Investors continue to dump gold

2nd July – 8th July 2022 | Another week in the markets

S&P 500	Nasdaq	VIX	DJIA	Russell 1000	NYSE
3,899.38	11,635.31	24.64	31,338.15	2,141.69	14,642.33
1.94%	4.56%	-7.72%	0.77%	2.01%	0.04%
Nifty 50	Gold	Silver	Brent crude	USD-INR	EUR-INR
16,220.60	$1,740.90	$19.24	$107.15	79.33	80.80
2.97%	-3.97%	-3.12%	-3.88%	0.48%	-1.85%

Source: MarketWatch

Hello Saturday,

This week global and US stocks rebound after a punishing first half, US treasuries see a huge inflow, and investors continue to dump gold.

• UK Prime Minister resigns and former Japanese Prime Minister gets assassinated 
• The euro reaches two-decade lows, almost at parity with the US dollar 
• Hong Kong’s IPO market starts to see recovery signs after a bad first half 
• The US’s jobs report for June shows pre-pandemic levels of private employment
• Chinese auto company BYD overtakes Tesla as the world’s top EV seller 
• Elon Musk terminates Twitter deal

Taking stock | Turmoil | Dollar store euro | Hong Kong IPO song | More jobs despite layoffs | Overtaking in the EV lane | #NoDeal | Invest wisely

Taking stock 

US stocks ended mixed Friday as investors tried to anticipate the impact of a strong jobs report on the Federal Reserve’s plans to raise interest rates. On Friday, S&P 500 fell by 0.1%, Dow Jones by 0.15%, and Nasdaq gained 0.12%, but all three indices saw weekly gains. Anticipated interest rate hikes pushed US Treasury yields higher while the dollar index closed flat after seeing two-decade highs earlier in the week.

Turmoil

On Thursday, UK Prime Minister Boris Johnson said he would resign once a successor is chosen. This comes after months of scandals, during which several ministers and senior members resigned due to a lack of faith in the leadership. But the UK is not the only one facing political chaos. On Friday morning, former Japanese Prime Minister Shinzo Abe was fatally shot while on a campaign. Shinzo Abe was the longest-serving prime minister of Japan and had served two terms. World leaders of nations across the globe, including the US, the UK, India, and Australia have expressed their shock about Abe’s assassination and condolences to his family and Japan. Despite this tragic loss, Nikkei managed to close in the green, and the yen saw brief gains. 

Dollar store euro

This week the euro tumbled to its 20-year lows while the US dollar index rose to new 20-year highs. The macroeconomic situation in the Eurozone has not been stable given the rising energy prices, which has only further strengthened the dollar’s safe-haven appeal. On Wednesday, the euro traded as low as $1.0165, bringing it close to parity with the US dollar. The last time the euro tumbled below $1.02 was in December 2002. This is the perfect opportunity for you to set up a short-term investment goal for funding your rite-of-passage Euro trip soon. 

Hong Kong IPO song

Things have started to look up again for Hong Kong’s IPO market, and the same is expected of China now that the COVID-19 curbs are easing. The first half of this year saw a 91% drop in IPOs in the Hong Kong market – from raising $30.48 billion last year during the same period to $2.67 billion. However, companies have now started to apply for IPOs despite the challenging backdrop. Hong Kong and Chinese stocks have gained some ground again since mid-May, and these IPO market recovery signs are in tow. Hong Kong’s benchmark index, Hang Seng, dropped only 0.6% during the second quarter, while the S&P 500 dropped by 16%. During the same period, MSCI China Index gained 2.2%.

More jobs despite layoffs

The US’s jobs report for June came in with stronger-than-expected data despite recession fears. Last month, the US economy added 372,000 jobs, pushing private employment back to pre-pandemic levels, while the unemployment rate at 3.6% is close to half-century lows. Despite this reassuring data, hiring freezes and job layoffs at several large companies continue. For instance, Twitter laid off a third of its recruiting team this week. Gamestop has fired its CFO and is looking to make another round of mass layoffs this year. 

Overtaking in the EV lane

Chinese auto-giant BYD, which Warren Buffett backs, has overtaken Tesla as the world’s top electric vehicle seller. In the first half of 2022, BYD sold 641,000 electric and plug-in hybrid vehicles, while Tesla sold 564,000. Tesla’s overall deliveries dropped by about 18% in the second quarter due to supply chain issues. Tesla’s stock has already fallen close to 30% year-to-date, and analysts expect a drop up to 40% owing to weaker deliveries. 

#NoDeal 

Elon Musk sent an official letter to Twitter on Friday stating that he is terminating the $44 billion deal to buy the social media platform. This is essentially on account of Musk’s claims against Twitter’s misrepresentation of bots and several other breaches in the agreement. Twitter’s chairman Bret Taylor tweeted that the company intends to take Musk to court and force him to close the deal as per the merger agreement. In after-hours trading, Twitter’s stock dropped while Tesla’s stock gained in light of this news. 

Invest wisely

Even bear market conditions afford excellent investment opportunities. For instance, when strong stocks such as Tesla drop significantly, you get to add such stocks to your portfolio at discounted prices and gain in the long term. It’s also important to be clear on your short-term, medium-term, and long-term financial goals. This helps you to continue investing in a disciplined manner and meet your goals in the desired timeline without being impacted by temporary market volatility. For goal-based investing and to add US stocks like Tesla to your portfolio, download the Appreciate App today.

Warm regards,
Another week
in the markets