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Team Asset Management offer their weekly round-up of global markets
MARKETS moved back onto the front foot last week, encouraged by some better-than-expected economic data and company reports. The blue-chip S&P 500 and technology-focused Nasdaq indices gained 2.9% and 3.6% respectively.
The positive week for the Nasdaq increased its year-to-date return to 32%, the best first of the year for the index since 1983. Despite ongoing concerns over higher interest rates, investors have poured money into technology stocks to get exposure to artificial intelligence.
The frenzy surrounding AI has propelled shares in semiconductor manufacturer Nvidia 190% higher this year and shares in Facebook’s parent, Meta Platforms, have risen 138%. Apple shares also reached a new record high last week and the company’s stock market valuation has climbed above $3 trillion.
Manufacturers of electric vehicles also had a good week. Tesla reported that it had delivered a record 466,140 cars worldwide in the second quarter, 10.4% more than in the first quarter of the year. Deliveries so far this year are also 58% higher than in the same period last year and the company is on track to meet its guidance of 1.8 million for 2023.
Elon Musk acknowledged in January that affordability was a problem for the average consumer and the decision to cut prices has helped to drive the increase in sales. Tesla shares returned 113% in the first half of the year and added another 7% in Monday’s trading session.
Tesla is the top-selling electric vehicle manufacturer in the US but it has fallen behind BYD Co in China, its second-largest market. BYD, which is backed by Warren Buffet’s Berkshire Hathaway, also announced that it had its best-ever quarter, selling 700,244 fully electric and plug-in hybrid vehicles.
China’s market-leading car brand added that it would launch a new electric SUV to compete with Tesla in the premium sector. The Denza N7 has a starting price of 301,800 yuan ($41,700) and has already attracted 20,000 pre-orders. Its Hong-Kong-listed shares have gained 36% so far this year.
Shares in Rivian, the electric truck manufacturer, jumped more than 17% on Monday after it reported that it had produced 13,992 trucks in the second quarter and is on track to meet its target of 50,000 for this year.
Rivian, part-owned by Amazon, however, has a long way to go to gain market share from other EV start-ups and its shares still trade 75% below its IPO price of $78 in November 2021.
It was not a good week for AstraZeneca and its shares fell 8% on Monday after it published the first results from its phase-three trial for its cancer drug, datopotamab deruxtecan.
The Anglo-Swedish pharmaceutical company, which is developing the drug in partnership with Daiichi Sankyo, revealed that the study showed that it could halt the progression of a patient’s cancer for longer than the current standard of care but it is too soon to know if they would also live longer. It added that some patients had suffered a side-effect that caused lung scarring.
In economic news, the third and final estimate for first-quarter US GDP revealed that the economy had grown at an annualised 2%, much higher than the previous estimate of 1.3%.
The upwards revision, driven by consumer spending (+4.2%) and exports (+7.8%), undermines widespread expectations that the US economy is heading for a recession. It is also likely to encourage the Federal Reserve to raise interest rates further to curb inflationary pressures, particularly in the labour market. There are currently 1.7 open positions for every available worker.
Energy prices rose after Saudi Arabia and Russia announced additional cuts to oil production on Monday.
Saudi Arabia will extend its one million barrels-a-day production cut into August and Russia will make a voluntary supply cut of 500,000 barrels a day. Saudi Arabia requires a higher oil price to fund its transformational Vision 2030 project while Russia’s war in Ukraine has drained government finances.
