Originally published by Rivkin Securities
US stocks opened higher overnight and remained positive in what was a fairly low volatility session. The S&P 500 closed 0.3% higher while the Dow was up 0.5% although one of the most interesting stories comes from Tesla (NASDAQ:TSLA), which jumped 11% on news that CEO Elon Musk is planning to organise a leveraged buyout (LBO) of the company at US$420 per share. This is a significant premium to the current price $380 per share even after today’s jump. The most curious aspect of this news is that it was announced via Twitter rather than an official company announcement. Many in the market are sceptical that Musk has actually arranged financing to perform the buyout and that it may just be a stunt to burn short sellers. It wouldn’t be the first time Musk has tried to punish short sellers although he is at risk of market manipulation charges if today’s announcement doesn’t prove to be accurate.
Yesterday the Reserve Bank of Australia (RBA) decided to keep rates on hold, as widely expected, which now brings to two years the time which the rate has been unchanged at 1.5%. The accompanying statement had little impact on financial markets although the Australian dollar did rally back above US$0.74 where it currently sits at $0.742. Unemployment is forecast to gradually decline to 5% over the next couple of years although the bank is slightly concerned by slowing growth in China. Market pricing suggests a rate hike now won’t occur until sometime in 2020. Tomorrow morning the Reserve Bank of New Zealand will meet to decide interest rates although it is expected to remain on hold at 1.75%.
Data Releases:
- China Trade Balance 12:00pm AEST (tentative)