Stock Market Update & Analysis: August 20th, 2024

Global Markets

Canadian Markets

Canada’s TSX dropped as investor caution increased ahead of upcoming inflation data. The market’s risk appetite was dampened by uncertainties surrounding economic indicators, overshadowing gains in gold prices. Despite gold’s appeal as a safe haven, its positive impact was insufficient to counterbalance the broader market sentiment. Additionally, oil prices fell again, contributing to the negative momentum in Canadian equities.

American Markets

In the U.S., markets fell across the board. Investors are closely watching for potential signals from the Federal Reserve regarding imminent rate cuts. The anticipation of such policy adjustments is likely already factored into current market valuations. This expectation has contributed to a cautious investment atmosphere, impacting stock performance negatively.

European Markets

European shares dropped, reflecting a wait-and-see approach as investors anticipate further economic data and policy developments. UK markets fell 1 percent as pound sterling continued it’s rise, while sentiment focused on the social disarray in the country adding to the slowing growth forecasts.

Japanese Markets

Japanese shares closed higher after yesterday’s big fall, buoyed by a softer yen and gains in technology stocks. The yen’s weakness likely provided a boost to export-oriented companies, while the technology sector’s performance contributed to the overall positive trend in Japanese equities.

Chinese Markets

Chinese and Hong Kong stocks ended lower, influenced by persistent concerns over China’s economic outlook. Ongoing issues related to economic growth and stability have created a challenging environment for investors in these markets, leading to declines in stock values.

U.S. Dollar & Oil

The U.S. dollar hit a new seven-month low, reflecting a weakened currency amid global economic uncertainties. Oil prices continued to decline after experiencing significant drops over the previous two days.

Corporate Stock News

• Alaska Air Group Inc & Hawaiian Holdings Inc: Alaska Airlines’ proposed merger with Hawaiian Airlines has passed a regulatory review by the U.S. Department of Justice, and the companies are now awaiting further steps from the U.S. Department of Transportation.
• Boeing Co: The FAA will require inspections of Boeing 787 Dreamliners following a mid-air incident involving a LATAM Airlines plane. The directive affects 158 U.S.-registered and 737 airplanes worldwide, focusing on potential issues with captain’s and first officer’s seats.
• Chevron Corp, Exxon Mobil Corp & Hess Corp: An arbitration panel will assess the value of Hess’ oil assets in Guyana as part of a high-profile dispute between Exxon Mobil and Chevron. The panel’s findings are central to Exxon’s claim about the nature of the deal.
• Emergent BioSolutions Inc: The company will donate 50,000 doses of its smallpox vaccine to address the mpox outbreak in Africa. The vaccine is yet to be approved by the FDA for use against mpox.
• Equinor ASA: Equinor has begun efforts to resume production at its Gullfaks C oil and gas platform in the North Sea after a shutdown due to well problems.
• Goldman Sachs Group Inc: Goldman Sachs has hired veteran banker Matt Beitzel as a partner in its financial institutions group, where he will lead dealmaking efforts involving banks and financial services firms.
• GoPro Inc: GoPro plans to cut 15% of its workforce as part of a restructuring to reduce operating expenses, expecting charges between $5 million and $7 million.
• HSBC Holdings PLC: HSBC is exploring the sale of its South African business as it refocuses on Asia. Several bidders from Africa, China, and the UAE have shown interest.
• Lowe’s Companies Inc: Lowe’s cut its annual profit and sales forecasts due to lower consumer spending on home improvements, with expected drops in comparable sales and adjusted earnings per share.
• Medtronic Plc: Medtronic slightly raised its lower-end annual profit forecast, supported by strong demand for medical devices and new product launches.
• NXP Semiconductors NV & Taiwan Semiconductor Manufacturing Co Ltd: The European Commission approved €5 billion in German state aid for a new microchip plant in Dresden, led by TSMC and other European firms.
• Palo Alto Networks Inc: The company forecasted higher-than-expected revenue and profit for fiscal 2025, driven by strong demand for cybersecurity products.
• Paramount Global: Edgar Bronfman Jr. submitted a $4.3 billion bid to acquire Paramount Global through National Amusements, potentially impacting a planned acquisition by Skydance Media.
• PwC: PwC lost its largest mainland China-listed client, Bank of China, to EY, following a regulatory investigation into its work with China Evergrande Group.
• State Street Corp: State Street is partnering with Swiss crypto company Taurus to offer new digital asset services, including tokenizing real-world assets.
• Tesla Inc: The European Commission reduced its proposed tariff on Tesla cars built in China to 9%, down from the earlier 20.8%, amid ongoing scrutiny of Chinese EV subsidies.
• Volvo: Swedish truck maker Volvo will build a new plant in Mexico’s Nuevo Leon state.
• Walt Disney Co: India’s antitrust body is scrutinizing Disney’s $8.5 billion merger with Reliance due to concerns about cricket broadcast rights. Additionally, Disney agreed to let a court decide on a wrongful death lawsuit.
• Xpeng Inc: The Chinese electric vehicle maker forecasted lower-than-expected third-quarter revenue and missed sales estimates for the June quarter, facing competition and declining demand for older models.