US stocks begin lower; Uber set for stock market debut

Summary:

• US markets begin final session of the week in the red

• Trade continues to weigh on sentiment

• Uber set to debut on the NYSE

It’s been a tumultuous week for global stock markets with concerns surrounding US-China trade tensions returning with a vengeance and seeing some sizable declines. While It has been more than a year since Washington first slapped levies on Chinese imports, tensions had dissipated significantly in recent months before a tweet from Trump last weekend brought them back to the front and centre of investors minds and caused a large gap lower. Even though the news is clearly negative for global growth, the week’s trade has been far from all negative with several sizable bounces seen in US indices. This lunchtime the US president took to social media once more to tweet inflammatory remarks aimed at Beijing and this caused another drop lower in US futures ahead of the open.

A series of tweets amounting to another broadside at China from US president Trump were posted earlier today, all but extinguishing any hopes of an amicable solution anytime soon. Source: xStation   

These latest posts from Trump came after the US had officially slapped the additional tariffs on China overnight but what may be seen as quite telling is the relatively subdued reaction in the markets. Perhaps this is a case of the calm before the storm but it also has a feel that in the near-term of a sell-the-rumour-buy-the-fact type of trade could play out. As this is the final session of the week, how the market trades into the weekend could well prove pivotal and may well be seen as setting the scene for what the first few sessions of next week will bring.    

While the US500 has declined in the past 3 sessions the market has closed significantly off its lows on each occasion and this presence of buying pressure could lead to a recovery back higher into the weekend so long as recent lows of 2837 aren’t breached to the downside. Source: xStation

One stock to watch this afternoon is Uber (UBER.US on xStation) with the firm set to make its debut on the NYSE. The IPO has been priced at $45 per share, towards the lower end of its range, with the company to be valued at $75.46B - a similar valuation as that of Caterpillar and makes Uber one of the most valuable companies ever to go public. In 2018, Uber's revenue reached $11.3 billion for the year, up 43% from 2017, while reporting adjusted losses of $1.8 billion, an improvement over losses of $2.6 billion in 2017, according to its IPO filing. One of Uber’s biggest competitors is rival ride-hailing app Lyft, which went public back in March but after a stellar first day’s trade the stock has fallen sharply to trade well below its IPO price.

Uber will be hoping for a similar first day’s trade to Lyft, although the latter has since struggled and fallen well below its IPO price of $71 per share. Source: xStation