Lloyds Bank, Nike, Adidas, Webtoons, Rivian, SpaceX, Taylor Swift, Deliveroo, Carnival, Microsoft, Apple – Markets Defused
Published: 12:31 29 Jun 2024 BST
Markets Defused gives an easy-to-understand and straightforward recap of the week’s most engaging business and stock market news.
- Lloyds Bank says ‘ultra low’ mortgages rates are over
- Nike shares hit by softer guidance
- Adidas benefitting from ‘brand heat’ during Euros
- Webtoons priced its $2.7bn New York IPO
- London Tunnels made premium debut, in Amsterdam
- Gucci’s Taylor Swift bump, was it real?
- SpaceX valued at $210bn, also landed a big ISS deal
- Deliveroo ‘in play’ after DoorDash approach
- Rivian soared on $5bn Volkswagen investment deal
- Carnival boosted by record cruise bookings
- Microsoft was the next tech giant to face EU sanction
- Apple was first to be charged under EU’s DMA rules
Lloyds says we won’t see ‘ultra low’ mortgages rates again
Whilst it is widely expected that UK interest rates will finally be reduced in the coming months, Lloyds Banking Group PLC (LSE:LLOY) chief executive Charlie Nunn is not expecting a return to the “ultra low” levels seen in recent times.
The new normal for UK mortgages will more likely be between 3% and 4%, Nunn said on Thursday in comments to Sky News.
After a decade where mortgages have been in the 1.5-2.5% range, he noted that the market doesn't expect the Bank Rate to fall below 3.5%.
Nunn reckoned that once the Bank of England cuts interest rates the initial relief will be felt first by government and businesses, as their borrowing costs ease, but for households it may take longer for the benefits “to feed through”.
Meanwhile, with the British election looming, he added that the next UK government will be extremely limited in how much they can invest in the economy, due to increased levels of government debt in recent years.
The government won’t be able to ‘pay its way out of this next stage’, he noted.
Nike shares hit by softer guidance
Nike Inc (NYSE:NKE, ETR:NKE) stock dropped some 20%, to $75.24, in Friday’s dealing after it downgraded guidance for the 2025 financial year, amidst ‘mixed’ fourth-quarter financials.
The downgraded outlook comes due to softer consumer demand in North America and China.
Nike told investors that it expects full-year revenue to drop by mid-single digits next year, with its first-quarter revenue seen down about 10% - this compares to a market forecast of a 3% decline. Analysts had projected a roughly 3% decline.
The sportswear brand plans to invest $1 billion in consumer-facing activities and accelerate product creation through its new “Speed Lane” which is described as a streamlining of production.
For its fourth quarter, Nike reported adjusted earnings of $1.01 per share on $12.6 billion in revenue, missing the $12.9 billion revenue forecast by Wall Street analyst consensus. Quarterly sales fell by 2% year over year, notably direct-to-consumer sales were down 8% offset somewhat by a 5% improvement in wholesale.
Adidas benefitting from ‘brand heat’ during Euros
adidas AG (OTCQX:ADDYY) is benefitting from on-trend “brand heat” for its Terrace lines, amidst the UEFA Euro 24 championship, that’s according to analysts at Deutsche Bank.
The ‘Terrace’ trend is continuing and is likely to be bolstered further by the football-related apparel sales, analyst Adam Cochrane highlighted.
“The positive Terrace impact will be felt across most regions and in the gross margin,” he said in a note.
Adidas’ terrace lines include retro designs, particularly those based on the European football culture of the late eighties and nineties – including the likes of the iconic Gazelle, Samba and Spezial trainers.
Cochrane added that the DB team expects to see Adidas report second quarter sales growth pushing toward 10%, which would be a big step up from the 5% seen in the year’s first three months.
Webtoons priced its $2.7bn New York IPO
Webtoons on Thursday priced its New York IPO at the top end of the range, setting a valuation of $2.7 billion. At $21 per share, the new stock market float will raise $315 million for the spin-out from South Korean tech giant Naver.
Described as a “storytech” company, Webtoons has 170 million monthly active users who engage with the Japanese and Korean webcomics, novels and animations it hosts.
Blackrock is expected to cornerstone the IPO, with reports claiming it will take around $50 million worth of shares.
London Tunnels made premium-priced debut in Amsterdam
London Tunnels, a tourist attraction firm floating on the Amsterdam stock exchange, this week made a premium-priced market debut.
Rising to 214p on the Euronext exchange, the shares were up around 7% from the IPO price of 200p.
The placing of existing shares, had valued the company at £130 million.
It may have snubbed the London Stock Exchange, in favour of Amsterdam, but the company will still need the backing of London planning authorities as it advances its project – which would see a network of wartime subterranean tunnel shelters converted into museum, heritage and cultural spaces.
Part of the project has been given the green light by the City of London planning, though further approval would be needed in the future, including permission from Camden authorities.
