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Macro

Your bite-sized weekly update (13 Aug)

13 Aug 2022

US inflation cools, NASDAQ bull market and Elon Musk's Tesla share sale

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THIS WEEK IN MARKETS

In case you missed it, the tech-heavy NASDAQ index is now in a bull market, having gained more than 23% from its lows this year. 

This was helped by the latest inflation data in the US, which showed that consumer prices have stayed flat in July compared to June. 

We asked our Telegram community if they’re looking to buy more stocks now.

  • 31% said they will be buying the S&P 500 index
  • 31% said they will do nothing
  • 19% said they will be buying tech stocks
  • 10% said they will add shorts on rally 
  • 9% said they will be buying defensive stocks

With the bounce in the stock markets, investor sentiment seems to be leaning towards being positive for now!

IMPORTANT

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Source: Bloomberg. Weekly price change as of market close on 12 Aug
  • US inflation cools. The US consumer price index (CPI) rose by 8.5% in July compared to the previous year, below economists’ expectations of an 8.7% increase. Consumer prices were unchanged compared to the previous month, as inflationary pressures eased with lower petrol prices.
  • Singapore lowers GDP forecast. The MTI has narrowed Singapore’s full-year growth forecast to 3-4% from 3-5% previously with a deterioration in the global economic environment. Singapore’s economy contracted 0.2% in 2Q compared to 1Q.
  • Chinese firms are delisting from NYSE. Five of China’s largest state-owned companies announced plans to delist from US exchanges as the two countries are not able to come to an agreement allowing American regulators to inspect audits of Chinese companies. 

ICYMI

  • Tesla’s CEO Elon Musk sold 7.92 mn Tesla shares worth $6.88bn between Aug 5 and 9. Asked if he was done selling Tesla shares, Musk replied: “Yes. In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.”
  • Coinbase reported a wider than expected quarterly loss with a decline in active traders.
  • Disney announced better-than-expected quarterly earnings and a December 8 launch date for an ad-supported version of its Disney+ streaming service. It also announced it would increase the price of its ad-free service to $10.99 per month from $7.99.
  • Roblox reported a wider than expected quarterly loss and bookings that fell short of analyst forecasts. 
  • Micron cut its current quarter revenue forecast and warned of negative free cash flow in the coming 3 months amid waning demand for chips. This came after Nvidia warned of weakness in its gaming business and led to fears of the first chip industry downturn since 2019. 
  • Palantir reported an unexpected quarterly loss, and lowered its full year forecast due to uncertain timing of some government contracts. 
  • Softbank posted a record US$23bn quarterly loss as its Vision Fund’s portfolio of technology stocks fell in value amid rising interest rates.
  • Capitaland Investment reported profit of $433 mn in 1H2022, a decline of 38% YoY due to lower divestment gains. The company unlocked $1.6bn of capital through divestments in 1H22, slightly more than half of its annual capital recycling target of $3 bn. Read more here
  • City Developments reported a record profit of $1.13 bn in 1H22 with divestment gains and gain on deconsolidation of CDL Hospitality Trust. 
  • ST Engineering reported a 5.4% YoY decline in earnings to S$280mn in 1H22, due to transaction and integration related expenses for its Transcore acquisition, as well as lower wage support from the Job Support Scheme. 
  • Thai Beverage announced that it will again defer the spin-off and initial public offering (IPO) of its regional beer business, BeerCo, due to recent market volatility.
  • Yangzijiang Shipbuilding reported higher earnings from continued operations of RMB 1.2 bn in 1H22, as its gross margin improved to 13% from 11% in 2H21. The company has received US$1.09 bn of orders year to date.
  • Yangzijiang Financial reported earnings of $136 mn in 1H2022, down 31% YoY. In view of the current macro uncertainty, it will adopt a more cautious approach in deploying its capital. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

THE BIG IMPORTANT STORY

Is Ascendas REIT a good defensive stock to hold?

Here's why many investors consider AREIT to be a defensive REIT to hold with the uncertain economic outlook.

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WHAT’S UP THIS WEEK

Monday, 15 Aug

  • US: Li Auto earnings

Tuesday, 16 Aug 

  • US: Sea, Walmart earnings

Wednesday, 17 Aug

  • US: Target earnings
  • US FOMC Minutes (July)
  • US Retail Sales

Thursday, 18 Aug

  • US: NetEase earnings

Get the full economic and Singapore earnings calendar on the SGX Academy

Source: SGX, Bloomberg, Refinitiv

THAT’S INTERESTING

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