Kristal Weekly Feed | 10th June 2019

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Got only 15 seconds? Here’s what you need to know.

Below is a succinct summary of major global events that transpired last week.

Positives

1. Microsoft market cap climbs above $1 trillion

2. US services sector increases faster than expected in May

3. Major US indices rise 4% for the week, first weekly gain in 5 months

Negatives

1. US Jobs Report slows substantially in May

2. Alphabet shares tank 6% as Justice Department prepares for an antitrust investigation

Now for more detail.

 

Positives

1. Microsoft market cap climbs above $1 trillion

What you should know

Microsoft rose 3.5% to $132.25, reaching a record intraday high on Friday. The rally pushed Microsoft’s market capitalization to $1.01 trillion, the first time it’s climbed above the 13-digit mark, reaching that mark briefly in April. Microsoft has fared well compared to other tech peers, gaining nearly 7% in the last week.

What you should look out for

According to analysts, Microsoft is better positioned than ever to maintain wallet share of customers through an economic downturn, given the broader budget exposure beyond IT. Microsoft target price is $143 suggesting another 8.7% upside from the current stock price.

Suggested Reading

Microsoft Reclaims $1 Trillion Mark as Stock Climbs to Record

 

2. US services sector increases faster than expected in May

What you should know

The U.S. services sector expanded at a faster rate than expected with the Institute for Supply Management’s non-manufacturing index rising to 56.9 in May from 55.5 in April. Business activity in the sector rose to 61.2 from 59.6 in April, its 118th straight month showing expansion. New orders in the services sector also grew at a faster rate in May relative to April.

What you should look out for

The non-manufacturing sector continues to experience a slight uptick in business activity, but it is still levelling off overall. Treasury yields pared losses after the ISM data was released, with the 2-year rate trading at 1.81% after hitting its lowest level since December 2017 earlier in the day. The 10-year yield recovered to trade at 2.1%.

Suggested Reading

US services sector growth tops expectations

 

3. Major US indices rise 4% for the week, first weekly gain in 5 months

What you should know

The S&P 500 ended 1.1% higher on Friday, taking its weekly gain to 4.4% The benchmark index clocked its first weekly gain in five months and its biggest such advance since November. The tech-heavy Nasdaq Composite rose 1.7% on Friday, and 3.9% for the week. This was after a disappointing US jobs report became the latest data to stoke concern on the health of the domestic economy and spurred hopes for a rate cut by the Federal Reserve.

What you should look out for

Fed chair Powell said the central bank stood ready to cut interest rates, saying it would “act as appropriate to sustain the expansion”. Moreover, Friday’s ugly data spurred markets to raise bets that the central bank will cut interest rates later this year.

Suggested Reading

S&P 500 has best week since November as jobs report fuels hopes of rate cut

 

Negatives

1. US Jobs Report slows substantially in May

What you should know

Job creation decelerated strongly in May, with nonfarm payrolls up by only 75,000 even as the unemployment rate remained at 3.6%, a 50-year low. The decline was the second in four months that payrolls increased by less than 100,000 compared to expectations of an increase by 180,000.

What you should look out for

Apart from the weak total of May, the previous two months reports saw substantial downward revisions. March’s count fell from 189,000 to 153,000 and the April count fell from to 224,000 from 263,000, for a total reduction of 75,000 jobs.

Suggested Reading

Jobs creation slows dramatically with payrolls up just 75,000 in May, much worse than expected

 

2. Alphabet shares tank 6% as Justice Department prepares for an antitrust investigation

What you should know

Alphabet shares dropped 6.1% to close at $1,038 on Monday after a report said the Justice Department is readying an antitrust investigation against Google. The probe would look into Google’s search practices and other businesses. While precedent suggests that Google enjoys broad discretion over the direction of search results, the questions arising from an investigation will challenge the possibility of multiple expansion.

What you should look out for

Antitrust concerns spilt over into other major tech companies such as Facebook shares dropping 7.5% after WSJ reported the Federal Trade Commission can look into the social media company’s business practice and how they impact competition.

Suggested Reading

Alphabet shares tank 6% as Justice Department reportedly prepares for Google antitrust probe