News & Insight • Weekly Newsletters

05 July 2024 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• A resounding victory for Sir Keir Starmer’s Labour Party in the UK election. Although the Tories suffered one of the biggest losses in their c.190-year history, the outcome (121 seats) wasn’t quite a cataclysmic as many had predicted
• A shock result in the French elections, as the second round of voting saw the left-wing alliance win the most seats. Tactical voting and collaboration between the right-wing Le Pen’s opponents looks set to throw the country into a period of political turmoil with no single group coming close to winning enough seats for a majority
• The non-farm payrolls data showed that the US economy added 206,000 jobs in June, but the jobless rate increased to 4.1% and recent jobs growth was revised lower
• Japan’s Topix index powered past its 1989 bubble-era peak to close at a fresh record high
• US gasoline demand climbed as a record number of Americans travelled long distances over the July 4^th holiday period
• Turkish Inflation fell to 71.6% in June allowing finance minister, Mehmet Simsek to say, “the disinflation process has begun….”

COMPANY NEWS

• The FT reported that Nvidia is set to make $12bn from AI chips from China even with the restrictions
• Tesla announced its second quarterly decline in deliveries in a row but the figure of 443,956 was better than expected. The shares rallied in response
• Both Eli Lilly and Novo Nordisk’s shares were under pressure as President Biden complained about the cost of their drugs on the market
• Boeing are trying to get their house in order and are looking to buy Spirit AeroSystems for $4.7bn
• Sainsbury’s shares fell after announcing first quarter results which was mainly due to weakness in sales of general merchandise at Argos. Management did suggest they had made market share gains though
• Sodexo, the food services company, slightly missed expectations but left full year guidance unchanged
• Keywords Studios, the UK-based gaming company announced they had received a firm and final offer from EQT of 2,450p – c.£2.2bn

ELECTION WEEK

More than any other general election in the past, this result highlighted some of the difficulties around “first-past-the-post” as opposed to proportional representation (PR).  Nigel Farage's Reform UK party won 14.3% of the vote yet only 5 seats. Under PR it would have been catapulted into third place with 91 seats. The Liberal Democrats, meanwhile, won 12% of the vote yet ended up with 71 seats

A purely proportional system - where national vote share translated exactly into the number of seats - would have given Labour about 195 seats and no majority. The Tories would have had 156 seats, Reform 91, the Liberal Democrats 78 and the Greens 45

KNIGHT FEVER

As ex-lawyer Sir Keir Starmer takes up his premiership – for some context there is a listed legal company Knights plc – we doff our helmets and raise our swords to the sporting knights: Sir Andy Murray, who bowed out of Wimbledon having been the shining light of British tennis for the last 15 years; Sir Lewis Hamilton, who won his record-extending 9^th British Grand Prix; and Sir Mark Cavendish who secured his 35^th stage win on the Tour de France – a record he used to share with Eddy Merckx who won five tours and 34 stages

THIS WEEK IN HISTORY

1881:  At 9:30am, President James A Garfield is shot at Baltimore and Potomac Railroad Station. News hits Wall Street around 9:50 am and shares abruptly fall. Stocks would close the day down about 4.5%. President Garfield died 11 weeks later, on September 19^th  

2016: 48 people (including three attackers) are killed and more than 230 injured in the Ataturk Airport terrorist attack in Turkey. Global stocks held their nerve although it knocked 5.7% off the Borsa Istanbul.

MARKET DATA

As at 5^th July 2024. Source: InFront

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