The Week Ahead | Calamatta Cuschieri

US Market closed lower on Friday after investors fear growth for the possibility of a trade war between US and China

Dropbox jumped 36 percent in on its Nasdaq debut and Sinopec will pay a record dividend.
Dropbox jumped 36 percent in on its Nasdaq debut and Sinopec will pay a record dividend.

Stocks fell sharply on Friday, adding to their steep weekly losses, as investors assessed the possibility of a trade war brewing between the U.S. and China.

The Dow Jones industrial average dropped 424.69 points to close at 23,533.20 — its lowest level since November — with DowDuPont as the worst-performing stock. The 30-stock index also closed in correction, down 11.6 percent from its 52-week high. The S&P 500 declined 2.1 percent with financials pulling back 3 percent. It also closed just outside correction territory. The Nasdaq composite fell 2.4 percent to 6,992.67. The indexes, along with the Dow, had traded higher earlier in the session.

In the week ahead, the U.S. personal income and spending data for February are expected to grow at the same pace as January, but consensus sees the core PCE deflator picking up to 1.6 percent from 1.5 percent. The U.S. Treasury will probably auction about $294 billion of bills and notes this week, its largest slate of supply ever.

Dropbox IPO: Stock starts trading on the Nasdaq

Founded 11 years ago, Dropbox rose to prominence with a free app that people could use to store their files and access from any device, a service that was in demand, thanks to the spread of smartphones.

On Friday, the company listed its $756 million IPO under the trading symbol DBX on the Nasdaq, and priced its 36 million shares at $21 Thursday, above the expected range of $18 to $20.

Shares closed at $28.48 apiece, giving the file-sharing company a market valuation of $11.2 billion. They climbed as much as 50 percent above their IPO price in earlier trading to as high as $31.60.

Dropbox reported more than $1 billion in 2017 revenue and 500 million registered users. The company says more than 90 percent of Dropbox's revenue comes from individual users purchasing subscriptions.

Dropbox has been facing steep expenses driven by a growing R&D budget, but became free-cash-flow positive in 2016.

The company made its public market debut at a time when technology stocks have slipped out of favour. Facebook Inc. has dropped in the past week as it acknowledged its mishandling of user data, while less-than-stellar earnings have driven others lower.

Sinopec will distribute record dividend as annual profit surged

China Petroleum & Chemical Corp., the world’s biggest refiner, will pay a record-high dividend as its massive fuels and chemical segments helped it post a nearly 10 percent increase in full-year profit.

While oil’s rally has helped Sinopec cut losses in its production and exploration segment, its refining and chemicals units have helped it ride out the volatility of oil’s earlier crash as margins from making fuels and petrochemicals improve.

The company has also shifted its upstream focus toward producing more natural gas, seeking to support President Xi Jinping’s drive of using more of the fuel instead of coal. The company’s total output gained 3.4 percent to 446 million barrels of oil equivalent last year, with gas rising 19 percent while crude slid 3.3 percent. The company expects to produce 290 million barrels of crude oil in 2018, or approximately 795,000 barrels per day, which is slightly down from 293.7 million barrels in 2017 and would mean Sinopec’s oil output declining for a fourth straight year.

It also plans to produce 974.1 billion cubic feet of natural gas, up 6.8 percent from 2017. “We expect the natural gas market to grow rapidly and international oil prices to be stable,” Sinopec said.

Disclaimer

This article was issued by Linda De Luca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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