17th June 2023 – 23rd June 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,348.33 | 13,492.52 | 13.44 | 33,727.43 | 2,377.85 | 15,469.35 |
| -1.39% | -1.44% | -0.74% | -1.67% | -1.52% | -2.06% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 18,665.50 | $1930.30 | $22.46 | $74.55 | 81.96 | 89.27 |
| -0.85% | -2.05% | -7.48% | -2.24% | 0.02% | -0.41% |
Source: MarketWatch
Hello Saturday,
This week, the Sensex hits a new all-time high, the Federal Trade Commission sues Amazon, and OceanGate’s Titanic expedition submersible implodes in the North Atlantic.
- After almost seven months, the BSE Sensex hit a fresh all-time high of 63,588.31 off the back of the gains from heavyweights like the HDFC twins and Reliance Industries, an increase in foreign capital inflows, and improving global economic factors.
- Federal Reserve Chair Jerome Powell presented the central bank’s semi-annual monetary policy report; it discussed the possibility of rate hikes in the fight against inflation, the strong labour market, and the fact that regulations for smaller banks seem unlikely.
- Strong crude oil exports and reduced imports have led to the US crude oil inventory dipping. However, oil futures have still slumped as the markets are more focused on the potential impact of high interest rates on the economy and oil demand.
- The Federal Trade Commission has sued Amazon for allegedly tricking millions of customers into signing up for Amazon Prime subscriptions through deceptive user-interface features, automatic annual renewals, and a complicated cancelling process.
- The remains of OceanGate Expedition’s Titan submersible, with which communication was lost during its descent towards the wreckage of the Titanic, has been found after a five-day multinational search; there were no survivors.
Taking stock | Green Bull | Regu-later | Oil okay | Prime suspect | Crushed dreams | Invest wisely
Taking stock
Wall Street closed lower Friday and US stocks posted a losing week with all major benchmarks breaking multi-week winning streaks. The S&P 500 fell 1.39%, ending a five-week winning streak, while the Dow lost 1.67%, ending three consecutive weeks of gains. The Nasdaq fell 1.44%, losing steam after eight consecutive positive weeks. The Fed’s monetary policy meeting included mentions of future rate hikes, which stoked investor fears, and the strong housing data did not help.
Green Bull
On Wednesday, the BSE Sensex hit an all-time high of 63,588.31 during intraday trade, and closed at 62,523. This fresh all-time high comes after almost seven months — it last hit a new high in December 2022, when it touched 63,583.07. Gains in heavyweights like the HDFC twins, TCS, Reliance Industries, and Larsen & Toubro supported this win on Wednesday. But there are some other reasons as well.
For the last seven months, the Sensex has been suffering due to global economic factors like surging inflation and high interest rates. But lately, these macroeconomic indicators are improving. Also, strong foreign capital inflows have been helping. In the first quarter of FY2024 alone, Foreign Institutional Investors (FIIs) have made a net investment of close to $9 billion in Indian stocks. The disappointing pace of economic recovery in China since the end of the pandemic is also prompting foreign investors to leave China and consider more investments in India. A final factor is the fact that markets globally are currently bullish despite slow global economic growth.
Regu-later
Federal Reserve Chair Jerome Powell presented the Fed’s semi-annual monetary policy report before the House this week. Here are the key takeaways:
- Despite keeping the interest rates unchanged in the latest Fed meeting, Powell remains hawkish on inflation. More rate hikes may be necessary — most Fed officials say at least two — but Powell stated that any decisions that were taken would be data-driven, and that the prognosis would continue to evolve based on economic indicators.
- During the hearing, Powell also doubled down on the view that changes in monetary policy impact the economy with a lag, making it difficult to predict exactly when rate hikes will curb inflation as planned.
- Powell reaffirmed the Fed’s commitment to fighting inflation while keeping in mind the impact of its actions on the job market and unemployment rates. He reiterated that the labour market remains strong, with historically low unemployment rates.
- New regulations on smaller banks, those with less than $100 billion in assets, are unlikely, particularly as far as higher capital requirements are concerned. And the regulations on banks with between $100 billion and $250 billion in assets will not be implemented until some time in 2024.
Oil okay
US crude inventories fell by 3.8 million barrels in the week ending on June 16, as opposed to analysts’ expectations of a rise of 0.3 million barrels. Continued strength in refining activity, a rebound in crude exports, and a reduction in imports have led to this unexpected outcome. Despite this dip in inventory, oil futures fell about 4% on Thursday. The reason for this? Interest rate hikes.
This week, the Bank of England raised its bank rate by a higher-than-expected 0.5%, bringing the rate to 5% — the highest level in 15 years. This is the 13th consecutive hike in an attempt to bring down inflation that remains stubbornly high.
Source: The New York Times
Fed Chair Powell, too, reiterated that there would be more hikes this year to help curb inflation. Hence, the markets have essentially shrugged off this crude inventory dip, due to concerns that high interest rates will continue to slow the economy down and negatively impact oil demand anyway.
Prime suspect
The Federal Trade Commission (FTC), the US agency responsible for consumer protection, sued Amazon this Wednesday. The FTC alleged that the tech giant has knowingly tricked millions of consumers into enrolling in its paid subscription service Amazon Prime through a secret project internally known as ‘Iliad’.
The FTC has accused Amazon of using manipulative, coercive, or deceptive user interface designs known as dark patterns to trick customers to enrol for Prime subscriptions that automatically renew yearly and are hard to cancel. It also stated that the company has made shopping on Amazon without Prime more difficult for customers in many cases. It has further claimed that Amazon has also sometimes presented customers with a button to complete transactions that would also subscribe them to Prime without clearly stating so. Amazon has previously faced lawsuits that accused it of making the cancellation process for Prime too complicated.
Crushed dreams
Extreme tourism has been on the rise. It offers individuals unique adrenaline-inducing experiences far beyond those conventional travel could ever offer. But it also comes with bigger risks.
This week, the Titan submersible, which was on an eight-day mission to explore the Titanic’s wreckage and was operated by the tourism and research company OceanGate Expeditions, lost communication two hours after embarking on its journey. There were five people on board, including Stockton Rush, OceanGate’s CEO and co-founder. After a five-day multinational search, the US Coast Guard declared that the submersible had undergone a catastrophic implosion, and that there were no survivors.
This once-in-a-lifetime experience offered by OceanGate cost $250,000 per person. Moreover, this wasn’t the first time the firm had offered such an expedition — successful expeditions had already been conducted in 2021 and 2022. These kinds of exclusive voyage tours, a niche of the adventure tourism industry accessible only to the ultra-wealthy, are only expected to rise in the coming years for two reasons.
First, the number of ultra-high-net-worth individuals has been increasing at a steady clip — this number is up by 44% since 2017. Second, new technologies and post-pandemic demand will further boost this travel niche. In light of the Titan tragedy, it’s likely that the extreme tourism industry might end up being subject to tighter regulations regarding safety and certifications.
Invest wisely
Whether or not you want to subscribe to Amazon Prime, adding Amazon stock to your investment portfolio can be a smart move, given the outperformance of Big Tech compared to the broader market. And investing in US stocks like Amazon is now as simple as it can get with Appreciate. Download the Appreciate app today to invest in the top-performing US stocks and exchange-traded funds and maximise your returns.
Warm regards,
Another week
in the markets
