Global Stock Market Analysis: Tesla plans to raise $2.3 billion

3 May 2019, Swissquote – Tesla is once again taking the headlines, after sharing its plans to raise as much as $2.3 billion through bond and stock offering. How did this impact the overall stocks and how did the regional stock markets react? If you trade stocks, then it is important to read today’s global stock market analysis of Swissquote. 

Tesla to Raise $2.3 Billion through bond and stock sale

Today’s Global Stock Market Analysis is dominated by Tesla’s stock offering news. Tesla Inc. is looking to raise as much as $2.3 billion through a bond and stock sale after the electric-car maker reported a steep quarterly loss last week that heightened concerns about its dwindling reserves of cash. Chief Executive Elon Musk had long insisted Tesla didn’t need to seek new financing as the Silicon Valley company wrestled with manufacturing and logistics challenges in bringing its mass-market Model 3 sedan to customers. That message shifted after Tesla reported one of its worst quarterly losses in history and its cash fell by more than 40% to $2.2 billion from three months earlier.

Mr. Musk told Wall Street analysts Tesla was operating more efficiently, but he said there was “merit to the idea” of raising money. In a securities filing Thursday, Tesla said it expects to bring in about $642.3 million in net proceeds from a public offering of about 2.7 million of its shares. Mr. Musk signaled his intent to buy about $10 million of those shares.

Tesla also said it is offering $1.35 billion in convertible senior notes, due in five years. If the underwriters exercise their full options, Tesla could bring in $738.7 million in net proceeds from the stock offering and $1.55 billion from the debt issuance – about $2.3 billion in total.

Swiss stock market ended trading with a slight minus

The Swiss stock market, which has developed its Crypto market in Switzerland, ended trading on Thursday with a slight minus. The SMI lost 0.2 percent to 9,746 points. Geberit reported surprisingly positive results. Sales of the sanitary manufacturer increased by 3.6 percent in currency-adjusted terms, operating cash flow increased by 6.8 percent to 262 million Swiss francs. With a plus of 7.4 percent, the Geberit share was the largest winner in the SMI.

In contrast, Swisscom shares declined by 0.6 percent. According to the analysts, the results were largely in line with expectations. Overall, the currency-adjusted decline in sales was only 0.2 percent. EBITDA exceeded expectations, mainly due to the application of IFRS 16. Swisscom held its ground well in a difficult environment. The AMS share rose by a further 10.4 percent to 47.45 francs. Already on Tuesday, the shares had gained a good 21 percent after the convincing figures for the first quarter. On the reporting day, positive analysts’ comments led to renewed gains. Lafargeholcim stocks gained 0.6 percent. The building materials group is withdrawing from business in Malaysia and Singapore in order to reduce debt.

European stocks were mostly lower

European stocks were mostly lower as reflected by a 0.5% decline in the Stoxx Europe 600. The index finished down 2.25 points to 388.84. The move was the largest one-day point and percentage decline since March 22. The U.K. FTSE 100 index was down 33.95 points, or 0.46%, to 7351.31 — its largest one-day point and percentage decline since Thursday and now is down for three consecutive trading days.

Meanwhile, the French CAC-40 index ended down 47.55 points, or 0.85%, to 5538.86. It was the largest one-day point and percentage decline since March 22. And the German DAX was up 1.34 points, or 0.01%, to 12345.42 and is now up for four consecutive trading days. VW gained 3.7 percent according to its quarterly figures. Volkswagen increased its operating profit before special items by 15.1 percent, resulting in a margin of 8.1 percent. Volkswagen had thus beaten expectations. Bayer increased by 3.8 percent. They thus benefited from statements on glyphosate by the U.S. Environmental Protection Agency (EPA). The EPA maintained its assessment that the glyphosate weedkiller is safe and non-carcinogenic when used correctly.

US Stocks fell midday due to oil prices drop

U.S. stocks fell midday, as a drop in oil prices weighed on energy companies. Accelerating declines in oil prices spilled over into the stock market, dragging major indexes sharply lower. Earlier in the day, a rise in Treasury yields initially had helped boost banks that stand to benefit from a healthier global growth picture and no imminent interest-rate cuts.

Energy stocks in the S&P 500 dropped 1.3%, the worst performers in the broader index, as the price of U.S.-traded crude oil dropped nearly 4% as investors turned more bearish after data Wednesday showed stockpiles surged last week.

The Dow Jones Industrial Average recently fell 185 points, or 0.7%. The S&P 500 and the Nasdaq Composite lost 0.5%. Domestic crude inventories now stand at the highest since September 2017. While the U.S. is set later to end its Iran sanction-waivers program and start banning all Iran oil exports, Saudi Arabia has pledged to boost oil output as needed. Furthermore, traders are expecting today the NFP figures, which will impact the greenback. 

US China trade talks impact Asian stock market

Asian markets were mostly lower in early trading, as investors took in the effects of comments by Jerome Powell and the latest round of U.S.-China trade talks.

US government Bonds fell after Fed Chair’s remarks

U.S. government bonds fell intraday after Federal Reserve Chairman Jerome Powell said a day earlier that soft inflation is transitory. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was up 2.538%, according to Tradeweb, compared with 2.511% Wednesday.

Today’s global stock market analysis was provided by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

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