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Dollar 20-Year High, Rivian Block Sales, Chinese Trade - What's Moving Markets

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·5 min read
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By Geoffrey Smith

Investing.com -- The dollar hit a 20-year high as global risk aversion mounts in the wake of Friday's employment report. Ford and (apparently) Amazon are getting rid of large amounts of Rivian stock with block sales that will raise eyebrows at those who were persuaded to buy into the IPO at three times the price only a few months ago. The signal that sends about valuations means that stocks are set for another rocky day. China's export growth slows to a crawl in April as Shanghai's port was shut by COVID. Still, things could be worse. You could be Vladimir Putin, holding a Victory Parade while your armed forces still struggle no closer to subduing Ukraine after 10 weeks of fighting. Here's what you need to know in financial markets on Monday, 9th May.

1. Dollar hits 20-year high as jobs report fails to dispel rate fears

The dollar continued to surge in the wake of Friday’s employment report for April, which did nothing to alleviate concerns of higher U.S. interest rates or fears of what they will do to the world economy.

The dollar index, which tracks the greenback against a basket of six developed market currencies, touched a high of 104.205 before paring its gains to trade at 103.880 by 6:30 AM ET (1030 GMT), a gain of 0.2% on the day. Gains were across the board.

The dollar also gained 0.8% against the offhore yuan, after China’s trade data for March showed annual growth in exports slowing to only 3.9% from over 14% in February, hurt by the month-long COVID-driven disruption to the country’s largest port at Shanghai. The dollar also hit a record high against the Indian rupee.

Digital currencies also suffered, with Bitcoin falling 3.3% to test its low for the year, while Ethereum fell 4.2%.

2. Early investors pile out of Rivian

Two of Rivian Automotive's (NASDAQ:RIVN) big early backers are reducing their stakes in the company via big block sales, according to various reports.

CNBC reported on Sunday that Ford (NYSE:F) will place 8 million shares of its total holding of 102 million in the electric van maker in an accelerated book-building process led by Goldman Sachs (NYSE:GS). J.P. Morgan (NYSE:JPM), meanwhile, is set to sell between 12 million and 13 million Rivian shares on behalf of another big shareholder. The seller wasn’t named but is widely believed to be Amazon (NASDAQ:AMZN).

The blocks are set to be sold at $26.90, a discount of around 6.5% to Friday’s close. The banks handling the sales were both joint lead managers on Rivian’s IPO last year when they sold the same stock at $78.

Mark-to-market revaluations of holdings in Rivian were a big factor behind both Ford and Amazon disappointing with their quarterly earnings recently.

3. Stocks set for another tough day. Food, real estate earnings eyed

U.S. stock market is set for another round of heavy selling at the opening, with the news of the Rivian block sales an uncomfortable reminder of how radically investors are reappraising the outlook for growth, interest rates, and consequently, stock valuations.

By 6:15 AM ET, Dow Jones futures were down 435 points, or 1.9%, their lowest since late February. The S&P 500 futures and Nasdaq 100 futures contracts were down at their lowest in over a year, losing 1.6% and 2.0%, respectively.

Earnings season is starting to wind down, but a number of important updates are still due later. Coty (NYSE:COTY) lifted its outlook after a strong first quarter. Tyson Foods (NYSE:TSN) will have something to say about the outlook for meat prices, while Duke Energy (NYSE:DUK) and Exelon (NASDAQ:EXC) may offer more color on the rising risk of electricity blackouts this summer. Mall landlord Simon Property (NYSE:SPG) and International Flavors and Fragrances (NYSE:IFF) report after the close.

4. Victory Day without victory

Russian President Vladimir Putin held his usual Victory Day parade to commemorate the end of the Second World War, but without being able to proclaim any new victories in Ukraine.

Putin’s eagerly anticipated speech was more notable for what it lacked, rather than what it contained – there was no mention of the full mobilization that defense chiefs have reportedly pressed for, nor of any new strategic goals, nor of the nuclear threats against the West which are now the daily staple of Russian state television.

Over the weekend, Ukrainian forces had reportedly hit another Russian warship, the frigate Admiral Makarov with anti-ship missiles. Hundreds of Ukrainian soldiers, meanwhile, continue to defend the Azovstal steel mill, their last redoubt in the besieged city of Mariupol.

Elsewhere, the EU’s top diplomat Josep Borrell suggested seizing Russia’s frozen foreign exchange reserves to help pay for the reconstruction of Ukraine.

5. Oil falls on Chinese trade data as Hungary stalls on EU embargo

Efforts to tie up a European embargo on Russian oil imports continue to be impeded by Hungary, however, which is still pressing for a five-year grace period. That’s emboldening others such as Slovakia and Bulgaria to press for carve-outs of their own.

Russian Oil Minister Alexander Novak was quoted by Russian newswires earlier as saying that he expects the country’s oil output to rise this month after sanctions badly disrupted shipments in April.

U.S. crude futures were down 2.2% by 6:25 AM ET at $107.33 a barrel, amid a broad risk-off movement in global markets prompted by the Chinese trade data. Brent futures were down 2.1% at $110.10 a barrel.

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