STOCK MARKET REPORT by CEO Silvano Grimaldi of the independent asset management company GRIMALDI & PARTNERS Ltd.
STOCK MARKET REPORT by CEO Silvano Grimaldi of the independent asset management company GRIMALDI & PARTNERS Ltd.
MONTHLY REVIEW
The international stock markets ended the month of JULY with significant gains.
SUPPORTING FACTORS
The US Federal Reserve's determination to raise interest rates further is interpreted by investors as a sign of confidence in the robustness of the economy.
Concerns about inflation and recession receded into the background.
Robust economic data from the USA: the retail trade increased its sales in June more than expected. Furthermore, sentiment among industrial companies in the state of New York - as measured by the Empire State Index - surprisingly and significantly improved in July.
EQUITIES IN FOCUS
EMMI sells stake in Italian cheese specialist
Dairy product manufacturer Emmi is selling a stake in Italy. The 25 percent stake in the Italian cheese specialist Ambrosi SpA was sold to the French Lactalis for an undisclosed price.
The transaction is part of the focus on clearly profitable growth segments. The company joined Ambrosi in 2007. The participation served the joint international growth in several countries. Today, however, both partners had their own structures outside of their home market.
SWATCH rides the wave of success with Moonswatch
With the Moonswatch, Swatch triggered a veritable boom in demand. This is another reason why the Biel-based watch group grew again in the first half of the year despite declining sales in China.
Swatch has become quieter in recent years, but since the launch of several Moonswatch models at the end of March, everyone is talking about the brand again. The long queues in front of the Swatch shops bear witness to this and have not gotten any shorter in the last three months.
"The daily growing demand in the markets currently far exceeds the available products," Swatch announced at the same time as the half-year results. The Moonswatch is therefore already sold out again shortly after the last delivery. The respective colors of the clock stand for different planets and other celestial bodies such as the sun, moon and Pluto.
Confident for full year
Despite geopolitical tensions and the slump in demand in the Chinese market, which is important for the watch industry, Swatch is confident for the year as a whole. The "daily increasing demand" for the Moonswatch should probably also contribute to this.
The Group continues to expect double- digit sales growth in local currencies for the current year. In the second half of the year, Swatch sees "extremely positive" growth prospects for all price segments. Regionally, the strongest growth is expected in America, Asia and mainland China, it said.
TESLA doubles profit and promises record half-year
Despite pandemic-related production outages in China and ongoing supply chain issues, Tesla nearly doubled second-quarter earnings. Thanks to strong price increases, the electric car manufacturer earned a bottom line of 2.3 billion dollars, 98 percent more than a year ago. Tesla clearly exceeded market expectations, and the stock initially rose significantly after the trading session. In the previous quarter, however, the result was still at a much higher $3.3 billion.
MONTHLY OUTLOOK
Equity markets have staged a strong recovery over the past month. The reason for this is the newly awakened economic optimism.
However, the list of imponderables such as energy dependency, high inflation, rising key interest rates and geopolitical crises is probably simply too long for a sustained upswing.
Whether July's stock mark rally is a bear market rally remains to be seen. In any case, this will depend on whether or not a pure mild recession is triggered by the rate hikes. The upcoming quarterly reports of the companies may also have an important influence on the further course of the stock market.
We expect a breather in the short-term uptrend in August.
STOCK RECOMMENDATION
© 2022, Grimaldi & Partners AG
