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Jarden Brief: Bitcoin surges as Elon Musk hedges big bet

Keeping you up to date with the latest market moves, in association with Investment firm Jarden

New Zealand

The New Zealand markets were closed yesterday for Waitangi day.

Air New Zealand has come under fire this morning after it was found one of its business units, Gas Turbines, has been supporting the Royal Saudi Navy through a works contract. Air NZ says the work is carried out through a third party contract over which they have had little visibility.

The airline will be ceasing all support, and will review its controls over third parties to ensure it does not carry out work of this nature going forward. The government’s shareholding minister, Grant Robertson, has noted they were not aware of the work, and that the Air NZ executive team had apologised to him.

International
US Markets:

At time of writing, US markets reached another high with all major indices up. The S&P 500 rose 0.3 per cent, the DJIA was up 0.4 per cent and the NASDAQ advanced 0.5 per cent.

An announcement from Tesla this morning advised it had bought US$1.5 billion worth of bitcoin, and that it would start accepting the cryptocurrency as a payment method for its products. The investment represents a significant percentage of Tesla’s cash balances, with the company holding US$19 billion in cash and cash equivalents as of the end of 2020.

The price of Bitcoin has risen more than 13 per cent to US$43,024.00 in response, although questions are now being asked about Elon Musk’s recent activity on Twitter – in which his tweets about another cryptocurrency Dogecoin have propelled its price up by more than 800 per cent.

Energy stocks led the market up, surging 3.6 per cent following strong oil price movement. The sector was led up by oil companies Marathon (+11.7 per cent), Occidental (+10.4 per cent) and Apache Corp (+8.7 per cent).

Carmakers in the US have been the latest industry to be hit by computer chip supply issues. Demand for silicon chips has soared since the pandemic, after consumers snapped up game consoles, laptops and TV’s to help bide the time during lockdown. This shortage is also what has led semi-conductor-reliant products such as Chromebook laptops, Xbox and the new Playstation 5 console to be sold out across the world. Car manufacturers use semiconductors in many car components, including power steering, brake sensors and parking cameras.

Asian markets:

Asian markets were optimistic yesterday evening with the Shanghai index rising 1.0 per cent, the Nikkei up by 2.1 per cent, and the Hangseng up 0.1 per cent.
Audio-sharing social media app, Clubhouse, seems to have been blocked in China, despite booming in popularity over the last few months. Commentators have noted the ban was expected – although the Chinese government has not made an official statement as yet.

Commodities:

Traditionally an inflation hedge, gold recovered 1.0 per cent, returning to US$1,832.55. Investors may consider what this means for their personal holdings. High inflation, in an environment where central banks are stepping back from high levels of support, could be a negative catalyst for an extended stock market.

Oil prices have now regained almost all the ground they lost during the pandemic, up to US$58.04 a barrel. Furthermore, breakeven rates – the spread between the yield of a nominal bond and an otherwise similar but inflation-protected bond – continue to climb.
Australia’s 10-year break-even rate climbed to 1.9 per cent, the highest since November 2018, and US 10-year break-evens touched 2.2 per cent, last hit in May 2014. It is no surprise that US inflation expectations have hit a seven-year high.

Australia

The S&P/ASX200 was up on Monday, rising 0.6 per cent to close at 6880.70 and setting a new 100-day high. Over the last five days, the index has gained 3.3 per cent and is currently 4.40 per cent below its 52-week high.

The top performing stocks in this index were buy now pay later, Zip Co, (+12.9 per cent) and telecommunications company, Vocus Group, (+12.8 per cent), with the latter soaring after it received a takeover proposal from Macquarie Infrastructure and Real Asset Holdings at A$5.50 a share.

The worst performing stocks for the day were diversified energy company, Origin Energy, and retail asset owner and developer, Unibail-Rodamco-Westfield, down 3.5 and 3.2 per cent respectively.

• For more information on the latest market moves, get in touch with Jarden.

Disclaimer: This Morning Brief has been prepared in good faith and reflects opinions and views at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation.We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission.This Morning Brief is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision. Jarden Securities Limited is an NZX Firm, a broker disclosure statement is available free of charge at www.jarden.co.nz. Jarden is not a registered bank in New Zealand. Full disclaimer available at: https://www.jarden.co.nz/limitations-and-disclaimer

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