Company Spotlight
On Friday, lithium prices in China drastically fell by 30% to $61,795 per tonne, which left many investors puzzled. However, it was later revealed that this sudden fall in price was attributed to one company - Contemporary Amperex Technology or CATL. CATL are the premier manufacturer of Electrical Vehicle Batteries, in which lithium is a key component in its manufacturing process. The sudden fall in lithium prices resulted from CATL’s change in its pricing strategy, as they have signed a deal to offer electric vehicle batteries to various electric vehicle manufacturers at a discounted price. The contract CATL signed with other EV manufacturers stated that CATL will sell their EV batteries at a discount as long as they purchase 80% of their EV batteries from CATL. Many large lithium miners and processors have had their share price reduced by roughly 10% as a result, with two of the largest companies Albemarle and SQM losing 6.2% and 2.5% respectively on Tuesday.
UK: FTSE 100
The FTSE 100 closed on Friday at 4:30 pm at 7,878.66, falling by 1.57% from the previous open to 8,004.36 on Monday at 8:00 am. This was the first time the FTSE 100 had a week closing with a fall in price since mid-December. The biggest decline was Cineworld plc, with the share price plummeting by 49.9%. This was a result of the company announcing that its shareholders may see their equity value reduced as it attempts to exit Chapter 11 bankruptcy protection, which followed as the company failed to find a buyer. The future for Cineworld does not look promising, Russ Mould, Investment Director of AJ Bells, believes that a break-up of the Cineworld Group may be imminent. Mining shares have also decreased following the fall in lithium prices as mining companies Anglo American and Antofagasta fell by 4.8% and 7.7% respectively. Global investment firm M&G made major strides, as they shot up to the top of the index following an 8% rise. Rolls Royce has also had a terrific week, with the share price increasing by a monumental 31%. This was following extremely successful results, with a 57% jump in operating profits from last year. Rolls Royce CEO Tufan Erginbilgic believes they are ‘capable of so much more’ and are conducting a strategic review to maintain this growth.
USA: S&P 500
In celebration of Presidents Day in the USA, the NYSE halted trading and trading began on Tuesday. The S&P 500 opened on Tuesday at 9:30 am at 4,052.35, falling by 2.03% to 3,970.15. This trend of the S&P 500 has been continuing since the beginning of February. This however has been one of their biggest weekly falls in the last two months due to fears of new inflationary pressures. The Federal Reserve is expected to increase interest rates in order to combat and control inflation, which will negatively affect equity valuations. One of the most significant declines was Dish Network, which fell by 6.5% after publishing a disappointing revenue figure, which was $10 million less than anticipated. The biggest riser in the S&P was Union Pacific, which rose by 10%. This was a result of the CEO Lance Fritz announcing that he would name his successor this year. This tremendous rise in share price infers that traders are optimistic about the future of Union Pacific. It has been a bearish week for the S&P 500 following high inflationary pressures and high-interest rates to counteract it.
Japan: Nikkei 225
The Nikkei 225 closed on Friday at 3:00 pm at 27,439.97, falling by 0.21% from its previous open at 27,497.13 on Monday at 9:00 am. One of the biggest ascendants of the Nikkei 225 this week was Advantest Corp which rose by a tremendous 8% to 10,930 JPY. Another key player this week was Tokyo Electron Ltd, which rose by 2.8% to 47,770 JPY. Significant declines include Sumitomo Metal Trading which fell by 2.6% to 5,125 JPY and Takeda Pharmaceuticals Co. Ltd which fell by 2.1% to 4,323. Despite Advantest Corp rising by 8%, the Nikkei 225 still ended the week with a decline.
Summary
Overall, it has been a bearish period in the markets, despite the many individual triumphant prices rises in the case of Rolls Royce and Union Pacific, the majority of share prices have fallen. Most indexes seem to have been continuing in this decline for the past month now and analysts say that it is expected to continue as high inflationary pressures currently plague all major economies.