JPMorgan advised investors to sell energy company stocks
JPMorgan strategists are advising clients to sell energy company stocks soon. Strategists who have kept energy stocks rated “above the market average” for months now see a tactical opportunity, given the huge gap between this group of stocks and energy prices.
Why are energy company stocks down?
“Given that crude oil prices are almost flat for the year and the energy segment is up about 60% (large-cap and service companies and 40% small-cap companies), we believe there is a tactic to sell energy company stocks (either directly or relative to oil assets). The catalyst for convergence will be a pullback in the broader stock market,” they wrote to clients in a note.
The strategists stressed the short-term nature of such a call, as they remain a firm believer in an energy supercycle and a broad market recovery after the Fed’s reversal.
As such, they added that a significant pullback (20-30%) in the energy sector would provide an excellent entry point for long-term investors.
We previously reported that Chinese consumers had accumulated a significant amount of cash during the pandemic.
Goldman Sachs to start trading Japan power futures
Goldman Sachs Group (NYSE:GS) plans to establish a desk in Tokyo to start trading Japanese power derivatives, two people familiar with the matter told Reuters on Wednesday.
More foreign energy companies and banks are seeking access to the Japanese power market, which was launched in 2016 in the wake of the Fukushima nuclear disaster in 2011, spurring trade activity by generators, consumers, and distributors.
An interest in trading rose amid growing liquidity in Japan’s power futures markets as the volatility of electricity prices surged following Russia’s invasion of Ukraine. The power crisis heightened the need for hedging among power suppliers and buyers, according to the sources.
Goldman Sachs has hired some traders in Tokyo, the sources said, requesting anonymity as the matter is still confidential.
A spokesperson for Goldman Sachs declined to comment.
Cathie Wood buys the dip in Coinbase shares amid SEC crackdown
“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,” SEC Chair Gary Gensler said in a press release.Coinbase shares settled 12% lower on Tuesday, their second session of steep losses this week following a 9% tumble on Monday, after the SEC also sued world no. 1 crypto exchange Binance over similar charges.But Coinbase shares rose 2% in aftermarket trading, boosted by news of the Ark buy.Cathie Wood has repeatedly expressed confidence in Coinbase and the broader crypto industry, and has cited a $1 million long-term price target for Bitcoin on the belief that it is an effective inflation hedge.Coinbase holds the fifth-largest weightage in Ark’s flagship Innovation ETF, with the fund having consistently accumulated the stock since its listing in 2021. But Coinbase has seen a sharp decline in value from 2021 highs, hitting record lows earlier this year as interest in crypto markets rapidly dried up amid rising U.S. lending rates.The company has also struggled to remain profitable amid multiple failed ventures, regulatory hiccups, and mounting operational costs, especially as low crypto trading volumes hurt its transaction margins, which are a key source of revenue.Bitcoin prices showed little reaction to the SEC move against Coinbase, rising 4% on Wednesday. But the world’s largest cryptocurrency was nursing steep losses through May, as trading volumes sank.
Japan stocks lower at close of trade; Nikkei 225 down 1.82%
Japan stocks were lower after the close on Wednesday, as losses in the Banking, Transportation Equipment and Power sectors led shares lower.
At the close in Tokyo, the Nikkei 225 declined 1.82%.
The best performers of the session on the Nikkei 225 were Kawasaki Heavy Industries, Ltd. (TYO:7012), which rose 4.35% or 146.00 points to trade at 3,500.00 at the close. Meanwhile, Tokuyama Corp. (TYO:4043) added 3.78% or 84.50 points to end at 2,321.00 and SKY Perfect JSAT Holdings Inc. (TYO:9412) was up 2.20% or 12.00 points to 557.00 in late trade.
The worst performers of the session were Shionogi & Co., Ltd. (TYO:4507), which fell 4.43% or 283.00 points to trade at 6,100.00 at the close. Daikin Industries, Ltd. (TYO:6367) declined 4.40% or 1,300.00 points to end at 28,240.00 and Tokyo Electron Ltd. (TYO:8035) was down 4.18% or 820.00 points to 18,815.00.
Falling stocks outnumbered advancing ones on the Tokyo Stock Exchange by 2255 to 1305 and 270 ended unchanged.
Shares in Kawasaki Heavy Industries, Ltd. (TYO:7012) rose to 5-year highs; rising 4.35% or 146.00 to 3,500.00. Shares in Tokuyama Corp. (TYO:4043) rose to 52-week highs; gaining 3.78% or 84.50 to 2,321.00.
The Nikkei Volatility, which measures the implied volatility of Nikkei 225 options, was down 3.03% to 21.15.
Crude oil for July delivery was down 0.84% or 0.60 to $71.14 a barrel. Elsewhere in commodities trading, Brent oil for delivery in August fell 0.79% or 0.60 to hit $75.69 a barrel, while the August Gold Futures contract fell 0.42% or 8.30 to trade at $1,973.20 a troy ounce.
USD/JPY was down 0.20% to 139.36, while EUR/JPY fell 0.33% to 148.83.
The US Dollar Index Futures was up 0.09% at 104.17.
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