Notable market news this past week (06-Oct-24)
Here is the Skeptivest roundup of the latest market headlines for the week
🇨🇳 EU passes Chinese EV Tariffs
New tariffs approved: The European Union's recent approval of tariffs, reaching up to 45%, on imported Chinese electric vehicles (EVs) marks a significant challenge for Chinese manufacturers, as the EU is their largest overseas market. However, the lower cost of Chinese EVs may still keep them competitive despite the added tariffs, offering European manufacturers a fairer chance in their own market.
Tensions rise: This decision risks escalating trade tensions, with potential retaliatory measures from Beijing. Earlier this year, China initiated investigations into imports of EU products like brandy, dairy, and pork, signalling the potential for a broader trade conflict.
What this means: For consumers, these higher EV prices could slow down the EU's carbon-neutral goal set for 2050. Currently, EV adoption in the EU is at around 3%, indicating a long road ahead before full transition. Germany, the EU's largest automaker, may face the harshest impact, especially given its $1.2 billion worth of exports of larger-engine vehicles to China last year. The worsening relationship between the EU and Beijing could spell significant consequences for Germany's automotive industry.
☕️ Quick fire happenings to note
🌏 Global macro
- OPEC abandons goal to drive oil price up to $100: The price of oil has been falling even though production cuts began in late 2022 to keep it from dropping further. A major driver for sluggish oil demand comes from China as the country is battling a fall in its real estate / construction market and demand for diesel is shrinking
- Japan’s general election is set for Oct 27th: The new Liberal Democratic Party (LDP) leader Ishiba Shigeru sworn in as Prime Minister and announced his new Cabinet on October 1st. This is first election since support for LDP was rocked by a series of scandals and under reported political funds. While LDP has to earn back the trust from the public, most voters are also concerned with day-to-day issues – sharply rising consumer prices, shortages of staple foods like rice, and security concerns over regional tensions are all likely to be immediate concerns
- US added 254k jobs in September: Far more jobs were added than forecasted while unemployment rate edged lower to 4.1%. Strength in job creation spilled over to wages, as average hourly earnings increased 0.4% on the month and were up 4% from a year ago. Both figures were ahead of respective estimates for gains of 0.3% and 3.8%. The report comes with questions over the labour market’s strength and how that will impact the Fed’s approach to lowering interest rates. With the US elections coming up soon in Nov, the Fed will likely take a conservative approach and observe how the market moves after elections before adjusting its rates
🏦 Individual stocks/companies
- Pepsico to buy Siete Foods for $1.2bn: Pepsico is buying a tortilla chip maker for $1.2bn, marking the company’s first food acquisition in roughly five years. The company intends to expand its product portfolio, shifting towards healthier options in recent years. Deal activity has been picking up for food companies this year, Mars acquired Kellanova for $36bn while Campbell Soup acquired Sovos Brand this year
- OpenAI raises close to $6.5bn: The company famous for ChatGPT has successfully raised US$6.5bn in their latest funding round, valuing the company over US$150bn. Notable investors include ADIA, Softbank, Fidelity and Nvidia
- LVMH and F1 announce 10-year partnership: The partnership will officially launch next F1 season. This arrangement is not the first time as F1 has worked with LVMH’s brands during last year’s Las Vegas Grand Prix. The partnership will be an opportunity for LVMH to scale its commercial market as the business continues to grow
- Nike (-8.19% past 5 days) misses: Nike beat earnings estimates but missed on sales. Amid the ongoing CEO change, the company withdrew FY’24 guidance and canceled next month’s Investor Day event.
🇸🇬 Singapore related
- Former transport minister S Iswaran sentenced to 12 months jail: Iswaran pleaded guilty on his first day of trial proceedings. The former minister obtained gifts worth about S$403,300 (US$313,200) over seven years, from two businessmen he considered his friends, obstructing justice
