Before the Bell: S&P 500 hits new record

In the U.S., the market rally continues, while in Europe wind farm developer Ørsted must prepare a major capital increase. Meanwhile, Sofina could benefit from a potential deal involving TikTok.

The global stock rally shows no sign of slowing. In the U.S., the S&P 500 (+0.5%) and the tech-heavy Nasdaq (+0.9%) both set new records. One of the drivers was Tesla (+3.6%). Elon Musk bought 1 billion dollar worth of Tesla stock on Friday—the first purchase since 2020. Alphabet (+4.5%) also gained after a rating upgrade from Citigroup. In Europe, Ørsted came under pressure. The company must raise 9.4 billion dollar via a capital increase. The new shares will be issued at 66.6 Danish krone—a steep discount to Monday’s closing price of 198.15 Danish krone.

In Asia, trading is muted this Tuesday morning. The Chinese government extended its anti-dumping probe into Nvidia, pressuring the chipmaker. The Hang Seng Index in Hong Kong was flat. Investors appear to be holding their breath ahead of tomorrow’s Federal Reserve rate decision. Sofina could benefit if reports of a deal between the U.S. and ByteDance for the sale of TikTok’s U.S. division are confirmed. Sofina has held a stake in ByteDance since 2016. Meanwhile, MDxHealth announced the completion of its ExoDx acquisition. Overall, investors face a quiet trading day with a light agenda.

Is diversification always a good idea?

Holdings are a popular way to invest in equities, and tomorrow one of the most interesting will report quarterly results: Exor. Though Italian by origin, the investment company has been listed on Euronext Amsterdam since 2016. Investing in Exor means exposure to leading companies such as Ferrari, Stellantis (autos), Philips (healthtech), and CNH Industrial (industry). These four holdings make up about 75% of the portfolio’s value. Ferrari is Exor’s crown jewel, boasting some of the auto industry’s highest margins and steady premium-segment growth. But the weakness lies in the cyclical challenges facing autos, Philips’ halving in value since 2021, and years of stagnation at CNH. Normally, diversification is a strength, but right now there’s little appeal in spreading capital across Europe’s auto and manufacturing sectors. Interested in Ferrari anyway? You can always buy it directly on the Milan stock exchange.

Uranium stocks glowing green

Uranium producer Yellow Cake looks set for a strong opening today. The U.S. government announced plans to build a uranium reserve. The U.S. remains dependent on Russian uranium—Russia supplies a quarter of U.S. enriched uranium needs. With strained diplomatic ties, Washington wants to accelerate its reserve build-up. Currently, U.S. nuclear plants have just 14 months’ worth of enriched uranium stockpiled, compared to two-and-a-half years in Europe and over 10 years in China, according to International Atomic Energy Agency data. Shares of Cameco (+10.5%) and Sprott Physical Uranium Trust (+6.2%) already surged yesterday. The news broke after European markets closed, meaning Yellow Cake has catching up to do. The company has built up a large above-ground uranium stockpile. Should Russian supply be disrupted, Yellow Cake is well positioned to benefit.

Did you know…

that Bloomberg Intelligence analysts estimate TikTok’s value at 40 to 50 billion dollar? Most of ByteDance’s profits, however, are generated in China. Analysts value ByteDance itself between 330 and 400 billion dollar.

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