Why is Block’s stock price plummeting today?
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The Block Inc. (ASX:SQ2) The stock price is down sharply on Monday, down 6.2% in morning trading.
Block shares closed Friday at $94.94 and are currently trading at $89.07 each.
So what is driving the current sell-off in global equities to buy now, pay later (BNPL)?
Why the big sale?
There are two main factors pushing Block’s stock price lower today.
And both are from the United States.
First, Block is listed on both the ASX and the NYSE. The global payments company started trading on the ASX on January 20 this year after acquiring Afterpay.
As you would expect, stocks on the ASX trade in close correlation to those on the NYSE. And on Friday, Block’s stock price fell 7.3% in US markets.
Which brings us to the second factor putting the company under renewed pressure today. The same reason Block fell on the NYSE.
Namely, a surprisingly strong labor market in the United States.
September’s jobs report saw the world’s largest economy add more jobs than consensus expectations, pushing the jobless rate down to 3.5%. This is the lowest unemployment rate recorded in the United States for half a century. Along with the tight labor market, wages are on the rise, up around 5% year-on-year.
You might think that a strong US labor market and rising wages would be something to celebrate, especially for investors in BNPL stock. But that’s not the case in markets that rise and fall in step with the Federal Reserve’s interest rate intentions.
Rising wages and low unemployment once again increased the odds that the Fed will continue to tighten aggressively. Which, along with Block’s stock price drop, has seen heavy tech Nasdaq Composite Index (NASDAQ: .IXIC) fell 3.8% on Friday.
Bulk Stock Price Overview
Considering today’s intraday falls, Block’s share price is down 50.7% since its listing on the ASX on January 20.
For some context, the S&P/ASX 200 Index (ASX: XJO) is down 12.1% over the same period.