joint venture with Sweden’s Volvo, rose slightly after the announcement, and were last up 0.3% on the back of a weak Indian market.
Royal Enfield also said it expects less than 10% of recalled motorcycles to require replacement of a faulty part.
Replacing an IPO
The Squarespace website creation platform (SQSP) and the online job marketplace ZipRecruiter (ZIP) will be placed on the NYSE this week and next, respectively. Squarespace plans to list with an estimated market value of more than $ 10 billion. The company offers a SaaS platform that allows small and medium-sized businesses (SMBs) and sole proprietors to easily create and manage their professional-quality online presence. Squarespace has shown strong growth, increasing revenue by 28% in 2020 and by 31% in the first quarter of 21 years, while maintaining a record of profitability. As of December 31, 2020, the company had 3.7 million unique subscriptions, and it notes that approximately 800 million small businesses worldwide are potential customers.
ZipRecruiter plans to list at an estimated market value of more than $ 3 billion. ZipRecruiter is a two-way marketplace for job ads that has been used by more than 2.8 million businesses and 110 million job seekers since its inception. The company claims to be profitable due to the stable generation of free cash flow, for the last four years it has been ranked first among job search apps on iOS and Android.
Squarespace and ZipRecruiter will be the third and fourth companies to opt for direct listings over traditional IPOs this year, after Coinbase (COIN) and Roblox (RBLX). The long-awaited deals have attracted a lot of investor attention, and both of them have generated a lot of enthusiasm. Since then, Coinbase has fallen 37% from its initial opening deal. Roblox continued to trade well in the secondary market, last closing 16% higher than its original opening trade.
Major debut of a woman
Shares in enterprise software company SUSE held their own in a Frankfurt stock market debut on Wednesday, climbing just above their 30 euro issue price, giving the group a market cap of around 5 billion euros ($6.1 billion).
Nuremberg-based SUSE had priced the deal towards the lower end of a 29 to 34 euros per share range with a view to securing a solid aftermarket performance, after volatile markets derailed a number of other European flotations.
CEO Melissa di Donato, the first woman to lead a high-profile initial public offering in Frankfurt, rang the opening bell in a video message showing images of cheering team members projected on to a screen behind her.
This is the start of an incredible journey, said the American veteran of SAP, who was hired by private equity investor EQT two years ago and has her sights set on sustaining double-digit growth.
SUSE provides open-source software for companies to run applications at cloud datacenters, on-premise servers, mainframe computers and devices at the edges of networks, making it a play on digital transformation.
The company, founded three decades ago, runs on the Linux open source standard and counts 60% of the U.S. Fortune 500 companies among its customers.
The IPO adds to a busy Frankfurt season, following the $10 billion listing by German used-car trading platform AUTO1, a $14 billion debut by Vodafone’s Vantage Towers and the $5 billion IPO of labs group Synlab.
Bitcoin’s Decline
The price of bitcoin dropped to a new low, sliding to $38,658 per unit during Wednesday morning’s trading sessions.
As cryptocurrencies stumble to regain their footing, investors have one key question. Will Bitcoin surge to $48,000 again?
According to a crypto educator and market analyst, Bitcoin hit all 3 buy zones. While a few analysts think bitcoin could sink much lower than today’s current values ($39,540 at the press time), few see BTC bouncing and hitting new highs again.
This latest dip looks similar in scale and timing to other drops endured following the 2012 and 2017 halvings. Furthermore, the crypto analyst said he would hodl. Also, he noted that he would wait to see Bitcoin hit $48,000 again.
Last month, another crypto analyst tweeted saying that nothing goes up in a straight line. More so, he said Bitcoin has gone up 6 months in a row. Therefore correction is standard.
A fall of 20% or more from highs is said to prove a bearish shift in the broader trend in traditional markets. However, the current bear market definition does not work in cryptos, where pullbacks of 30% or more are pretty ordinary during a bull run.
In addition, Bitcoin is trading at $40,327 at the time of writing, according to CoinMarketCap.
Ethereum’s Bearish Trend
Ethereum was trading at $2,804.58 by 07:13 (11:13 GMT) on Wednesday, down 20.08% on the day. It was the largest one-day percentage loss since March 12, 2020.
The move downwards pushed Ethereum’s market cap down to $325.43B, or 18.03% of the total cryptocurrency market cap. At its highest, Ethereum’s market cap was $479.29B.
Ethereum had traded in a range of $2,804.58 to $3,434.01 in the previous twenty-four hours.
Over the past seven days, Ethereum has seen a drop in value, as it lost 34.01%. The volume of Ethereum traded in the twenty-four hours to time of writing was $49.65B or 21.13% of the total volume of all cryptocurrencies. It has traded in a range of $2,804.5835 to $4,171.7593 in the past 7 days.
At its current price, Ethereum is still down 35.76% from its all-time high of $4,366.10 set on May 12.
Ripple Partner
Ripple has announced a partnership agreement with the National Bank of Egypt (NBE). With the help of the global payment network RippleNet, the bank gained direct access to the financial services provider LuLu International Exchange, which is based in the United Arab Emirates. This will allow NBE to process cross-border payments from the UAE.
According to a World Bank study, Egypt received $24 billion in international remittances in 2020, thanks to a large diaspora of migrant workers in the Gulf states, making it one of the five largest recipients of remittances in the world after India, China, Mexico and the Philippines.
The National Bank of Egypt is the largest Egyptian bank, which was founded in 1898. NBE has 540 branches across the country.
The RippleNet system allows banks to make cross-border money transfers almost instantly and with minimal costs. Ripple and the U.S. Securities and Exchange Commission (SEC) are currently engaged in legal proceedings. The financial regulator accuses Ripple of illegally selling securities under the guise of XRP tokens worth $1.3 billion.
Popularization of Cardano
The number of Cardano Millionaire investors (ADA) has increased 13-fold in 2021 as asset growth continues.
In addition, data provided by cryptanalyst CoinMetrics noted that from January 1, 2021 to May 17, 2021, the number of wallets with ADA worth at least $ 1 million increased by 1,231% from 504 to 6,710.
Moreover, millionaire investors appeared during the period when ADA began to attract the attention of the crypto community. However, according to CoinMarketCap, ADA reached a new ATH of $ 2.46 on May 16, 2021. According to this, the price of the ADA at the time of writing is $ 1.76.
Moreover, from the beginning of the year to the present, the price of ADA has increased by more than 1000%. Recently, there has been a significant increase in interest in Cardano news on the Google Trends platform. Moreover, the number of active addresses in the ADA increased by 417.81%, and the number of transactions exceeded 382%.
The rise in the ADA came after Bitcoin (BTC) ended concerns about the carbon footprint. In addition, BTC declined in price after electric car maker Tesla suspended bitcoin payments for car purchases.
After the suspension, Tesla CEO Elon Musk mentioned that the company was looking for an energy-efficient cryptocurrency, and assets such as ADA were immediately known as an alternative. In addition, Musk noted that he is looking for a cryptocurrency that uses less than 1% of the energy consumed by bitcoin during mining.
