21st October 2023 – 27th October 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,117.37 | 12,643.01 | 21.27 | 32,417.59 | 2,250.71 | 14,675.78 |
| -2.53% | -2.62% | -2.03% | -2.14% | -2.59% | -2.38% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 19,047.25 | $2,016.30 | $23.24 | $89.17 | 83.41 | 88.13 |
| -2.53% | 1.16% | -1.23% | -3.61% | 0.31% | 0.04% |
Source: MarketWatch
Hello Saturday,
This week, the US economy accelerates as Q3 GDP grows at an annualised rate of 4.9%, Indian FinTech giant Paytm clocks higher Q2 revenues, and a six-week labour strike nears its end as the United Auto Workers (UAW) union reaches a tentative agreement with Ford.
- The US clocks an unexpectedly high annualised GDP growth rate of 4.9% in the third quarter, beating the estimate of 4.7%.
- The Nasdaq’s ~3.5% fall over the last two days, stemming from global economic uncertainties, shifts gears for the stock performance of major tech companies.
- The UAW and Ford reach a tentative agreement with a new four-year labour contract; the UAW’s negotiations with General Motors and Stellantis continue.
- Indian FinTech major Paytm reports a 32% rise in revenue for Q2 FY2024.
- EU member Bulgaria gets greylisted by the FATF, while Panama and the Cayman Islands manage to get off the FATF grey list.
Taking stock | Stunning or stunted? | Tech-nically speaking | Autocorrect | FinTechtonics | Grey areas | Invest wisely
Taking stock
Global stock markets seemed dented for the second week in a row, ending mostly in the red on Friday. With tech giants reporting mixed results and the US GDP growing at a better-than-expected rate,10-year US Treasury yields crossed the 5% mark last week. All major indices fell over the week — the S&P 500 lost 2.53%, the Dow shed 2.14%, and the Nasdaq closed 2.62% lower.
Stunning or stunted?
The US’s GDP growth made headlines last week: US GDP clocked a 4.9% annualised increase due to an increase in government and consumer spending.
On the manufacturing front, orders for durable goods went up 4.7% in September, much higher than the 2% forecast. Moreover, the American dream of buying a home has resurfaced strongly, as indicated by the 3.9% increase in residential investment.
However, a repeat of such GDP growth seems unlikely. This, economists say, is largely due to reduced credit availability, the increased cost of borrowing, depleted savings, and increased rates of interest on borrowing impacting larger purchases.
Tech-nically speaking
On Friday, global markets closed in the red as major tech giants reported mixed earnings. The Nasdaq, which is a tech-heavy index, took a sharp hit as a result. Meta reported a 23% increase in revenue compared to last year, thanks to the strong demand for advertising. However, Meta closed lower on Friday after CFO Susan Li acknowledged, on Wednesday, that the escalating Middle East conflict had reduced ad spending in the beginning of the fourth quarter.
In terms of performance, the so-called Magnificent Seven, which includes the likes of Amazon, Apple, and Microsoft, also lost level. Google parent Alphabet recorded an 11% increase in revenue in Q3, in large part thanks to YouTube and Ad revenues. However, its cloud computing revenue faced headwinds. And while Amazon’s revenue skyrocketed 236%, its primary businesses of ecommerce and cloud computing showed relatively slow growth.
The details of the growth seen by tech companies are leading investors to take a cautious approach towards them. As global indices brace for a new wave of technological change and innovation, how well the Magnificent Seven will be able to hold the fort remains to be determined.
Autocorrect
After six long weeks of negotiations, the United Auto Workers (UAW) union claims to have reached a tentative agreement with Ford Motor, thus bringing its strike to an end.
UAW Vice President Chuck Browningsaid, “Workers will get a 25% general wage increase, plus cost of living raises that will put the pay increase over 30%, to above $40 per hour for top-scale assembly plant workers by the end of the contract.” In addition, the agreement will require Ford to give a 150% raise to temporary workers, the biggest such raise in 22 years, as well as annual bonuses for retired employees. Assembly workers will get an 11% raise, almost bringing them at par with all of the wage increases workers have got since 2007.
While the UAW-Ford deal awaits ratification, the UAW is still negotiating with General Motors (GM) and Chrysler parent Stellantis (STLA). However, Browning expects the UAW-Ford deal to serve as a template in tidying up those negotiations as well.
FinTechtonics
For Q2 FY2024, One97 Communications, the parent company of Indian FinTech major Paytm, recorded a 32% YoY revenue rise driven by steady loan growth, an increase in merchant subscription revenue, and a jump in gross merchandise volume (GMV). In terms of value, the loans distributed by Paytm rose by 122% YoY to ₹16,211 cr.
The FinTech giant narrowed its quarterly YoY losses by 49%, from ₹571 cr to ₹292 cr. In addition, trading platform Paytm Money became profitable in FY2023, with a net profit of ₹42.8 cr compared to a loss of ₹10.7 cr in the previous fiscal year.
In anticipation of its results on Friday, Paytm closed 2% higher on the stock exchange. Its stock has risen 86% year-to-date.
Source: Paytm’s Earnings Release
Grey areas
While Panama and the Cayman Islands are no longer on the FATF’s grey list, Bulgaria has now been added to it.
While Albania, the Cayman Islands, Jordan, and Panama were lauded by the FATF for the significant progress they’ve made in addressing strategic AML/CFT deficiencies, the global watchdog highlighted Bulgaria’s failure to comply with forty of its technical standards. The FATF stated that the EU jurisdiction needed to focus on meeting its strategic deficiencies, and to introduce legal and regulatory reforms to combat illicit financing and deal with cases against money launderers, corrupt officials, and organised crime syndicates.
Invest wisely
With quarters changing and numbers fluctuating, your investment strategies may need a relook. With the US continuing to enjoy economic resilience, investors might be well-advised to look to the US for investments. To invest in American markets easily and add some international exposure to your portfolio, download the Appreciate app now.
Warm regards,
Another week
in the markets
