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Wednesday, January 21

Noteworthy macro moves today: Gold +2.3%. DAX 30 Index (Germany) -1.3%. Oil (WTI) +1.5%. 

Global equity markets are trading lower amid concerns over geopolitical tensions following President Trump's renewed threats of tariffs against European nations related to his push for acquiring Greenland. This has led to a significant sell-off in U.S. indices, with the S&P 500 experiencing its steepest drop since October, reflecting investor anxiety about potential trade wars.

In economic data released today, the UK's inflation rate rose to 3.4% in December, exceeding expectations and complicating monetary policy efforts by the Bank of England as core inflation remained steady at 3.2%. Additionally, the CBI Business Optimism Index showed a decline to -19, indicating ongoing weakness in business sentiment amid rising costs and declining orders.

Also released today, U.S. mortgage applications surged by 14.1%, driven by a drop in average mortgage rates to 6.16%, marking a new low since September 2023 and signaling continued demand growth in the housing market despite broader economic uncertainties linked to geopolitical developments and inflationary pressures.

SPDR Gold Shares (GLD) [+2.6%]
Gold prices surged, reaching an all-time high as safe-haven demand intensified amid rising geopolitical tensions and renewed tariff threats from U.S. President Donald Trump. This surge prompted a significant flight to gold and other precious metals, with equities experiencing steep declines. SPDR Gold Shares (GLD) closed up on the previous trading day, benefiting from this heightened interest. Social media discussions highlighted a positive trend in the Hong Kong precious metals sector, with notable gains in various gold stocks. Analysts suggested that ongoing geopolitical uncertainties could drive gold prices even higher. Additionally, gold prices increased further today, surpassing $4,800 per ounce, supported by fears of offshore selling of U.S. assets and a significant drop in the U.S. dollar, reinforcing the demand for secure investments amidst market volatility.

Communication Services Select Sector SPDR Fund (XLC) [-0.6%]
The Communication Services Select Sector SPDR Fund (XLC) has seen a price decline of 0.53%, translating to a decrease of approximately $0.59. This drop occurs amid broader market challenges, including President Trump's renewed tariff threats against European nations, which have spurred significant sell-offs on Wall Street and contributed to declines in major indices. Concurrently, U.S. Treasury yields have reached a five-month high, potentially affecting communication services stocks within XLC's portfolio. The fund's daily return stands at -0.62%. Among its holdings, notable detractors include NFLX, which dropped significantly, contributing the most to the fund's performance decline, followed by GOOGL and GOOG, both of which also experienced notable decreases. The S&P 500 Index has declined by 0.24%, reflecting broader market sentiment that may influence XLC's price movement.

NFLX | -7.7% | -2.7B
Netflix Inc | Movies & Entertainment
Netflix reported its fourth-quarter earnings, posting an earnings per share of 0.56, slightly above the expected 0.55, and revenues of 12.05 billion, surpassing the consensus of 11.97 billion. Despite these positive figures, the company projected first-quarter earnings of 0.76, below the anticipated 0.81, and revenues of 12.16 billion versus the expected 12.19 billion. For fiscal 2026, Netflix's guidance indicates revenues between 50.7 billion and 51.7 billion, marginally above the consensus estimate of 50.98 billion, suggesting a deceleration in growth. Additionally, Netflix announced a pause on share buybacks to accumulate cash for its all-cash acquisition of Warner Bros., valued at 27.75 per share, raising concerns regarding future cash flow and operational strategy.

PDD | +3.8% | +22.6B
PDD Holdings Inc | Broadline Retail
Shares of PDD Holdings Inc. have increased notably, following the announcement of a tax fine of RMB 100,000 for failing to submit required tax information. This penalty, perceived as less severe than initially anticipated, has contributed to a positive market response. Earlier today, PDD's stock price surged approximately 6%. Reports also indicate that despite ongoing scrutiny and a raid on Temu's office in Turkey, the company’s stock has shown resilience amidst these regulatory challenges. Additionally, social media discussions revealed that PDD faced a fine of approximately $14,000 from Chinese authorities for non-compliance with tax regulations. The Shanghai district tax bureau's fine was characterized as smaller than feared, which may have further buoyed market sentiment.

JNJ | -3.4% | -17.1B
Johnson & Johnson | Pharmaceuticals
Johnson & Johnson reported fourth-quarter earnings today, revealing a net income of $5.116 billion and adjusted earnings per share of $2.46, surpassing the consensus estimate of $2.44. Revenue for the quarter reached $24.56 billion, exceeding expectations of $24.16 billion. Despite these positive results, the stock declined in pre-market trading, attributed to ongoing legal concerns regarding its talc products. A court-appointed special master has recommended allowing expert testimony linking these products to ovarian cancer, overshadowing the earnings beat and guidance for fiscal year 2026, which anticipates sales between $99.5 billion and $100.5 billion. Social media discussions highlighted the slight earnings beat but noted some concerns regarding missed estimates in specific areas, contributing to a pre-market decline of approximately 3.4%.

KHC | -6.3% | -1.7B
Kraft Heinz Co | Packaged Foods & Meats
Kraft Heinz Co's stock has dropped significantly, declining nearly 7% since Tuesday. This downturn follows reports that Berkshire Hathaway may sell up to 325.4 million shares of its stake, which represents approximately 27.5% of the company. The potential divestiture has raised concerns among investors, contributing to the stock's decline. Earlier today, BNP Paribas downgraded Kraft Heinz's rating to "underperform," setting a price target of $22. Additionally, social media discussions have highlighted the negative market reaction to Berkshire's possible sale, with shares falling around 5% in early trading today. The overall sentiment reflects apprehension regarding the implications of such a large share sale by a major stakeholder.

NEGG | -5.4% | -1.1B
Newegg Commerce Inc | Computer & Electronics Retail
Newegg Commerce Inc. is facing significant downward pressure following the detention of its Chairman, Mr. Zhitao He, who is also the CEO of its largest stockholder, Hangzhou Lianluo Interactive Information Technology Co. This information was disclosed approximately 14 hours ago, indicating that Mr. He is under investigation by the Haibei Prefecture Supervisory Commission. Despite Newegg's assertion that daily operations and management remain unaffected, the market reacted negatively, resulting in a notable drop in share price. The announcement has been highlighted on social media, with discussions raising concerns about the implications of Mr. He's detention for the company.

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