Today’s top financial news: Google’s parent company Alphabet’s 20:1 stock split is now a reality. GOOG and GOOGL’s share prices have fallen from around 2,300 USD at the end of last week to around 108 USD at the time of writing, making the blue-chip stock more affordable for a broader range of investors.
Another company in the financial news is video game retailer GameStop, which plans a 4:1 stock split from the current share price of around 145 USD on July 19. GameStop’s stock split takes effect after the market closes on July 21.
As the stock markets are currently in a bearish mood, the lower prices for stocks appear to make sense, particularly when factoring in the increasing likelihood of a recession in the US and EU. Stock splits do not change the company’s market capitalisation but increase the number of available stocks, thereby reducing the price of each individual stock. As of July 19, GOOG’s current market capitalisation is 1.48 trillion USD and GameStop’s is 10.78 billion USD.
In other news, the ILO Unemployment Rate for May is due out this morning. The benchmark came in as expected, unchanged from the previous result of 3.8 percent.
The ECB announces its Bank Lending Survey today, just ahead of the central bank’s interest rate decision on Thursday. It comes at a sensitive time in the Eurozone’s economy. Europe’s interest rate outlook is growing more hawkish amid weaker growth prospects hampered by the conflict in Ukraine and uncertainty over COVID-19 developments.
In more central bank news this week, the People’s Bank of China (PBoC) releases its latest interest rate decision on Wednesday, July 20. The PBoC has remained dovish so far amid COVID-19 outbreaks that impact on industrial productivity. Any surprises to the upside or downside may move the CNY currency pairs.
The Bank of Canada (BoC) is set to release the all-important latest inflation data for June tomorrow. CPI is expected to have risen from 6.1 percent previously to 6.7 percent in June. Given the trading markets’ current sensitivities towards inflation, any surprises may move the CAD currency pairs while setting expectations for BoC’s next interest rate decision.
Finally for this week’s trading news, Bank of Japan announces its interest rate decision on Thursday. The central bank is not expected to change its interest rate guidance from the current level of minus 0.1 percent, so any surprises could move the JPY currency pairs.
What is a stock split?
The best way to explain a stock split is to imagine you hold one share of a company worth 1000 USD. The company’s shareholders decide to split the stock by 2:1 to increase liquidity, or the ease of purchase and sale of the stock. Now you hold two shares, each worth 500 USD. Stock splits usually occur when a share price rises too high for easy liquidity in the broader markets. They do not change the market capitalisation or overall value of the company.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.