Indices in the red ahead of US open; Kraft Heinz to fall

2:12 PM September 17, 2019

Summary:

  • US indices trading lower ahead of cash session

  • Dax falls to lowest level of the week

  • 3G Capital sell sizable Kraft Heinz stake

 

There’s a little bit of softness around in equities ahead of the US session with red seen across the US indices and the German Dax falling to its lowest level of the week in the past hour.

US stocks remain not too far from their record highs but have failed to close the gap lower from last week’s close at 3007. Price is once more approaching the 8 EMA. Source: xStation 

 

There’s no real news to support the declines, although it is worth pointing out that the aforementioned markets have still failed to close their gaps lower at the start of the week and Oil remains well supported. Bonds are moving higher alongside Gold while the greenback is one of the best performing currencies, with the USDZAR higher by 1% on the day.

The USD is edging higher as the attention starts to turn to tomorrow’s Fed rate decision. The overnight repo rate has hit 10% in the US and this could be explaining some of the gains in the buck and the weakness in the EM space. Source: xStation 

 

There’s been some bad news for investors in Kraft Heinz this afternoon after reports that its second largest shareholder has sold a significant portion of its stake. Private equity firm 3G Capital Partners, a Brazilian firm founded by Jorge Paulo Lemann has disclosed that it sold 25.1 million shares at a price of $28.44. 3G are second only to Warren Buffet’s Berkshire Hathaway in terms of shareholdings and the legendary investor will not be too pleased to see the stock is called to begin lower by more than 2%. 

 

It is worth pointing out that Lemann, in a separate filing, increased his personal holding of Kraft Heinz stock by around $100M and it is believed that the 3G sale was necessary due to withdrawals from the fund that holds the stock. A spokesman for Kraft Heinze told CNBC that the private equity fund had no current intention to sell any further stock. 

 

Kraft Heinz shares are set to begin lower this afternoon and after 3 solid weeks of gains the chances of a retest of the record low around the 25 handle have seemingly increased after the 3G news. Source: xStation

 

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