While you were sleeping: Amazon weighs on Wall St

Thursday 29th March 2018

Wall Street fluctuated with tech stocks as Amazon shares sank amid a report that US President Donald Trump wants to curtail the company.

Shares of Amazon dropped, down 4.5 percent as of 2.25pm in New York, after Axios reported that Trump is “obsessed” with the company and has talked about changing its tax treatment.

“Capitol Hill wants Facebook’s blood, but President Trump isn’t interested,” Axios reported. “Instead, the tech behemoth Trump wants to go after is Amazon, according to five sources who’ve discussed it with him.”

In 2.22pm trading in New York, the Dow Jones Industrial Average rose 0.4 percent. However, the Nasdaq Composite Index inched 0.04 percent lower. In 2.06pm trading, the Standard & Poor’s 500 Index fell 0.3 percent.

“With Facebook and regulatory worries, the last thing nervous tech investors wanted to see was news that Trump is targeting [Amazon CEO Jeff] Bezos and Amazon over the coming months as this remains a lingering cloud over the stock and heightens the risk profile in the eyes of the Street,” GBH Insights analyst Daniel Ives said, Reuters reported.

The Dow rose, as gains in shares of Merck and those of Walmart, recently up 2.4 percent and 1.8 percent respectively, outweighed slides in shares of Intel and those of Cisco Systems, down 3.3 percent and 1.7 percent respectively.

”The [IT] sector’s recent underperformance has probably had more to do with two factors which have darkened the prospects for the earning of IT firms in particular," according to Capital Economics markets economist Oliver Jones.

"The first is the prospect of tougher regulation, particularly on the handling of customer data,” Jones noted. “The second is the risk of more protectionism following the trade measures announced by the US."

“Those focused primarily on software might have most to lose in an environment of tougher regulation on data privacy,” according to Jones. “Meanwhile, those focused instead on producing hardware or semiconductors that rely on global supply chains appear at greater risk from an escalation of trade tensions.”

Meanwhile, a Commerce Department report showed US gross domestic product expanded at a 2.9 percent annualised rate in the fourth quarter, beating economists' expectations and up from a previous estimate of a 2.5 percent pace.

In Europe, the Stoxx 600 Index gained 0.5 percent from the previous close. The UK’s FTSE 100 Index added 0.6 percent, while France’s CAC40 Index rose 0.3 percent.

Shares of NEX Group jumped, closing 9.8 percent stronger in London, as Chicago-based CME Group proposed to buy the company.

NEX received a non-binding proposal for the acquisition at 10 pounds per share, it said in a statement on Wednesday. “Discussions are at an advanced stage; there can be no certainty that an offer for NEX will be made, nor as to the terms of any offer,” the company said.

The offer is 49 percent higher than NEX’s closing price on March 15, before the approach was reported by Bloomberg. Potential bidders such as London Stock Exchange Group and IHS Markit may approach NEX with their own offers now that CME has shown its hand, according to Bloomberg.

Germany’s DAX Index declined 0.3 percent.

(BusinessDesk)

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