Stock Market Update & Analysis for July 9th 2024

Global Markets

Canada

Canada’s main stock index experienced a decline despite stable gold and copper prices, reflecting broader market sentiments rather than commodity price changes.

USA

On Wall Street, the Dow Jones Industrial Average showed mixed results, with notable strength in megacap technology and semiconductor stocks. Investors are keenly awaiting testimony from Federal Reserve Chair Jerome Powell, anticipating insights into the central bank’s future monetary policy.

Europe

In Europe, the stock market faced downward pressure, with a significant drop in Indivior’s share price following the company’s revised profit forecast. This contributed to the overall negative sentiment in European markets.

Japan

Japan’s Nikkei 225 index reached a record closing high, bolstered by gains in semiconductor stocks and the continued weakness of the yen, which benefits exporters by making their products cheaper overseas.

Oil Markets

Oil prices decreased following Hurricane Nicholas, which impacted Texas, a crucial U.S. oil-producing region. The damage from the hurricane was less severe than anticipated, leading to a decline in oil prices as supply disruptions were minimal.

Currencies

The U.S. dollar gained strength, recovering from its lowest levels in nearly a month against major currencies. This rise in the dollar was influenced by market expectations and reactions to recent economic data and geopolitical developments.

Corporate Stock News

HSBC Leadership Transition

As HSBC prepares to appoint its third CEO in nine years, the bank is exploring financial incentives and reallocating key projects to retain those who miss out on the top job. This move is aimed at maintaining stability and morale within the bank’s leadership ranks. The discussions reflect the bank’s efforts to ensure that leadership changes do not disrupt ongoing projects and key strategic initiatives.

Grifols Takeover Bid

The Grifols family and Canadian fund Brookfield have agreed to evaluate a possible joint takeover bid for Spanish drugmaker Grifols, with the intent to delist it. This potential bid comes as Grifols faces financial challenges, and the move would allow for restructuring away from the public market pressures.

Mercedes-Benz EV Strategy

Mercedes-Benz will wait to see if electric vehicle (EV) demand picks up before adding more battery cell capacity. Lower projected EV sales mean the company will no longer need the capacity initially planned for 2030. This cautious approach highlights the current uncertainties in the EV market and the need for automakers to balance investment with actual market demand.

Cenovus Energy & Imperial Oil Wildfire Response

Cenovus Energy is demobilizing some staff at its Sunrise oil sands project in northern Alberta as a precaution due to evolving wildfires. Operations remain unaffected, but non-essential staff are being moved. Imperial Oil, whose Kearl oil sands mine is nearby, stated that its operations have not been affected.

Maple Leaf Foods Restructuring

Maple Leaf Foods plans to separate into two independent public companies. The new entity, “Pork Company,” will see Maple Leaf Foods retain a 19.9% ownership position and enter into an evergreen pork supply agreement. CEO Curtis Frank will continue to lead Maple Leaf Foods, while Dennis Organ will head the new company.

Microsoft’s Device Strategy in China

Microsoft plans to offer Apple’s iOS-based devices to its employees in China to access authentication apps, given the absence of Google’s Android services in the country. This shift is part of Microsoft’s global Secure Future Initiative, aiming to maintain security standards despite regional restrictions on app availability.

Ardent Health IPO

Ardent Health is targeting a valuation of about $3.15 billion in its initial public offering (IPO). The healthcare provider plans to raise up to $314.6 million by selling 14.3 million shares priced between $20 and $22 each. Ardent will list its shares on the New York Stock Exchange under the symbol “ARDT.”

BP Plc Profit Warning

BP Plc warned that weak refining margins and lower oil trading results would reduce its second-quarter profit by up to $700 million. This announcement led to a drop in its share price and caused analysts to lower their earnings estimates. The London-listed company cited weak diesel prices and narrower North American heavy crude oil differentials as the main reasons.

Eli Lilly & Novo Nordisk Rivalry

Shares of Novo Nordisk, the maker of the obesity drug Wegovy, fell after a data analysis showed that Eli Lilly’s Mounjaro leads to faster and greater weight loss. Novo Nordisk responded by emphasizing that the comparison did not include Wegovy and highlighted the need for a head-to-head clinical trial to accurately compare the drugs.

Emergent BioSolutions & Johnson & Johnson Settlement

Emergent BioSolutions announced that Johnson & Johnson agreed to pay $50 million to settle claims related to a terminated manufacturing deal for J&J’s COVID-19 vaccine. The deal termination in 2022 was due to breaches by Emergent, including the failure to supply the vaccine drug substance.

Honda Motor Co Plant Consolidation

Honda will halt vehicle production at its Ayutthaya factory in Thailand by 2025, consolidating output at its Prachinburi plant. The Ayutthaya plant, opened in 1996, will shift to producing car parts, while the Prachinburi plant, opened in 2016, will handle vehicle production.