Chief executive Angus Murray, meanwhile, commented that the company "will seek to raise capital over the coming years to realise our vision of creating an unparalleled tourist attraction”.
Gucci’s Taylor Swift bump, is it real?
Kering SA (EPA:KER), the French luxury conglomerate that owns Gucci, supposedly benefitted from what some people call “Swiftonomics”, aka the Taylor Swift effect.
By mid-week, shares in the Gucci-owner were up for six straight days, after Swift and NFL-player boyfriend Travis Kelce were photographed wearing Gucci on a night out in London last weekend.
A coincidence? ... Does a photo of Taylor Swift using your brand equal immediate stock market success?
Well, the cancellation of Golden Goose from the IPO slate probably says things aren’t so simple – the singer is heavily associated with the ‘destressed-by-design’ brand, which sells trainers for around $500 per pair.
SpaceX valued at $210bn, also landed a big ISS deal
Elon Musk’s SpaceX has set a new high bar for its valuation, at around $210 billion according to reports.
The new valuation was set by ‘insider’ share sales priced at $112 per share, as reported by Bloomberg.
It is a boost for London-listed investment group, Scottish Mortgage Trust, as the space company represents around 4.4% of its portfolio.
The share sale comes as SpaceX has been handed a $843 million contract to drag the International Space Station (ISS) out of the Earth’s orbit and to its destruction.
Deliveroo ‘in play’ after DoorDash approach
Deliveroo PLC (LSE:ROO) was said to be ‘in play’ this week, with reports on Wednesday revealing recent takeover talks with American food delivery peer DoorDash Inc (NYSE:DASH).
DoorDash approached Deliveroo last month, according to a Reuters report. However, talks ended with no agreement, and valuations were mismatched.
At around 130p at the time, the market is valued Deliveroo at £2.1 billion.
Analyst views on the news suggest it may only be the beginning of potential bids for Deliveroo and that other bidders could potentially emerge.
The London-listed shares, which are 13.2% owned by Amazon, have struggled since it disappointing 2021 IPO. It is down 54% since the float.
Rivian soared on $5bn Volkswagen investment deal
Amazon-backed elective vehicle firm Rivian Automotive Inc (NASDAQ:RIVN) saw its shares soar on news of a new $5 billion partnership with German car maker Volkswagen.
VW will invest up to $5 billion, starting with an initial $1 billion injection into a new joint venture.
This new partnership aims to develop shared electric vehicle (EV) architecture and software.
It is seen as a boost for Rivian’s development of its R2 SUVs, which are slated to roll out by 2026.
The deal will see Rivian license its existing intellectual property to the VW venture, and it is expected to accelerate the German group’s development of ‘software-defined vehicles’ (SDVs).
Carnival boosted by record cruise bookings
Carnival Corp (LSE:CCL, NYSE:CCL) beat market expectations for its second-quarter, as the cruise operator reported a “surprise” profit. At $5.78 billion, revenue for the quarter exceeded Wall Street forecasts.
The company also reported adjusted earnings per share of $0.11, versus a projected narrow loss of $0.01 per share. Net income rose by nearly $500 million, and operating income was up nearly fivefold to $560 million.
Carnival highlighted higher ticket prices, higher onboard spending, and what it described as strategic improvements in commercial operations.
Pointing to strong demand, it now expects adjusted earnings per share of $1.15 for the third quarter, and $1.18 for the full year 2024.
Customer deposits hit an all-time high of $8.3 billion, comfortably above it prior record by $1.1 billion, and, said its cumulative booked position for the rest of 2024 and 2025 was ‘the best on record’ in terms of price and occupancy rate.
"We have made incredible strides in improving our commercial operations, strategically reallocating our portfolio composition and formulating growth plans,” chief executive Josh Weinstein said in a statement.
Microsoft was the next tech giant to face EU sanction
Microsoft Corp (NASDAQ:MSFT) is the next American tech giant under the scrutiny of European competition laws, after Apple was targeted on Monday.
The European Union alleged a breach of its antitrust rules, due to the “bundling” of its Teams messaging and videoconferencing app along with its established Office 365 and Microsoft 365 software packages.
The European Commission, the EU's executive arm, claims that bundling restricted competition by giving Teams an unfair advantage over rival messaging services like Slack and Alfaview.
It followed an investigation, that began last July, after complaints from Salesforce-owned Slack Technologies and Germany-headquartered Alfaview.
Apple was first to be charged under EU’s DMA rules
Apple Inc (NASDAQ:AAPL, ETR:APC) was found to be in breach of the European Union's Digital Markets Act (DMA) by the European Commission.
The breach centres on Apple's App Store policies, which according to the EU, limit competition by preventing app developers from steering users to alternative purchasing options.
Preliminary findings of the European Commission, released on Monday, indicated that Apple's rules "prevent app developers from freely steering consumers to alternative channels for offers and content."
It followed an investigation that was launched in March, and Apple has 12 months to comply with the DMA regulations to avoid fines that could reach up to 10% of its global revenue.
