Sponsored Content
Team Asset Management offer their weekly round-up of global markets
GLOBAL stocks lost ground for a second consecutive week as higher US government bond yields and more stresses in China’s property sector shook investor sentiment. The blue-chip S&P 500 and technology-focused Nasdaq indices fell 0.6% and 1.4% respectively.
Walt Disney (+4.9%) was the top performer in the S&P 500 on Thursday despite reporting a loss for the second quarter after it incurred $2.65 billion in one-off restructuring charges and content impairments relating to removing dozens of titles from its streaming platforms.
The entertainment giant revealed it had 146.1 million Disney+ subscribers, a 7.4% fall from three months earlier, after its Hotstar streaming service lost the rights to Indian Premier League cricket and 219.6 million subscribers including ESPN+ and Hulu.
However, the rise in the share price reflected investor optimism over chief executive Bob Iger’s strategy to eventually make its streaming services profitable. Cost-cutting measures implemented previously helped to reduce streaming losses in the quarter by more than $500 million to $512 million and Disney will both raise its prices in October and introduce cheaper ad-supported services.
Disney also said it would explore ways to crack down on password sharing and plans to roll out a new sharing policy early next year. Away from the streaming, revenues at Disney’s Parks, Experiences and Products business rose 13% over the year to $8.33 billion. The international division performed particularly well, including Shanghai Disney, which saw record highs from a revenue, operating income and margin perspective following the end of Covid restrictions in China.
Warren Buffett’s Berkshire Hathaway climbed to an all-time high last week after reporting a $36 billion profit for the second quarter as insurance underwritings earnings benefited from higher interest rates and lower catastrophe losses. Berkshire’s huge cash reserves swelled by another $17 billion to $147 billion during the period and the value of its stake in Apple appreciated by nearly $60 billion in the first half of the year.
Shares in United Parcel Service fell by more than 5% in premarket trading last Tuesday before recovering some of the loses during the trading session later in the day. The world’s largest delivery company cut this year’s revenue and margin forecasts owing to the pay deal it agreed for its US workers with the Teamsters union last month against the prospect of the biggest US labour strike in 60 years.
UPS revealed that the compensation package, which includes benefits and healthcare cover, for an average full-time driver would rise from $145,000 to $170,000 by the end of the five-year deal. It will also increase part-time workers’ salaries to at least $25.75 per hour and end mandatory overtime.
The deal was negotiated at a time when a downturn in global shipping has already reduced margins for logistics companies and UPS expects full-year revenues to be around $93 billion, compared to earlier guidance of $97 billion, and operating margins to fall to 11.8%.
In economic news there was some more encouragement on the inflation front. Annual US consumer price inflation accelerated to 3.2% in July, lower than forecasts of 3.3%, and the core rate, driven by higher housing, car insurance and food costs.
The core inflation rate, which excludes more volatile food and energy prices, slowed from 4.8% to 4.7%. and reinforced expectations that the Federal Reserve would leave interest rates unchanged at its next FOMC meeting in September.
According to the Office for National Statistics, the UK economy expanded 0.2% in the second quarter, and 0.4% from a year earlier, defying expectations that it had stagnated in the three months to the end of June. ONS chief economist Grant Fitzner said an improvement in business investment, the narrowing of the UK’s trade deficit and a muted impact on the economy from industrial action had underpinned the better-than-expected performance.
Brent crude rose $1 to $86 a barrel despite a less optimistic update from the International Energy Agency, which expects demand for oil to rise by one million barrels per day next year, 150,000 fewer than previously forecast. The revision reflects its more lacklustre economic outlook and surging electric-vehicle sales. By 2030, the IEA expects EV usage to displace five million barrels of oil per day.
