In today’s headlines, Samsung earnings lift Asian tech stocks, GameStop rallies after announcing a stock split and Rivian shares jumped after promising production update. Other top stories include Merck’s bid for biotech firm Seagen and the outlook for the ARK Innovation ETF amid the tech selloff.
Samsung triggers $30bn tech rally
After beating expectations with a 21% jump in revenue, Samsung [005930.KS] sparked a tech rally in Asian markets. Samsung climbed 3.2%, Hynix [000660.KS] jumped 5%, Taiwan Semiconductor Manufacturing Co [2330.TW] was up 5% and United Microelectrics Corp [2303.TW] surged 7.3%. Together, the four firms added around $30bn in market value. Despite the short-term rally, going long on tech may not be the right place to be. Short sellers betting against tech have seen considerable gains this year, with bearish traders making nearly $20bn in profits by shorting FAANGs since the start of 2022.
Investors bet on ARKK rebound
The ARK Innovation ETF [ARKK] has slumped 53% year-to-date, hurt by the selloff of big tech stocks such as Tesla [TSLA]. However, its net inflows came in at $1.5bn, and some investors are forecasting a rebound for Cathie Wood’s flagship fund. VettaFi’s Todd Rosenbluth said that the fund’s long-term focus on disruptive innovation has attracted interest from financial advisors, and that some see its price weakness as a buying opportunity.
Investors flock to GameStop after stock split news
The poster child for meme stocks climbed 11% in premarket trading on Thursday after announcing a four-for-one stock split in the form of a dividend. Stock splits have gained popularity, with big names like Tesla, Apple [AAPL] and Amazon [AMZN] benefitting from this practice over the past two years. GameStop’s [GME] business model has struggled as consumers shift to buying video games online rather than in physical stores, so investors will be watching to see what impact the split will have on the company.
Merck in talks to buy Seagen for $40bn
Pharmaceutical company Merck [MRK] is in advanced discussions to buy cancer biotech firm Seagen [SGEN] in a deal that could be worth more than $40bn. Seagen is reportedly being valued at more than $200 per share and the deal is expected to close before Merck’s quarterly earnings on 28 July. The merger would help boost Merck’s cancer drugs offering and offset a potential loss in sales after its immunotherapy drug Keytruda loses patent protection later this decade.
Rivian’s Q2 production boost
On Wednesday Rivian [RIVN] shares jumped 10.4% from Tuesday’s close after the company teased its second quarter production figures ahead of its earnings announcement in August. The EV maker said it produced 4,401 electric trucks and SUVs in its Illinois plant in the three months and delivered 4,467 vehicles. Rivian also reiterated that it is on track to deliver 25,000 vehicles this year, in line with lowered guidance issued in March. Since production began at the end of 2021, Rivian has produced 7,969 vehicles as of the end of June.
Can Rolls-Royce take flight?
A recovery in aviation meant Rolls-Royce [RR.L] saw flying hours increase by 42% in the first four months of the year compared with the same period in 2021. In the medium term, the jet engine maker expects civil aerospace revenue to grow by a low double-digit percentage, while cashflow is expected to “comfortably” exceed operating profit with operating margin percentage forecast to be in the high single digits. Since the update on 12 May, investors have gradually started flying back to the stock, which closed 5.3% higher than its 52-week low on 6 July.
China tech rebounds
Chinese big tech stocks including Alibaba [9988.HK], Baidu [9888.HK] and Tencent [0700.HK] have rallied in the past few weeks as Beijing’s regulators appear to be loosening their grip and the country emerges from Covid-19 lockdowns. The iShares MSCI China Multisector Tech ETF [TCHI], which has all three stocks in its top 10 holdings, has outperformed the S&P 500 year-to-date. It’s delivered a positive return in the past month versus a negative return for the benchmark (as of 7 July).
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.