15th October – 21st October 2022 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 3,752.75 | 10,859.72 | 29.69 | 31,082.56 | 2,061.13 | 14,144.05 |
| 4.74% | 5.22% | -7.28% | 4.89% | 4.66% | 3.94% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 17,576.30 | $1,662.50 | $19.40 | $93.60 | 82.54 | 81.42 |
| 2.27% | 0.75% | 6.59% | 2.34% | 0.15% | 1.61% |
Source: MarketWatch
Hello Saturday,
This week US stocks see their best week since June, India’s consumer spending gets a festive boost, and the UK’s political and economic turmoil persists.
- Festive season spending in India recovers from the pandemic slump this Diwali with a potential $18 billion in retail sales
- The UK faces political and economic turmoil as Prime Minister Liz Truss steps down only six weeks into office
- Uber to establish an advertising arm and launch Uber Journey Ads to display highly-targeted ads to consumers as they wait for their rides and deliveries
- Elon Musk’s endeavours seem upbeat – Burnt Hair perfume makes $300 million in a week, Tesla plans a share buyback, and SpaceX scores more contracts
- Japanese yen slides past 150 against the dollar, levels not seen since 1990; policymakers rule out a rate hike in the next meeting
Taking stock | Let there be light | UK, you okay? | Adwagon | Musk-ing in glory | Yennyways | Invest wisely
Taking stock
Wall Street closed the week on a high note despite the 10-year Treasury yield surging to its highest level since 2008 and some disappointing corporate earnings reports. All three major indices had their best week since June. S&P gained 4.74%, the Dow rose 4.89%, and Nasdaq jumped 5.22%.
Let there be light
Once again, Diwali, the season of lights and heavy consumer spending, is upon us. This will be the first Diwali after the pandemic without any restrictions, and everyone is ready with their shopping lists and cards. According to the Confederation of All India Traders, retail stores in the country expect sales of $18 billion. This isn’t just 50% more than last Diwali but also almost double the festive season spending in the pre-pandemic year of 2019. Online marketplaces such as Amazon and Flipkart have already seen a 27% jump in sales from a year ago between September 22nd and 30th, marking this season’s first festive sale.
Despite prices of goods having gone up 10% to 15% since 2019, consumer spending is stronger than ever before in India. In fact, growth in spending has been one of the driving factors behind the 13.5% GDP growth in the April to June quarter this year from a year earlier. Things look bright for India compared to other countries bracing for a recession. According to the International Monetary Fund (IMF) estimates, India’s economy could expand by 6.8% in the financial year ending March 2023.
India’s GDP annual growth rate:
UK, you okay?
On Thursday, Lizz Truss resigned as UK prime minister just six weeks into office. The UK was in the middle of economic turmoil with surging inflation and an energy crisis when she entered office – energy bills were predicted to rise 80% in October and then again in January. Truss’s economic plans, meant to help with this, only made matters worse. Her plans for tax cuts, deregulation, and borrowing alarmed investors across the globe and sent British stocks, bonds, and the pound tumbling. The British pound reached a record low against the US dollar, the Bank of England had to step in to calm the markets, and Truss had to reverse most of the tax cuts.
Amongst all this, Truss’s own party turned against her, and she was forced to step down, becoming the UK’s shortest-serving prime minister ever. The next UK prime minister is set to be chosen by the Conservative Party by the end of next week. Such political turmoil in the country only aggravates the economic instability, driving UK stocks and the pound lower, thereby impacting global markets.
Adwagon
This year, several major companies have launched advertising divisions, such as Netflix and Instacart, and now Uber has jumped on this advertising bandwagon too. This week Uber announced its plan to establish a dedicated advertising arm and launch Uber Journey Ads. Leveraging Uber’s first-party data and insights on its 122 million active users who make or order over 2 billion trips per quarter on the app, Uber Journey Ads will allow marketers to display highly-targeted ads to its users. For both its mobility and food delivery users, Uber will show its customers ads relevant to their purchase journey as they wait for their destination or delivery. So this could mean ads by hotels and restaurants being displayed to you as you take a ride from the airport to the city centre. While Mark Grether, Uber’s new ad business chief, said that this would eventually make rides cheaper for the customers, he didn’t shed light on how exactly that would happen or by how much.
Musk-ing in glory
Everything is well in the Musk-verse. He has agreed to go ahead with the Twitter deal, thus putting an end to the trial. Musk also launched a perfume called ‘Burnt Hair’ to capitalise on quirky products. All 30,000 bottles of the $100 perfume sold out on pre-order within a few days. Musk’s SpaceX has also been doing well by winning more sole-source contracts. Last month it secured a potential eight-year, $1.4 billion contract with NASA to perform five more missions transporting NASA crews to the International Space Station.
Tesla’s third-quarter financial results came out this week, and while the automaker missed its revenue estimates by a little, its earnings beat expectations. Musk got on a conference call with analysts after the earnings were published and announced a plan to proceed with a $5 to $10 billion share buyback. While nothing is confirmed yet, it will be Tesla’s first share buyback if this goes through. Share buybacks tend to boost a company’s stock and valuation as it shows its confidence in its growth potential. Musk said he sees a path for Tesla to exceed Apple’s market cap of $2.3 trillion. Currently, Tesla’s market cap is $700 billion.
Yennyways
The Japanese yen slid past its key 150 level against the US dollar this week for the first time since August 1990. This has put investors on high alert and left them wondering when policymakers will finally step in. Japan is one of the only countries whose central bank has not raised interest rates. In fact, the Bank of Japan’s ultra-low interest rates, which it seems determined to maintain, are a big reason for pushing the yen down. As the US keeps raising interest rates while Japan’s rates remain low, global investors find it more attractive to exit from Japanese markets and divert their money into dollar-denominated assets.
Invest wisely
Short-term market fluctuations won’t impact your portfolio in the long term if you adopt the investing strategy of dollar-cost averaging and invest through Systematic Investment Plans (SIPs). This entails investing a fixed amount of money at predetermined intervals over a long period. Hence, SIPs allow you to average out the cost of your investment by buying more when the prices are low and buying less when the prices are high. They help you hedge market volatility and stay on track to meet your long-term goals. You can invest in US and Indian stocks and ETFs through SIPs by downloading the Appreciate App.
Warm regards,
Another week
in the markets
