Notable market news this past week (03-Nov-24)
Here is the Skeptivest roundup of the latest market headlines for the week
🇯🇵 Japan's ruling coalition loses majority in elections
Japan’s political landscape has been shaken: as Prime Minister Ishiba's Liberal Democratic Party (LDP), which has dominated Japanese politics for nearly seven decades, took a significant hit in recent elections. The party secured only 215 seats, a dramatic drop from the 279 seats it held before. This result represents the LDP's worst electoral performance since 2009, when the party briefly lost control of the government to the opposition Democratic Party of Japan
Economic and Social Frustrations Fuel LDP's Decline: Economic hardships facing Japanese citizens are a primary factor behind the LDP’s weakened position. Japan has been grappling with rising prices across consumer goods due to inflation and global supply chain disruptions, compounded by sluggish wage growth. The average Japanese household has seen its purchasing power decrease, and many voters expressed discontent with the government’s handling of economic policy. Although the LDP has traditionally been seen as the steward of Japan’s economic stability, recent frustrations seem to have eroded confidence in its ability to manage the current challenges effectively
Political Instability and Yen Decline: The election results have sparked concerns about political instability, the yen dropped to a three-month low following news of the LDP’s poor showing, placing additional strain on Japanese households
☕️ Quick fire happenings to note
🌏 Global macro
- Australia to ramp up missiles investment: The country will invest up to A$18bn (US$12bn) to strengthen manufacturing of missiles, including making advanced guided missile systems in the country for the first time, as part of an overhaul of its defence strategy in the face of rising geopolitical tensions and China’s ICBM test into the South Pacific
- BOJ holds interest rates: The decision came amid an unusually high level of political uncertainty in Japan, where the ruling Liberal Democratic Party (LDP) was stripped of its coalition majority in parliament
- US and European hydrogen stock prices collapse: S&P Kensho Global Hydrogen Economy Index is back to levels akin to mid-2020, erasing gains made over the hype of green energy. Slow rollout of tax credit rules in US and insufficient government funding in Europe have hampered developed in the hydrogen space
🏦 Individual stocks/companies
- Samsung share price down 30% from July peak: The company has lost $122bn of market value in that span as concerns mount that the company is losing out to smaller rival SK Hynix in AI memory and failing to gain on TSMC in outsourced chipmaking
- Apple iPhone 16 banned in Indonesia: The iPhone 16 cannot be marketed in the country as Apple’s local unit is yet to fulfil the country’s 40% local content requirement for smartphones. Indonesia is still a relatively small market for Apple, accounting for ~10% of iPhones shipped Phones annually
- Microsoft Cloud revenue rises on AI boom: Microsoft reported double-digit gains in quarterly revenue and profit driven by strong demand for cloud computing, but its shares slipped after it warned that growth was cooling and AI related spending would continue to rise
- HSBC announces $3b share buyback: HSBC announced stock buyback as it reported better-than-estimated earnings days after unveiling a major restructuring of its business
- Buffett cuts stake in Apple: Buffett sold ~25%, of its Apple shares over the summer, ending with about 300m as he sees a high likelihood that the US federal government would raise tax rates in the coming years given the country’s sustained budget deficits, which would reduce Berkshire’s profits on future stock sales
🇸🇬 Singapore related
- SIA and Scoot flights affected by Taiwan typhoon: Typhoon Kong-rey, one of the biggest storms to hit Taiwan in decades, caused the cancellation of several Singapore Airlines and Scoot flights. A Taipei-bound Singapore Airlines flight was diverted to Hong Kong due to poor weather conditions
