- NIO stock gives back early gains reaped on deregulation of cross-border data.
- China’s Cybersecurity Administration has reduced scrutiny of non-personal data.
- Hang Seng index closes 2.5% higher on the news.
- US Core PCE data for August shows inflation slowing, boosts US stocks.
Nio (NIO) stock rose 1.2% early Friday, to $9.02 but then promptly gave back gains to trade lower at the time of writing. The early boost came as Chinese stocks made broad-based gains after a domestic regulatory body reduced regulations for cross-border digital data flows. Hong Kong’s Hang Seng index closed 2.5% higher on the news.
Fellow Chinese corporations Alibaba (BABA), XPeng (XPEV) and Li Auto (LI) saw their American Depository Receipts (ADRs) rise in tandem on the news. The NASDAQ rose 1.3% on Friday after a bad start to the week on positive inflation data.
US stocks are marginally higher on Friday after lower than expected Personal Consumption Expenditures (PCE) data from August. This is the Federal Reserve’s (Fed) favorite inflation marker. The reading showed Core PCE coming in at 0.1% on a monthly basis, half the rate expected by analysts. This is the first time in two years that Core PCE has dropped below 4% on an annual basis. It registered 4.3% in July.
Nio stock news: Cyberspace administration proposes to reduce data burden
China’s Cyberspace Administration released a proposal on Friday that would mean marketing, international trade and global manufacturing data that does not include personal data would not require a security review. This would make it much easier for multinational Chinese corporations like Nio, who routinely gather user data to study their products and markets.
Chinese traders view the move as one that will boost the competitiveness of Chinese firms and reduce their barriers for entry into foreign markets.
The rally is much appreciated by shareholders as NIO stock has been trying to recover from the 22%+ sell-off two weeks ago that enfolded after the electric vehicle manufacturer sold $1 billion in senior convertible notes. Conversion of the notes would mean dilution of 5% to 6% for existing shareholders, but Nio said it would be able to reduce its nearly $4 billion in outstanding debt.
Shareholders have another reason for excitement as well. On Monday, NIO shares will likely react to September delivery data. Nio has beaten expectations for deliveries in each of the last two monthly announcements, and the September delivery hurdle is lower compared to previous months. Nio only needs to deliver between 15,200 and 17,200 vehicles to meet management’s forecast for 55,000 to 57,000 units in the third quarter. Nio delivered 19,329 vehicles in August.
Nio shares were already tracking higher on Thursday after rumors made it to Reuters that management was in talks with Mercedes-Benz to trade the German automaker technology in exchange for investment. Both companies vehemently denied there were any ongoing talks.
The Nasdaq is a stock exchange based in the US that started out life as an electronic stock quotation machine. At first, the Nasdaq only provided quotations for over-the-counter (OTC) stocks but later it became an exchange too. By 1991, the Nasdaq had grown to account for 46% of the entire US securities’ market. In 1998, it became the first stock exchange in the US to provide online trading. The Nasdaq also produces several indices, the most comprehensive of which is the Nasdaq Composite representing all 2,500-plus stocks on the Nasdaq, and the Nasdaq 100.
The Nasdaq 100 is a large-cap index made up of 100 non-financial companies from the Nasdaq stock exchange. Although it only includes a fraction of the thousands of stocks in the Nasdaq, it accounts for over 90% of the movement. The influence of each company on the index is market-cap weighted. The Nasdaq 100 includes companies with a significant focus on technology although it also encompasses companies from other industries and from outside the US. The average annual return of the Nasdaq 100 has been 17.23% since 1986.
There are a number of ways to trade the Nasdaq 100. Most retail brokers and spread betting platforms offer bets using Contracts for Difference (CFD). For longer-term investors, Exchange-Traded Funds (ETFs) trade like shares that mimic the movement of the index without the investor needing to buy all 100 constituent companies. An example ETF is the Invesco QQQ Trust (QQQ). Nasdaq 100 futures contracts allow traders to speculate on the future direction of the index. Options provide the right, but not the obligation, to buy or sell the Nasdaq 100 at a specific price (strike price) in the future.
Many different factors drive the Nasdaq 100 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the Nasdaq 100 as it affects the cost of credit, on which many corporations are heavily reliant. As such the level of inflation can be a major driver too as well as other metrics which impact on the decisions of the Fed.
Nio stock forecast
Nio stock is already trading above its 9-day Simple Moving Average (SMA) in Friday’s premarket. The next barrier is $9.50, which has roughly worked as both support and resistance in several instances over the past year. After that, the 21-day SMA at $9.72 comes into play. A break of the latter moving average will instill more confidence in bulls.
The rally makes sense as well since NIO stock was plumbing the depths of the neutral territory on the Relative Strength Index (RSI) over the past two weeks. A break above the 21-day SMA will offer exposure to the $10.15 to $11.30 resistance band.
NIO daily chart
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