Stock Market Futures Under Pressure Amid New Virus Strain
Stock market futures are making considerable moves downward in early morning trading on Friday. This came as investors geared up for a shortened trading day amid renewed virus strain found in South Africa. Before the stock market was closed on Thursday for Thanksgiving, there were several strong economic reports. In brief, personal incomes and consumer spending for October came in higher than expected. In addition to that, initial jobless claims also hit their lowest level since 1969.
“It’s a scary headline” about the virus variant, so it may have caused a knee-jerk reaction. North America off the desks means there’s a wall of buyers missing “and that thinner markets make for more pronounced moves.”- said Kyle Rodda, an analyst at IG Markets
The new strain comes at a time when markets are already facing headwinds from inflation and fears of tighter monetary policies. Meanwhile, crude oil prices and treasury yields continue to trade lower in the stock market today. As of 7:19 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 2.13%, 1.56%, and 0.47% respectively.
China Asks Didi To Delist From U.S. On Security Fears
There has been a long speculation that ride hailing giant Didi Global (NYSE: DIDI) faces a potential delisting from the New York Stock Exchange. Of course, nothing is set in stone at the moment. But Chinese regulators have asked top executives of the company to devise a plan to delist from the U.S. stock market. Unless you have been living under a rock, you would know that China continues a broad crackdown on its tech firms. If anything, regulatory risk remains arguably the biggest threat affecting most Chinese stocks today.
Investors should note that the increasing state scrutiny and regulations are the new normal when it comes to investing in Chinese stocks. For instance, Tencent (OTCMKTS: TCEHY) has committed to working with the Chinese government as it reshapes policy toward domestic firms operating internationally. No doubt, this could affect businesses directly. Admittedly, many investors may be scratching their heads with these developments. But Tariq Dennison from GFM Asset Management doesn’t expect long-term investors to be deterred by the uncertain regulatory outlook.
“If you ask me, newer regulations are more likely to entrench these companies and to give them wider moats because Tencent is very, very likely to be able to adapt to any of these new rules, to find new ways to make money. And they have lots and lots of consumers to serve in a common prosperity model,” -Tariq Dennison from GFM Asset Management.
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Baidu (BIDU) Kicks Off Its Robotaxi Business
Chinese search-engine giant Baidu (NASDAQ: BIDU) keeps ramping up its autonomous driving ambitions. Granted, the company received approval on Thursday to operate its commercial robo taxi services in a specified zone in Beijing. This marks a major step toward building its driverless taxi business. Following this piece of news, investors could be looking at Baidu stock closely in the stock market today.
According to CEO Robin Li, Apollo Go, Baidu’s robo taxi service, aims to be in 65 cities by 2025 and 100 cities by 2030. So far, Baidu can only offer public robo taxi rides when a safety driver is accompanying passengers. But that might change in the next year or two. Self-driving taxi operators like Alphabet’s (NASDAQ: GOOGL) Waymo have been testing similar products in California and Arizona. For Apollo, it is apparent that they are willing to open up these autonomous driving tech for other international markets too.
“We have partnered with many transportation companies in China and are trying to partner with similar companies in other places. If there is such demand for autonomous driving in other markets, Baidu is willing to cooperate with overseas partners, whether it is an operating company, an automaker or another transportation company. We can export our technologies and experience, and jointly operate in certain areas on the basis of complying with local laws and regulations“- said Wei Dong, VP of Baidu’s intelligent driving group.
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Tesla Ramps Up Investment To Expand Shanghai Factory Capacity
Reports said Tesla (NASDAQ: TSLA) plans to invest up to $188 million to expand production capacity at its Shanghai factory. Despite the regulatory pressure mounting over consumer disputes on product safety and how the EV king handles data, the automaker’s China sales continue to rise. The filing showed that the expansion will allow Tesla to add 4,000 staff. That would take the number of people the plant can employ to 19,000.
Those who follow the company closely would recall the EV maker’s latest plan to invest heavily in the highly anticipated ‘Gigafactory’ in Austin, Texas. According to a recent public filing, Tesla is set to spend at least $1.06 billion on the new EV factory. Furthermore, the general construction of the facility is set to be completed by December 31. This includes the facilities needed for bodywork, stamping, casting, and full vehicle assembly among other key manufacturing assets.
According to CNBC sources, all this is from construction filings with the Texas Department of Regulation. Upon completion of construction, the Gigafactory will reportedly focus on the production of Tesla’s upcoming electric pickup truck, the Cybertruck. Moreover, the company will also be manufacturing its Model 3 and Model Y EVs there as well. By and large, EV players like Tesla continue to ramp up their operations. And investors’ focus on the EV industry could continue to grow. With the company leading this charge, it would not surprise me to see TSLA stock gaining traction.
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Nio To Develop Co-branded Network Of Charging Solutions With Shell
Chinese electric vehicle maker Nio (NYSE: NIO), often dubbed as Tesla of China, has had no shortage of good news in recent weeks. We saw its expansion into Europe and the completion of a $2 billion share offering recently. Thus, I can understand why many believe NIO stock makes a good EV investment right now. Of course, one of the facets that set Nio’s EV strategy apart from its competitors is its battery swap technologies.
On Thursday, Nio officially announced a strategic partnership with Shell (NYSE: RDS.A). The joint effort in China will start with two pilot sites with a goal to reach 100 sites by 2025. From this partnership, consumers can have access to Shell Recharge high-speed charging at Nio locations. Meanwhile, battery swapping services will also be available at convenient Shell locations. With charging and battery swapping at more locations, this would almost certainly offer a better experience to EV owners.
