China Data Surprises To Preserve Stocks Rally

Stocks have continued to inch higher today as Chinese export data comes in much better than expected. European markets are firmer a few tenths either side of 1% and their US counterparts up a little more with the Nasdaq breaking back through the 9000 mark and into positive territory for the year. Markets had been expecting Beijing to announce a 15.1% fall in exports, to add to the miserable economic data that has seemed to trickle through during the pandemic, but we got a surprise when the figure actually came out with a 3.5% gain year on year.

Yesterday, Lyft (LYFT) announced on its quarterly earnings call that it is cutting 17% of its workforce, which was followed by reports that Uber is cutting a similar proportion of its staff. Lyft reported a loss of almost $400m on revenue of $956m for the first quarter of 2020. Lyft CEO Logan Green said that the pandemic has had a “profound impact” on the business, and that rides in the month of April were down more than 75% versus the same month last year. For the quarter as a whole, Lyft still made gains in rider numbers versus Q1 2019 — and both the loss and revenue figures were better than expected. The job cuts at Lyft amount to around 1,000 people, and are accompanied by other measures including trimming salaries and furloughing employees, with another cost cutting update coming with the next two weeks. That, combined with the announced cost cutting measures, sent the firm’s share price soaring more than 15% in late trading. Uber stock also jumped more than 7% in late trading, ahead of its own earnings report tomorrow.

In economic data, ADP’s employment report showed that private payrolls fell by more than 20 million in April, with the biggest job losses coming from the services and hospitality sectors, plus trade, transportation, utilities and construction. The figure blows the previous record, 834,665 in February 2009, out of the water.

Mixed bag for US stocks

The major US stock indices posted a mixed day on Wednesday, with the Nasdaq Composite leading the way. The tech heavy index posted a 0.5% gain, on the back of a 19.6% jump in MercadoLibre stock and a 6.3% pop for Activision Blizzard. Latin American e-commerce business MercardoLibre’s rally came on the back of a solid first quarter earnings report despite the pandemic. The firm has been a beneficiary of consumers turning to online shopping options, and Q1 net revenues jumped almost 40% year-over-year. Video game giant Activision Blizzard, the company behind the hugely successful Call of Duty series, rose on the back of strong Q1 results boosted by consumers stuck at home turning to games for entertainment. While the Nasdaq made gains, the Dow Jones Industrial Average fell 0.9%, dragged lower by firms including Dow, American Express, Chevron and Boeing. In the S&P 500, which fell 0.7%, Occidental Petroleum was the biggest loser, after reporting its Q1 2020 earnings figures. The stock closed 12.5% down, thanks to substantial Q1 losses, writing down the value of assets, and a potential debt crunch looming.

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