Tesla excluded from S&P500!

MARKETS

Stock markets rolled over again on Friday in a volatile day of trading that saw the S&P 500 drop over 3% before finishing well off the lows, closing down 0.8%. A rally in ‘reopening’ stocks including banks and cruise lines went some way to offset another drop in tech stocks. Asian and European markets both closed in the red following on from the big declines on Wall Street.

The US dollar had its best weekly gain in over two months as investors looked to sell out of stocks and hold cash, principally in greenbacks. The turmoil in tech stocks creating the need for a haven and the ECB’s Lane jawboning the euro lower both contributed to the dollar-strength.

Gold and silver prices edged higher, largely brushing off the positive US jobs data. Oil prices snapped a 4-week win streak after dropping nearly 4% on Friday. 
 

Tesla

Etsy, Teradyne and Catalent were all added to the S&P500 index on Friday in its quarterly reshuffle. The S&P 500 index committee will have disappointed many traders by leaving out Tesla. The electric car company qualified to be added having had four quarters of profitability. 

Presumably Tesla did not meet some of the qualitative requirements given the volatility of the share price. Shares of Etsy popped 5% afterhours when the news was released, while Tesla shares dropped 7%. Being added to the S&P500 means 100s of tracker funds automatically have to buy the shares to match the index composition.
 

Softbank

Japanese conglomerate Softbank bought $6 billion in call options over the summer according to the Wall Street Journal. The options buying was so huge that it forced dealers to hedge their short positions by buying the underlying shares, forcing the price of tech stocks higher than they might have otherwise gone. The question is whether that news weighs on the confidence of individual investors to keep buying the shares.
 

JPY: Suga

Frontrunner to replace outgoing Japanese Prime Minister Shinzo Abe and Cabinet Secretary Yoshihide Suga said in a weekend interview that “I would like to carry over (the bold easing steps) put in place by the Bank of Japan.  If Suga wins the nomination, it should take some upward pressure of the Japanese yen.