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Russian stocks tumble on Mueller indictments

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Russian stocks tumbled Friday afternoon after a federal grand jury indicted 13 Russian nationals and three Russian entities for alleged interference in the 2016 presidential election.

The VanEck Vectors Russia exchange-traded fund (RSX), which tracks a host of publicly-traded Russian companies, fell 1.6 percent following news of the indictments. The fund is largely comprised of energy and financial companies, according to FactSet.

The iShares MSCI Russia ETF (ERUS), a similar fund, shed 1.4 percent.

The downturn appeared to reflect investor fears over souring U.S.-Russia relations and that the latest developments could force President Donald Trump’s hand in enforcing sanctions.

Trump has been reluctant to enforce additional sanctions on Russia despite a new law designed to punish Moscow’s interference, saying that the measure was already taking a toll on Russian companies.

Known as the “Countering America’s Adversaries Through Sanctions Act,” the legislation called for the administration to deliver a report on Russian President Vladimir Putin’s hierarchy in and out of the Russian government in an attempt to spook political opponents.

The administration delivered a list of Russian “oligarchs” in January, though the document came under fire after Forbes went through the lists and confirmed that it was an exact replica of the Russians on its 2017 billionaires list.

Still, special counsel Robert Mueller’s latest indictments mark the latest in an investigation that has kept markets on edge.

All three major stock indexes turned negative following Mueller’s announcement, with the Dow Jones industrial average falling roughly 150 points before rebounding.

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Fed decision January 2021: rates unchanged

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The Federal Reserve kept its foot to the floor Wednesday in terms of the help it is providing for an economy that central bank officials say has slowed down.

Consistent with market expectations, the policymaking Federal Open Market Committee said it was keeping its benchmark short-term borrowing rate anchored near zero and maintaining an asset purchasing program that is seeing the Fed buy at least $120 billion a month.

At the core of the move to keep policy historically accommodative was an economy in which the sectors most vulnerable to the pandemic are taking the hardest hit.

“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic,” the committee’s post-meeting statement said.

The statement reiterated that Covid-19 is “causing tremendous human and economic hardship across the United States and around the world.”

The committee otherwise left the statement unchanged other than adding to its position that growth will depend on the pandemic.

“The path of the economy will depend significantly on the course of the virus, including progress on vaccinations,” the statement said.

The decision means that the fed funds rate, which serves as a benchmark for a variety of consumer debt instruments, will remain anchored in a range between 0% and 0.25% and most recently was trading at 0.08%.

The Fed took the rate to zero in the early days of the Covid-19 pandemic and has left it there since. In recent months, officials have made their commitment to low rates even more aggressive, vowing not to start hiking even if inflation gets close to or slightly exceeds the central bank’s 2% target.

Markets were watching, though, to see whether the statement would provide any clues on the future of the asset purchases, or quantitative easing. Since the beginning of the coronavirus crisis, the Fed expanded its holdings by more than $3 trillion, bringing its balance sheet to nearly $7.5 trillion.

Though inflation remains low now, investors worry that the Fed could start to taper the purchases unexpectedly should conditions change and cause market tumult. The statement offered no new guidance on the matter, so market participants will look for Chairman Jerome Powell’s post-meeting news conference for further details.

Fed officials remain cautious on an economy that has seen a two-speed recovery, with earners in upper-income brackets doing well and those at the bottom, particularly workers in services industries, faring poorly. That disparity has formed much of the impetus behind the Fed’s flexible average inflation targeting regime.

Under the approach, the Fed no longer will raise rates in anticipation of inflation but rather will tolerate higher levels in the interest of a more inclusive recovery. In the past, when the jobless rate would fall to levels consistent with what appeared to be full employment, the Fed would institute preventive hikes to stop inflation in its tracks.

The current economy is showing conflicting signs of inflation, with housing and materials costs pushing higher and services inflation lower.

From a macro view, the economy grew strongly in the fourth quarter overall, though activity slowed into the end of the year. The Commerce Department releases Q4 GDP on Thursday, with expectations, according to economists surveyed by Dow Jones, of a 4.3% increase. On Friday, the Fed’s preferred inflation gauge, the personal consumption expenditures deflator, is expected to show a year over year core increase of 1.3%,

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‘Roaring 20s’ after the pandemic? Big banks warn be careful what you wish for

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GameStop jumps more than 100% even as hedge funds cover short bets, scrutiny of rally intensifies

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Patrick T. Fallon | Bloomberg | Getty Images

Shares of GameStop surged again Wednesday, continuing the streak of wild swings for the stock as several high-profile short sellers said they had backed away from their positions.

The name traded at roughly $342 per share when it was briefly halted at about 11:19 a.m. ET, up almost 131% from Tuesday’s close and giving the company a market cap of about $24 billion. The stock traded as high as $380 per share in premarket trading.

The latest move higher comes as some of the high-profile short sellers of GameStop, including Melvin Capital and Citron, announced that they covered most or all of their positions.

The stock lost some of its premarket gains after the short sellers made their announcements, but the shares rebounded to new highs shortly before the market open.

GameStop’s nearly vertical surge over the past week has come as retail traders, many of whom have documented their moves on the social media site Reddit, have piled into the stock and call options. The spiking share price has helped to create a stock squeeze, where shorts and options dealers are forced to buy shares of a rising stock to cover their positions, resulting in a feedback loop that drives the stock even higher.

The name appeared to get a boost in extended trading on Tuesday after Tesla CEO Elon Musk tweeted out the link to the Reddit board where much of the discussion has taken place.

The video game retailer, which had a market cap of less than $4 billion at the end of last week, was the most traded stock on the market by value Tuesday, according to Deutsche Bank strategist Jim Reid.

GameStop’s rapid rise has drawn comparisons to speculative trading during the tech bubble of the late 1990s and led many Wall Street veterans to warn investors about the potential for significant losses.

Hedge fund manager Michael Burry, who reported holding 1.7 million shares of the stock at the end of September, said in a now-deleted tweet that the rise was “unnatural, insane, and dangerous.” Burry also told Bloomberg News that he did not have a current long or short position in the stock.

William Galvin, Massachusetts’ top securities regulator, told Barron’s that the trading in GameStop could be “systemically wrong.”

Bank of America raised its price target on the stock to just $10 per share on Wednesday, saying in a note to clients that the increased share price could help GameStop’s turnaround plans but presented a risk for investors.

“While it is difficult to know how much very high short interest and retail ownership … could continue to put upward pressure on shares, we think fundamentals will again factor into valuation,” the note said.

The Securities and Exchange Commission declined to comment to CNBC.

— CNBC’s Michael Bloom contributed to this story.

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