Before the bell: Japan back in the lead

Alphabet wants to borrow for 100 years. While technology stocks recover, IT services firm Kyndryl sees its share price cut in half.

An average European stock, as measured by the Euro Stoxx 50, gained 1.1% yesterday. Dutch payments company Adyen (+4.6%) was the biggest winner in the index. Shares within Belgium’s Bel20 also rose by an average of 1.1%. Melexis (+4.6%) and the holdings GBL (+3.5%) and D’Ieteren (+2.7%) led the Brussels index higher. On the other side of the Atlantic, the S&P 500 (+0.5%) and the US technology-heavy Nasdaq (+0.9%) also closed in the green. Oracle (+9.6%) and Microsoft (+3.1%) benefited from the broader recovery in the technology sector and renewed confidence in artificial intelligence. Alphabet (+0.4%) has asked banks to assist with the issuance of a 100-year bond. This ultra-long-term loan is, unsurprisingly, linked to the company’s planned investments in artificial intelligence. IT services firm Kyndryl (-55%) plunged after the unexpected departure of its CFO. The company is currently in the middle of an accounting investigation and has postponed the publication of its annual results.

In Asia this morning, the Hang Seng Index in Hong Kong is up 0.5%. In Japan, indices are once again firmly in the green. The Topix is up 2% and the Nikkei is gaining 2.4%. Later today, a long list of companies will report results, including Barco, Coca-Cola, CVS Health, Spotify, AstraZeneca, Ferrari, Marriott, S&P Global, Robinhood, Gilead, Cloudflare, Edwards and Ford.

Where there’s smoke, there’s fire

Kyndryl’s share price took a 55% hit yesterday on the New York Stock Exchange. Investors dumped the stock following the immediate departure of the CFO, at a time when the company is already in the midst of an accounting investigation. On top of that, Kyndryl has postponed the release of its annual results, which is never a good sign. A year earlier, the company had already come under scrutiny from short seller Gotham City, which accused the firm of accounting manipulation. “Where there’s smoke, there’s fire,” investors appear to have concluded, as they rushed for the exits. Kyndryl was spun off from IBM in 2021 and focuses on low-margin IT services. The company helps businesses digitise and migrate to new systems. For example, it supported Carrefour in migrating to the Google Cloud Platform and modernised the digital workplace at Belfius. Since its IPO, the company has lost more than 70% of its market value.

A hundred-year bond

Alphabet has asked banks to help with the issuance of a 100-year bond. The century bond will form part of a broader sale of sterling-denominated debt that the company is launching this week. The proceeds are intended to finance the latest round of artificial-intelligence investments by Google’s parent company. One-hundred-year bonds are extremely rare, especially for technology companies. The most recent century bonds were issued by the University of Oxford and the Wellcome Trust. In the technology sector, the last 100-year bond dates back to several years before the dot-com crash, when IBM issued one. Should we be worried about a new stock-market crash? Unfortunately, it’s not that simple. Many factors come into play when markets crash.

Did you know…

that the Italian olive oil market is being flooded with cheap olive oil from Tunisia? On average, a kilo of olive oil at the source in Italy now costs just over 6 euro. A year ago, it was still close to 10 euro. But with large volumes of cheap Tunisian oil entering the Italian market at around 3.5 euro per kilo, Italian producers are being forced to cut their prices.

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