24th June 2023 – 30th June 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,450.38 | 13,787.92 | 13.59 | 34,407.60 | 2,436.93 | 15,875.91 |
| 2.35% | 2.19% | 1.12% | 2.02% | 2.48% | 2.63% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 19,189.05 | $1927.80 | $22.98 | $75.19 | 82.10 | 89.59 |
| 1.76% | -0.13% | 2.36% | 0.86% | 0.17% | 0.36% |
Source: MarketWatch
Hello Saturday,
This week, Apple hits $3 trillion in market value, US economic data shows admirable signs of resilience, and two tech billionaires train for a possible cage fight.
- The US economy continues to be strong — the latest GDP revision indicates the economy grew at 2% instead of the estimated 1.3% in the first quarter; new home sales are up, consumer confidence remains high, and weekly jobless claims drop.
- The HDFC and HDFC Bank merger will be completed this weekend; the new HDFC Bank entity will be the fourth-largest lender by market cap in the world, and is expected to keep growing at a remarkable pace.
- Elon Musk and Mark Zuckerberg take jiu-jitsu training for a possible cage fight face-off; the rivalry between the two tech billionaires is long-standing but has intensified since Musk took over Twitter.
- The world’s most commonly used artificial sweetener, aspartame, used in Coke Zero, Dr. Pepper, and many other consumables, will reportedly be declared a possible carcinogen by the World Health Organisation (WHO).
- Apple crosses $3 trillion in market cap, becoming the first publicly listed US company to reach this milestone; other tech giants like Alphabet and Amazon are still in the $1 trillion zone.
Taking stock | Recession recess | The big bank wedding | There will be blood | Sickly sweet | First among equals | Invest wisely
Taking stock
Wall Street ended the week higher and closed the month strong. With investors being bullish, especially on tech stocks, mega-cap tech stocks like Nvidia and Netflix surged, Apple hit $3 trillion in market cap, and the Nasdaq posted its biggest first-half gain since 1983, surging 31.73% year-to-date. For the week, the Nasdaq rose 2.19%, the S&P 500 climbed 2.35%, and the Dow gained 2.02%.
Recession recess
Economic data this week showed that the US economy continues to be strong despite fears of a recession. New home sales surged 20% this May compared to a year ago, and the consumer confidence index rose to 109.7 in June, the highest since January 2022. This strong economic data, however, means that the Federal Reserve is likely to continue with rate hikes in an attempt to reduce the overall demand in the economy and control inflation.
The labour market also continues to remain strong — US weekly jobless claims for the week ended June 24 posted their biggest drop in 20 months. Also, according to the third and final GDP estimate for the January-to-March quarter this week, the GDP increased at an annualised pace of 2%. This is not only up from the previous estimate of 1.3% but also higher than the Dow Jones consensus forecast of 1.4%. The GDP is expected to grow as much as 2% for the April-to-June quarter as well, as per recent Wall Street forecasts. While the data shows that the economy is showing surprising signs of resilience, economists believe that the possibility of a recession has not disappeared.
The big bank wedding
In April 2022, the Housing Development Finance Corporation (HDFC) and HDFC Bank announced their decision to merge in a $40 billion deal. Having received all the necessary approvals from the relevant regulatory bodies, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), the two financial behemoths are all set to complete the merger by July 1. The date to swap shares, as of now, is July 13.
According to the deal, HDFC shareholders will receive 42 shares of HDFC Bank for every 25 shares held. The merger is beneficial for the HDFC twins, their shareholders, and their customers. It will create a financial services entity that will be the fourth-biggest lender globally in terms of market capitalisation, right behind JPMorgan Chase & Co., the Industrial and Commercial Bank of China Ltd., and Bank of America Corp.
Source: Bloomberg
This new entity will be valued at about $172 billion, and will have around 120 million customers. Moreover, it will operate 8,300 branches and employ 1,77,000 people. No bank in India, and very few banks globally, have managed to grow at the rate that HDFC has. Even now, the bank expects to grow at 18% to 20% annually, and plans to double its branches over the next four years.
There will be blood
Last week, Elon Musk tweeted that he would be up for a cage fight with Mark Zuckerberg. Soon after, Zuckerberg responded by saying ‘Send me location’ in an Instagram story. Since then, it’s emerged that both tech billionaires have participated in training sessions with jiu-jitsu black belt, scientist, and podcaster Lex Friedman.
The rivalry between Musk and Zuckerberg is not new; this is simply the latest development in their seven-year tech feud. The tensions between the two have intensified ever since Musk took over Twitter, making them direct rivals.
Earlier this year, there were rumours that Meta was developing a platform for text-based content, codenamed Project 92, that would be a direct competitor of Twitter. Since then, Musk has reportedly been taking jabs at Zuckerberg online.
Sickly sweet
A lot of people opt for products that are ‘diet’ or ‘sugar-free’ in the interest of their health. But it has now come to light that a majority of these products use an artificial sweetener that might be carcinogenic to humans.
Aspartame, one of the world’s most commonly used artificial sweeteners, will reportedly be listed as a possible carcinogen by the World Health Organisation (WHO) next month. The sweetener is used in Coke Zero, Pepsi Max, Dr Pepper, sugar-free gums like Extra’s, breakfast cereal, diet yoghurts and jellies, and many other consumables. Aspartame is about 200 times sweeter than regular table sugar. However, it has almost zero calorific value and lacks a bitter aftertaste. As a result, ever since it was approved by the US Food and Drug Administration (FDA) in 1974, it has been used as an additive in a range of foods and drinks.
It’s important to note that the WHO’s classification for aspartame is going to be “possibly carcinogenic to humans”, which is the third of five categories of carcinogens. This means that while there is some evidence that aspartame can cause cancer, it is not conclusive. Despite this categorisation, however, leading food and drink companies are expected to face consumer backlash. In the past, products with ingredients given the same categorisation that aspartame is likely to get have been boycotted by consumers over health concerns. Hence, it’s likely that companies will have to change certain formulations and find an alternative to aspartame.
First among equals
On Friday, Apple became the first publicly-listed company to reach $3 trillion in market cap. The company had come very close to hitting this milestone in January 2022 — while it had managed to cross the historic $3 trillion mark, it had failed to close at that level.
Investors remain bullish on Apple’s portfolio of products and services, and the announcement earlier this month of Vision Pro, the company’s mixed reality headset, has created a fair bit of buzz. The tech giant has also proved resilient in the face of the uncertain economy, as its sales dipped less than expected in the most recent quarter.
Invest wisely
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Warm regards,
Another week
in the markets