Indivior Plc Profit Forecast Cut

Indivior slashed its 2024 profit forecast, citing a slowdown in sales of its opioid addiction treatment and the discontinuation of its schizophrenia drug Perseris. The company’s shares plunged as a result, with CEO Mark Crossley noting that Sublocade revenues were impacted by competitive pressures and changes in U.S. Medicaid coverage.

KKR Stake Reduction in Kokusai Electric

KKR plans to reduce its stake in Kokusai Electric, cashing in on the Japanese chip equipment maker’s strong performance. KKR, holding around 43% of Kokusai’s shares, intends to sell about half of its stake. Kokusai will buy back shares in the market.

Lucid Group Recall

Lucid Group will recall about 5,251 of its 2022-2023 Air luxury sedans due to a software error that could cause a loss of power. Additionally, it will recall approximately 7,506 Air sedans due to an issue with the coolant heater affecting windshield defrosting.

Marathon Petroleum Refinery Restart

Marathon Petroleum began preparations to restart multiple units at its Galveston Bay oil refinery in Texas City, Texas, following a power outage caused by Hurricane Beryl. The 631,000-barrel-per-day refinery is raising steam to restart its largest production units.

Meta Platforms & Vodafone Collaboration

Meta Platforms has collaborated with Vodafone to optimize short-form video delivery on 11 of its European mobile networks. This partnership aims to free up network capacity and improve the efficiency of video delivery without compromising the viewing experience.

Paramount Global Technology-Media Strategy

Skydance Media CEO David Ellison outlined a vision for Paramount Global to become a technology-media hybrid company. Ellison emphasized the need for Paramount to enhance its technology prowess to compete with tech giants entering the entertainment industry. Efforts will focus on improving algorithmic recommendation engines for Paramount+.

Shell Offshore Drilling Plans

Shell seeks government approval to drill up to five ultra-deep offshore wells off South Africa’s west coast. The company plans to explore and appraise wells in the area, reflecting a strategic shift toward the potential-rich Orange Basin south of Namibia.

Stellantis Hybrid Vehicle Expansion

Stellantis announced plans to expand its affordable hybrid vehicle lineup to 36 models in Europe by 2026. The automaker is focusing on “mild hybrid” vehicles that use a low-voltage battery and energy recovery system, providing an alternative to traditional petrol and electric vehicles.

Tesla Attorney Fees

Tesla faces a record $7 billion in attorneys’ fees for challenging Elon Musk’s $56 billion pay package. An attorney for a Tesla shareholder argued that the fee petition incentivizes holding corporate boards accountable, despite Tesla’s lawyer opposing the petition.

Walt Disney Co Cruise Expansion

Disney unveiled plans for a new cruise ship to set sail from Tokyo starting in fiscal 2028. The ship, part of a $60 billion expansion of Disney’s theme parks and cruise business, will have a maximum capacity of 4,000 passengers and is expected to significantly boost annual sales.

United Airlines Landing Gear Incident

A United Airlines jet lost a landing-gear wheel during takeoff from Los Angeles but landed safely in Denver. The airline is investigating the incident, with no injuries reported. The wheel was recovered in Los Angeles.

Piper Jaffray Companies Raises Apple Target

Piper Jaffray Companies has raised its price target on Apple Inc. to $225 from the previous $190, maintaining a Neutral rating on the stock. This adjustment reflects an optimistic outlook on Apple’s future performance, driven by strong sales of its flagship products and potential growth in services and wearables. Despite the increased target price, the Neutral rating suggests that Piper Jaffray sees Apple’s current valuation as fairly balanced with its growth prospects.

Wells Fargo Raises Airbnb Target

Wells Fargo has increased its price target for Airbnb Inc. to $129, up from its previous target, but continues to hold an Underweight rating on the stock. This implies that while Wells Fargo acknowledges some positive developments or potential in Airbnb’s business model and market position, it still considers the stock to be overvalued relative to its peers. The Underweight rating indicates caution, suggesting that investors might find better opportunities elsewhere in the market.

KeyBanc’s Outlook on AMD

KeyBanc has reiterated its Overweight rating on Advanced Micro Devices (AMD) with a target price of $220. This rating suggests that KeyBanc believes AMD’s stock will outperform its industry peers and market averages. The high target price reflects confidence in AMD’s product pipeline, market share gains, and overall financial health. AMD’s strong presence in the semiconductor industry and ongoing innovations in processors and graphics cards are likely contributing factors to this positive outlook.

KeyBanc Maintains Micron Technology Rating

KeyBanc has also maintained its Overweight rating on Micron Technology, setting a target price of $165. This rating and target price indicate that KeyBanc expects Micron to perform well above the market average, driven by its leadership in memory and storage solutions. The company’s advancements in DRAM and NAND technologies, along with robust demand from data centers and consumer electronics, support this optimistic view. The Overweight rating suggests that investors should consider Micron as a strong buy in their portfolios.