News & Insight • Weekly Newsletters

07 June 2024 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• Despite a series of gradually weaker US economic data points over the last few weeks, the US non-farm payrolls number for May came in much higher than expected with 272,000 new jobs vs. 180,000 expected
• The ECB cut rates by 25bps following a similar cut in Canada. A “hawkish” cut. The ECB President, Christine Lagarde, stressed that this is not yet a “dialling back” phase of interest rates, but rather a “moderation in the level of restriction”.
• International Allied dignitaries were in Normandy celebrating the lives of those who took part in Operation Neptune/D-Day Landings (part of Operation Overlord) 80 years ago

COMPANY NEWS

• A Jefferies analyst got a sizeable scoop as they suggested that TSMC was set to receive the first next generation EUV test machine later this year from ASML, sending the latter’s shares higher. The analyst cited a call with the ASML CFO where he noted that ASML expected TSMC to eventually use the high-NA EUV. It was also noted that Intel would also receive the new machine, which costs a reported $380m apiece
• Semiconductor chips companies Nvidia and AMD also reacted to several announcements over the weekend at the Computex conference in Taiwan. After announcing its new Blackwell platform a few months ago, Nvidia CEO Jensen Huang announced that its next generation platform would be called Rubin and would be available in 2026 with a focus on improved power efficiency
• Continued weakness in the alcoholic beverages sector as Remy Cointreau reported sales falling by 19.2% in the year ending March 2024. Meanwhile, Brown Forman showed sales fell 5% over the last quarter
• GSK shares fell as the Zantac litigation rumbles on. A judge in Delaware had issued a ruling that denied GSK’s motion to exclude expert testimony, allowing all of the c72,000 cases where GSK is named to proceed to trial
• Shares in Standard Chartered fell as a whistleblower claimed in the courts in New York to have evidence of previously unknown transactions processed for sanctioned entities, including terrorist organisations that allegedly took place between 2008 and 2013 which were concealed within previously investigated transactions for which the bank was fined. The bank dismissed the accusations
• Although results from Inditex, owner of Zara, were slightly underwhelming they suggested current trading was good, sending shares higher. Lululemon followed suit, missing analyst expectations but guiding higher
• Waste Management is looking to buy Stericycle, experts in collecting clinical waste, for $7.2bn

INVESTMENT TRUST CORNER

A number of trusts are either being taken over or merging and, in that vein, Brookfield look to be mulling a bid for Tritax Eurobox, Blackstone increased their offer for Hipgnosis Songs Fund and we had the latest results from LondonMetric. The latter is the collection of Secure Income REIT, LXI REIT, LondonMetric and CT Property Trust and look to be making good progress in divesting non-core assets. It is now the third largest property fund listed in the UK

ELECTION COLLECTION

The polls were wrong – and sadly a number of polling company CEOs resigned. We mentioned last week about the scale of the Indian election and perhaps it is unkind to question the ability to poll such a large country, but Modi was supposed to win by a landslide – and the stock market rose by 3% in anticipation. However, when the exit polls came in followed by the actual results it was a lot closer and there will be an element of coalition between Bharatiya Janata Party (Modi) and his long term allies, National Democratic Alliance, and those of the Congress party-led INDIA opposition alliance. The market fell by 7% in reaction but has since clawed back some of those losses

THIS WEEK IN HISTORY

2000: A Federal Judge orders Microsoft to be broken up for violating anti-trust laws (they would eventually repeal and win)

2020: Highlighting the speed at which markets recovered from the Covid-induced sell-off, by this week in 2020 the S&P 500 had risen by 40% since it bottomed on March 23^rd — the highest return over so short a period since 1933. Year-to-date, the S&P 500 was only down 3% despite 108,000 Americans having died in the pandemic and 21m people out of work

MARKET DATA

As at 7^th June 2024. Source: InFront

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