Before the bell: Santa Claus Rally

Today, yet another Japanese car manufacturer sees its stock price surge. Meanwhile, Chinese giant Alibaba is reportedly preparing a major deal in South Korea.

Both European markets and Wall Street were closed on Christmas Day. European traders are enjoying another day off today, while their American counterparts will be back to work soon. Light trading is expected, as many market makers and fund managers avoid taking extra risks during the final days of the year. However, being invested during this period can still pay off. Traditionally—though not guaranteed—the S&P 500 rises by an average of 1.3% in the five trading days following Christmas, a full 100 basis points (1%) higher than in a typical five-day trading stretch.

The Shanghai Stock Exchange is open today, but Chinese stocks are trading flat on average. The Hong Kong Stock Exchange remains closed, leaving Wall Street as the next market to react to news about Alibaba. According to Bloomberg, the Chinese e-commerce giant plans to merge its South Korean operations with the online retail business of E-Mart, a Korean supermarket chain. The deal is reportedly valued at 4 billion dollars. In Tokyo, there’s a strong rally, with both the Nikkei and Topix indices climbing 1.1%. This is largely thanks to Toyota, whose stock is 6.6% higher today (more on that below).

Bearish Market for Diamonds

“Diamonds are forever,” as the famous 1971 James Bond film claims. However, current demand for these gems tells a different story. De Beers, the South African diamond group, has admitted to holding its largest stockpile since the financial crisis of 2008—valued at 2 billion dollars. Sales have slumped due to weak demand in China and growing competition from synthetic diamond producers, leading to declining diamond prices. Anglo American, which holds an 85% stake in De Beers, plans to divest this interest in the second half of next year.

Spotlight in the Showroom

The holiday season seems to bring a new carmaker into the spotlight every day. In recent days, Honda, Tesla, and Nissan have all taken their turns. Today, it’s Toyota’s moment to shine. Shares of the Japanese automaker surged 6.6% on the Tokyo Stock Exchange, following a 4.6% gain yesterday. Toyota’s stock is riding high on a report from the Nikkei financial newspaper, claiming that the company’s management aims to double its return on equity to 20%. Toyota has neither confirmed nor denied the report. The company’s stock has gained 21% this year, outperforming Japan’s Topix index (+17.6%).

Did You Know…

Toyota is the world’s largest car manufacturer? Last year, it sold 11.2 million new vehicles, compared to Tesla’s 1.8 million. However, Tesla’s growth rate (+38%) far outpaced Toyota’s (+7.2%). This is reflected in their market values: Tesla is worth 1,480 billion dollars, while Toyota’s market capitalization is only 263 billion dollars. Of course, Tesla is much more than just a carmaker.

This article was translated from Dutch and was originally published on Spaarvarkens.be.