Market scorecard
Major US indices fell on Wednesday as economic concerns and fears of another Fed rate hike returned. US Labour data showed an increase in job openings in April, reversing three months of declines. The S&P 500 closed lower, clinging to a small gain for May, marking three consecutive monthly advances. The Nasdaq fell, weighed down by a decline in Nvidia.
Fed Governor Philip Jefferson did however say that the central bank is inclined to keep interest rates steady in June to assess the economic outlook. His remarks were echoed by Philadelphia Fed President Patrick Harker, who said, "I think we can take a bit of a skip for a meeting."
In company news, Salesforce tumbled 6% after-hours following a dim outlook for sales. Elsewhere, Hewlett-Packard dropped 7.1% on a slimmer revenue forecast than anticipated. The biggest loser in the S&P 500 was Advance Auto Parts which plunged 35% after it reported a sharp drop in profit. The biggest winner was Intel after it said it was on pace to hit the higher end of its revenue guidance, its shares closed up 4.8%.
In summary, the JSE All-share was down 1.15%, the S&P 500 fell 0.61%, and the Nasdaq was 0.63% lower.
Our 10c worth
One thing, from Paul
A few days ago I said that Nvidia was "now the fifth most valuable fully-listed company in the world".
Someone took me to task, saying that I had forgotten to include Saudi Aramco in the list, in third spot. It's listed on the Saudi Stock Exchange, otherwise known as the Tadāwul. At current exchange rates, it's supposedly worth just above $2 trillion.
No, this company with share code TADAWUL: 2222 can GTFO. Javier Blas at Bloomberg (that's him below) agrees with me in this article, Saudi Aramco's valuation is an illusion. He says that too few shares trade for typical price discovery metrics to apply to the oil giant.
Basically, the Saudi government owns 98% of the shares and those that are held by others hardly ever trade. So, $2 trillion is a "fake news" number, if you ask me.
Byron's beats
We have been watching inflation closely because it drives the Fed, which significantly influences short-term stock prices. Closer to home we also desperately need global inflation to come down because it is very bad for our economy. Higher prices impact the most vulnerable in society, and we have far too many people in that category. It also means that our reserve bank needs to raise rates which put even more pressure on a fragile economy.
The good news is that commodity prices around the globe continue to fall. According to Bloomberg, the commodity basket has dropped 10% so far this year and is at its lowest level since 2021. Leading the charge lower is natural gas, wheat, and copper.
Let's hope inflation dissipates in SA, although the weaker Rand does not help.
Michael's musings
Last week, beauty company Coty reported numbers to the market. Here is an interesting statistic shared by the company. Fragrance sales in the US are up 60% from pre-pandemic levels. That is huge growth from an already established industry!
Coty noted that they are seeing significant demand growth from men and Gen Z's, two consumer groups who previously weren't big spenders in the industry. In addition to increased consumer numbers, people also use their fragrances more often. The Coty CEO said: "[they're] spraying more, especially Gen Z, who use fragrances not [only] on their skins, they use fragrances on their clothes and outfits".
There is also an interesting trend called the 'lipstick effect'. This is when consumers trade down from large, expensive luxuries to cheaper ones due to financial pressure. In the current environment of higher interest rates and economic pressure, consumers aren't feeling as rich. So instead of splurging on an expensive watch, they decide to treat themselves to Chloe eau de parfum.
Reading company results really is a great way to stay informed about the world.
Bright's banter
Uber is set to launch a flight booking program in the UK, enabling its customers to book plane tickets directly through the Uber app. Developed in partnership with online travel agent Hopper, the new functionality will be introduced this European summer.
Users will be able to input their travel details, select flights, and complete payments within the Uber app. While there are no immediate plans for a wider rollout, Uber will assess customer engagement before deciding on expanding the feature to other markets.
Linkfest, lap it up
As Paul mentioned above, Nvidia is part of the $1 trillion club. Visual Capitalist has a graph showing the other companies who are/ were in the club and their peak valuation - Four comma club.
A clan of killer whales is on the loose. Scientists believe they may be teaching one another to sink small boats near Spain and Portugal - It may have started with an angry orca.
Signing off
Asian markets were broadly higher this morning on higher-than-expected economic numbers. The Caixin manufacturing data showed an expansion in activity, exceeding forecasts. Hong Kong's Hang Seng, the Nikkei in Japan, and the Shanghai Composite in mainland China are all in the green, while the South Korean KOSPI traded slightly lower.
On the economic front, today we will see Eurozone manufacturing PMI, CPI and unemployment. In the US it will be construction spending, initial jobless claims and ISM manufacturing.
US equity futures contracts rose in early trade. The Rand is hovering around that R19.87 to the greenback.
Yabba dabba doo! It's almost Friday.
Sent to you by Team Vestact.
No comments:
Post a Comment