Daily Brief - 14 May 2024

GameStop shares rocket as 'Roaring Kitty' sparks trading frenzy

GameStop's shares soared dramatically by up to 119% following a social media tease by Keith Gill, famously known as 'Roaring Kitty'. His renewed online presence reignited interest among retail traders, reminiscent of the 2021 meme stock frenzy.

GameStop closed the day up by 74%, while AMC Entertainment also saw significant gains. Despite skepticism about GameStop's financial fundamentals, the retail traders' enthusiasm continues to drive volatility in the market, evidenced by massive trading volumes and repeated trading halts.

This phenomenon also influenced other meme stocks, underscoring the ongoing allure and speculative nature of these investments.

Anglo American stands firm against BHP's $43 billion bid

Anglo American has rejected a second, increased offer from BHP, valued at $43 billion, as it faces growing pressure to justify its standalone strategy. Despite BHP enhancing its bid by nearly 15%, Anglo dismissed the proposal due to concerns over the deal's structure and the risks involved.

BHP's interest primarily lies in Anglo's lucrative South American copper assets, aiming to become the world's top copper producer. Anglo plans to unveil its strategic plans to investors soon, promising a compelling alternative to BHP's offer.

Meanwhile, Anglo's shares dipped slightly, reflecting investor skepticism about the likelihood of a more favourable offer.

Wall street braces for market turbulence ahead of CPI report

Wall Street trading desks, including JPMorgan and Citigroup, are alerting investors to potential market volatility surrounding the upcoming consumer price index (CPI) report.

The options market anticipates a significant movement of up to 1% in the S&P 500, based on current trading patterns. A higher-than-expected CPI might trigger a sharp selloff, while a lower figure could boost market confidence and raise expectations for a Federal Reserve rate cut.

This comes amid an unusually calm market period, with reduced volatility and lowered hedging costs, suggesting a critical juncture for market dynamics based on the inflation data.