19th August 2023 – 25th August 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,405.71 | 13,590.65 | 15.68 | 34,346.90 | 2,411.53 | 15,766.91 |
| 0.82% | 2.26% | -9.36% | -0.45% | 0.79% | 0.11% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 19,265.80 | $1,943.30 | $24.29 | $84.30 | 82.53 | 89.08 |
| -0.23% | 1.30% | 6.51% | -0.62% | -0.76% | -1.49% |
Source: MarketWatch
Hello Saturday,
This week, India becomes the first country to land in the moon’s south pole region, Shein and Forever 21 partner up, and Nvidia’s second-quarter results beat market estimates.
- India becomes the first country to land a craft in the moon’s south pole region as part of its Chandrayaan-3 moon mission; the country currently makes up 2-3% of the global space economy and expects to increase its share to 10% by 2030.
- Fast fashion e-commerce giant Shein joins forces with American fashion brand Forever 21 in a deal expected to help both brands expand their customer base and boost business.
- Strong demand for Nvidia’s AI chips helps the company deliver a blowout quarter: Q2 sales increased 100% year-over-year, and the company raises its Q3 revenue forecast to $16 billion.
- UPS averts a crippling labour strike as workers ratify a five-year contract that increases the wages of both full-time and part-time workers, and also improves various other work conditions.
- SoftBank-owned chip designer Arm Holdings files for an IPO in the US at an estimated valuation of $60-70 billion.
Taking stock | Shoestring moonshot | Fast-fashion friends | Off the charts | UPS and downs | Arm’s race | Invest wisely
Taking stock
After Fed Reserve Chair Jerome Powell delivered his Jackson Hole speech, stocks rallied, ending the volatile session higher. Powell assured investors that while interest rates may need to be raised to curb inflation further, the monetary policy would proceed cautiously. For the week, the S&P 500 rose 0.82%, while the Nasdaq climbed 2.26%. The Dow, on the other hand, fell 0.45%.
Shoestring moonshot
This Wednesday, India made history as its moon mission, Chandrayaan-3, became the first to successfully land a craft in the moon’s south pole region. This is not the first time that ISRO has made India proud. As the sixth-largest space agency in the world, ISRO holds an impressive success rate and has set a new global standard for cost-effective space missions. India also ranks fifth in the world when it comes to the number of private space companies, with over 400 companies.
The global space industry is estimated to exceed $1 trillion in value by 2040, and currently, India only constitutes 2-3% of the global space economy. However, as India becomes more and more proficient in successfully launching low-cost space projects and creating history with missions like Chandrayaan-3, it’s also becoming better placed to become a more dominant player in the global space economy.
India is also a leading player in satellite communication, which is one of the key sectors in the space industry. The West does not favour Chinese rockets, and ever since the Ukraine-Russia war, Russian rockets are also off the table. As for NASA programmes, they are only becoming more costly and delayed. Hence, India’s roster of massive international clients for satellite construction and space launch services is poised to grow.
Fast-fashion friends
This Thursday, Shein and Forever 21, two fast-fashion giants, announced that they had partnered up to boost their reach. Shein, a China-based e-commerce retailer known for its ultra-low prices, will acquire about a third of Sparc Group, Forever 21’s operator. While the terms of the deal haven’t been disclosed, Sparc will also take a minority stake in Shein.
Shein had an estimated 74 million active users earlier this year, and now Forever 21 will be able to sell its clothes, shoes, and other merchandise to this huge customer base. This will not only help Forever 21 boost its business, a move that’s much-needed after it came out of bankruptcy in 2020, but will also give Shein the opportunity to sell its products through Forever 21’s physical stores across the US. This will significantly improve the customer experience, especially if Shein allows its customers to return merchandise in Forever 21’s retail stores — currently, Shein charges a $7.99 shipping fee for returned orders.
Off the charts
Nvidia’s Q2 results this Wednesday managed to set the market alight once again. The company reported record quarterly sales of $13.5 billion, showing a year-over-year growth of 100%.
Along with this came Nvidia’s impressive forecast for the current quarter and a stock buyback plan of $25 billion. The company expects its Q3 revenue to be about $16 billion, much higher than the $12.61 billion forecast by analysts. This would translate to sales growth of 170% from a year earlier.
Source: Statista
Nvidia’s growth is primarily supported by the strong demand for its AI chips, which currently almost exclusively powers generative AI technology. On Thursday, Nvidia’s stock reached a new high after climbing as much as 6.7%. Year-to-date, the stock is up 220%.
UPS and downs
This week, UPS workers approved a new five-year deal with massive wage increases and improved working conditions. The deal was reached on July 25, but the ratification process took four more weeks. 86.3% of UPS workers voted for the deal — the largest margin in favour of a contract in the history of the ‘Teamsters’ union at UPS.
The new deal includes pay raises for full-time and part-time workers, and will put an end to forced overtime. Full-time workers will make $2.75 more per hour this year and $7.50 more per hour over the five-year period. Part-time workers will make a minimum of $21 per hour, which is up from the current minimum of $15.50 and a big win. By the end of this five-year deal, UPS drivers will end up averaging $170,000 annually in pay and benefits.
The deal has saved the US economy billions, as even a 10-day UPS strike would have cost an estimated $7 billion — the most expensive strike in about a century. But how does it impact UPS? For now, the company has cut its full-fiscal revenue and margin forecasts. This agreement is an expensive one for UPS and is expected to increase its labour costs by over 3% per year. UPS stock was mostly stable after the news.
In the long term, despite being expensive, this new deal could still be good news for UPS by preserving its market share. For the quarter ending June, the company lost about one million packages a day to competitors, even though the labour strike wasn’t going to start until August 1.
Arm’s race
UK-based chip designer Arm Holdings Ltd. applied to be listed on the Nasdaq stock exchange this Monday. This would be the biggest IPO of 2023 so far — Arm is looking to raise $8 billion to $10 billion at a valuation of $60 billion to $70 billion. Tech giants like Nvidia, Amazon, and Intel are reported to be some of its anchor investors. The underwriters for this IPO include Goldman Sachs Group Inc., JPMorgan Chase & Co., Barclays Plc, and more.
Arm, owned by SoftBank Group, is an important player in the global chip industry, and its technology is used by Amazon, Alphabet, Apple, Samsung, Intel, Qualcomm, and Nvidia. Softbank’s decision to take Arm public came after Nvidia pulled out of its $40 billion offer to acquire the chip maker in 2022. Nvidia was forced to pull the plug on this deal as the Federal Trade Commission (FTC) sued to block it. Arm’s going public could be a much-needed boost for the IPO market.
Invest wisely
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Warm regards,
Another week
in the markets
