News & Insight • Weekly Newsletters

09 August 2024 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• A very sharp fall in Japanese equity markets early on Monday morning triggered a wave of selling across other regions. However, some order had been restored by the end of the week as global equities finished the week more or less flat
• In the early hours of Monday, the VIX traded at 65 (a very high measure of market volatility) and at one point markets were pricing in a 60% chance of a 25bps emergency rate cut by next week
• But new US jobs data showed the number of people filing for unemployment benefits actually fell last week, which sat at odds with the weak non-farm payrolls number the week before. This gave stock markets a much-needed shot in the arm
• And following the miss in manufacturing data last week, the July ISM Services index in the US was 51.4 vs 51.0 expected and up on the prior month with prices paid increasing slightly to 57.0, above consensus estimates as readings for both employment and new orders rose back above 50 and were both higher than forecast

COMPANY NEWS

• Eli Lilly closed up 9.4% on Thursday after reporting second quarter results. Adjusted earnings per share (EPS) was $3.92 vs $2.70 expected with revenue rising 36% to $11.30bn, well above consensus estimates. Management noted that higher realised prices were primarily driven by its blockbuster weight-loss drug Mounjaro in the US

• Novo Nordisk reported that second quarter EBIT increased 8.6% year-on-year to DKK25.93bn vs DKK27.36bn expected with overall sales of DKK68.06bn slightly below consensus. Sales for its weight-loss drug Wegovy were below estimates, but the company increased its full year sales growth guidance to 22-28% vs 26.8%. It was noted that half of the Wegovy miss compared to consensus was due to negative rebate adjustments with the full year operating profit guidance cut mainly due to impairments announced several weeks ago with management commenting that they were keeping the Wegovy caps on initial dose strength in the US with the outlook reflecting continued supply constraints
  
  
• Disney’s quarterly results showed a first ever profit in its streaming business. But this was offset by weakness in its Theme Parks division. Rising costs meant that Disney now forecasts a mid-single digit decline in profit in the current quarter

• Siemens reported better than expected operating profit and reiterated its full-year guidance on rising electricity demand, and the need for its gas turbines, and its network parts and maintenance
  
  
• Occidental Petroleum’s second quarter earnings report beat expectations on the back of higher production and it confirmed that they are operating well. Management also reaffirmed their plan to repay $4.5bn in near-term debt by August 2025 followings its costly acquisition of Permian-based producer CrownRock which raised its outstanding debt to $28bn

• John Wood Group closed the week down sharply at 129p it was announced that Sidara would not be making a firm takeover offer. Sidara had made a 230p per share offer in May and was engaged in talks with Wood Group’s board but stated that it would not proceed with a formal bid “in light of rising geopolitical risks and financial market uncertainty” 

THIS WEEK IN HISTORY

1945: An atom bomb is dropped on Nagasaki. Global stock markets rally as they see an end to World War II

1974:  The day after US President Nixon announced his resignation, stock markets fall. The Dow Jones Index drops nearly 1% to finish at 777.30 and stocks continue their sharp decline for the next month, falling to 648, a nearly 19% decline over the next few weeks

MARKET DATA

As of 9^th August 2024. Source: InFront

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