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10 July : Payrolls Unravel Market; Energy and Materials Thrive; Alibaba Soars, Levi Strauss Stumbles

  • Market themes from Thursday unraveled on Friday as the government payrolls print tempered the excitement following the strong ADP employment data.
  • Yield curve rallied on hopes of fewer rate hikes, but wage inflation picked up, indicating little change in the overall economic picture.
  • Equity markets started strong but lost momentum towards the end of close. As we approach the end of the interest rate cycle, it may be wise to consider a shift towards old-world cyclicals for investment opportunities.
  • Energy, Materials, and Industrials sectors showed strength, while defensive sectors like staples, healthcare, and utilities faced declines.
  • Alibaba ADR surged 8% following regulatory fines, indicating a potential end to a challenging regulatory period. Tencent ADR also rose 4%.
  • Levi Strauss shares dropped 7.7% after the company lowered its full-year guidance due to weak US wholesale business and price-sensitive shoppers.
  • Biogen received full FDA approval for their Alzheimer’s drug, but the market was disappointed due to lingering concerns about side effects and efficacy.
  • Coca-Cola Hellenic significantly upgraded its FY23 guidance after a strong June, benefiting from exposure to tourist destination markets. Last Thursday marked the busiest ever day for commercial flights, indicating a recovering travel industry.
  • Locally, Telkom shares declined 6.7% as discussions with Sipho Maseko’s consortium ended.
  • China’s CPI at 0% suggests struggling demand, while PPI at -5.4% indicates deflationary export from the world’s factory. Calls for further stimulus may arise.
  • Commodity futures show little enthusiasm, with iron ore down nearly 3%
  • Keep an eye on the upcoming US earnings season and the US CPI print for potential market impact.
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Information correct at time of publishing. It is important to conduct thorough research and analysis using a combination of fundamental and technical analysis techniques to make informed trading decisions.

Additionally, consider your risk tolerance, investment objectives, and time horizon when assessing company performance for trading. This content is not meant as financial advice.
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