What's moving markets today: Uber IPO and tariffs
The Uber (UBER) IPO may have been a dud. But there's another company that went public on Friday and its stock is surging. Shares of Chinese online lending marketplace Jiayin Group (JFIN) were up more than 40% in their debut.
Scott Coyle, CEO and co-founder of ClickIPO, an app that allows individual investors to buy and sell shares of new stocks, said there was solid demand for Jiayin among the more than 100,000 people who have downloaded the ClickIPO app.
The success of Jiayin is all the more impressive given the market volatility as of late due to increased trade tensions between the US and China this week and worries about how the Chinese economy could be hit by a prolonged spat.
Coyle thinks the strong debut for Jiayin bodes well for a larger and more well-known Chinese firm expected to begin trading next week: Luckin Coffee (LK). Luckin, which will list on the Nasdaq, has been dubbed the Starbucks of China. Coyle says there has been a fair amount of interest in Luckin from ClickIPO users.
If this trend keeps up, then perhaps Chinese ridesharing giant Didi will do better than Uber and Lyft (LYFT) if it decides to go public.
Uber (UBER) picked a hell of a week to go public.
At one time, Uber rooted for Lyft to fail. But as the closest proxy to Uber on the public market, Lyft's stock decline only made Uber's IPO pitch that much harder.
Uber and Lyft drivers staged strikes in numerous cities around the world ahead of the IPO.
The drivers are seeking livable incomes and job security at a time when Uber will likely only face greater pressure from investors to find ways to move toward profitability.
The United States has escalated its trade war with China, hiking tariffs on $200 billion worth of Chinese exports hours after trade talks held in Washington failed to produce a breakthrough.
The most highly anticipated IPO of the year had a less than stellar reception on Wall Street.
In a stunning turn of events, Uber (UBER) opened at $42 a share in its Wall Street debut Friday, below its IPO price of $45 a share.
The lackluster debut comes as Uber runs up against broader market jitters over an escalating trade war between the United States and China as well as investor concerns about its chief rival and closest proxy, Lyft.
Stocks remain solidly lower an hour and a half into the trading day, as worries about the next developments in the trade spat between the United States and China weigh on investors.
Only five Dow stocks are trading in positive territory:
The stocks leading the decliners:
In the S&P, all sectors besides the more resilient utilities are down.
There was a lot of buzz on Wall Street about Uber’s (UBER) IPO on Friday. But investors on Main Street don’t seem as enthused.
Shawn Cruz, manager of trader strategies for TD Ameritrade, told me from the floor of the NYSE that he was seeing “decent demand” for Uber stock -- but not nearly as much as there was for Facebook (FB) and Alibaba (BABA) when they went public.
But that might be a good thing. Unlike Uber rival Lyft (LYFT), which raised its price range and then priced at the top end of it, Uber appears to be going public at a more reasonable valuation.
Uber vs. Lyft
Cruz added that Uber might fare better than Lyft — and not just because it is bigger.
Rapidly growing Uber Eats is a big selling point for Uber. Cruz thinks Uber deserves a valuation closer to delivery giant GrubHub (GRUB) as a result.
We're still waiting for Uber's first trade. What will it start at? This could be a hint.
Consumer price inflation for April stood at 2% year-over-year -- ticking up from 1.9% to match the Federal Reserve's inflation target, but undercutting expectations for 2.1% inflation.
President Donald Trump, who has been vocal about his wish the central bank would lower interest rates to stimulate the economy, called the CPI release "really good, very low inflation" in a tweet.
Still, market expectations and presidential hopes for an interest rate cut might be misplaced, according to James Smith, developed markets economist at ING.
According to Smith, the strength in wage growth will gradually put pressure on inflation as the tightness in the job market means companies are increasing pay to retain staff.
Investors are currently pricing at least one rate cut over the next 12 months, but despite the latest increase in trade uncertainty, we think this is unlikely to materialize as things stand. Given the robust activity story, inflation backdrop and recent improvement in financial conditions, we think it is more likely that the Fed remains on hold for the foreseeable future," said Smith
In its latest policy update, Fed Chairman Jerome Powell said a weakening in inflation was due to "transitory" factors. All eyes will now be on next month's numbers.
More than anyone else, Travis Kalanick built Uber (UBER) into a global force through a mix of aggressive fundraising and a take-no-prisoners approach to growth.
At Uber's IPO price, Kalanick's remaining stake in the company is worth $5.3 billion.
While Kalanick wasn't ringing the bell, he was still at the stock exchange. He watched the Uber festivities from the gallery, not the floor, leaving about an hour after markets started trading.
US stocks dropped at the open after additional tariffs on Chinese import goods climbed to 25% from 10% just after midnight.
Shares of Chinese e-commerce company JD.com (JD) rallied 9.6%, after the company reported better than expected earnings.