Trump’s media stock soars on debut, GameStop dips

Equities

In the latest trading session, the FTSE 100 remained unchanged, reflecting a cautious stance among investors during a holiday-shortened week.

DS Smith surged by 10.2% following the announcement of ongoing discussions with International Paper regarding an all-stock acquisition valued at £5.72 billion. Diploma also saw a notable increase of 9.5% after revealing its plans to acquire Peerless Aerospace Fastener for £236 million, indicating strategic moves aimed at expanding their market presence.

Across the pond in the US, the stock market looked a lot more rosy with the Dow Jones Industrial Average climbing by 1.22% to reach 39,760.08, coming tantalisingly close to breaking the 40,000 thresholds for the first time. This rise was significantly influenced by Merck & Co, which jumped 4.96% after the FDA approved its therapy for a rare lung condition, making it the top performer on the Dow that day. The S&P 500 also set a new closing record by gaining 0.86% to 5,248.49, buoyed by expectations around the Federal Reserve's interest rate decisions and recent inflation data.

However, the tech-heavy Nasdaq Composite saw a more modest increase of 0.51%, with mixed performances among its constituents. Notably, Nvidia experienced a 2.5% decline, marking its second consecutive session of losses, despite still being up more than 80% for the year.

Trump Media & Technology Group enjoyed a 14.19% surge following a stellar debut on the Nasdaq.

The enthusiasm for Trump Media is largely attributed to individual investors rather than large institutional players, with many of these investors believed to be supporters of Trump.

The debut was executed through a SPAC (Special Purpose Acquisition Company) arrangement, involving a merger with Digital World Acquisition Corp, a shell company listed publicly and specifically established to acquire a business and introduce it to the stock market.

Conversely, GameStop faced a steep 15.03% drop after reporting a significant decline in fourth-quarter revenue and announcing job cuts to reduce costs, underscoring the challenges faced by the retail sector.

Forex & Commodities

The US dollar saw a period of consolidation against its major currency peers as Federal Reserve Governor Christopher Waller's comments indicated a cautious approach towards cutting short-term interest rates due to persistent inflation concerns. Consequently, market expectations for a rate cut in June have slightly decreased, now standing at a 60% chance according to the CME FedWatch tool. The dollar index experienced a slight uptick following Waller's remarks but was last recorded marginally lower at 104.34.

In Japan, the yen maintained its position close to the 152 mark against the dollar. This stability is amidst discussions by Japan's monetary authorities on potential interventions to curb further depreciation of the yen. Meanwhile, the British pound weakened against the dollar, dropping 0.08% to $1.26305.

Gold prices rose, with spot gold up 0.5% at $2,189.89 per ounce, as investors awaited the US Core Personal Consumption Expenditures Price Index (PCE) data, a significant indicator for future Federal Reserve policy decisions.

Oil prices experienced a downturn, influenced by a stronger dollar and unexpected increases in US crude and gasoline stocks. Brent crude futures and West Texas Intermediate (WTI) crude futures both saw declines. The increase in US stockpiles adds pressure to oil prices, along with the ongoing discussions within OPEC+ regarding output policy adjustments ahead of their next meeting.