Market scorecard
US markets saw an end of week comeback, with the S&P 500 breaking a two-day losing streak thanks to strong performances from key industry players. Tech giants, which had taken the hardest hit, led the rally, with Amazon (NASDAQ:AMZN) in particular jumping 6.2% following strong earnings results.
In company news, Nvidia (NASDAQ:NVDA) will join the Dow Jones Industrial Average on the 8th of November, replacing Intel (NASDAQ:INTC). Elsewhere, Apple (NASDAQ:AAPL) has reached an agreement to buy the photo-editing app Pixelmator, but the purchase price was too small to disclose.
On Friday, the JSE All-share was up 0.95%, the S&P 500 rose 0.41%, and the Nasdaq was 0.80% higher.
Michael's musings
On Tuesday night, Visa (NYSE:V) reported a solid set of results. It is always nice when our stocks have better revenue and profit numbers than the market expects. For the quarter, Visa had revenue of $9.6 billion and net income of $5.3 billion, both up 12% from September last year. To generate all that cash, Visa processed 75 billion transactions, up 11%. The key segment of cross-border payments was up a healthy 16%.
Given that Visa is linked to most parts of the global economy, the results are always a good indication of what is happening on the ground. Visa executives said that international travel continues to be healthy, particularly out of the US and Europe, but flagged that Asia-Pacific has been weak. This is a similar trend to what we have seen from the luxury goods companies. The world's largest payments processor said strong e-commerce trends have helped offset weakness in Asian markets.
Looking ahead, Visa maintained its guidance of 'low double-digit growth' for both revenue and profit. Keeping the guidance steady shows Visa's confidence in the global economy and the consumer's ability to continue spending. We are happy holders of Visa, and agree that the global economy is still looking strong.
One thing, from Paul
It's finally time for the US election. It's been a long wait, and the polls suggest that it's going to be very close. Literally, a toss-up.
The two sides are taking themselves very seriously and painting their opponents as evil and dangerous. It certainly matters who wins because of the stark differences in tariffs, reproductive rights, and foreign policy.
But you should relax. Policies are one thing, but implementing them is another. New laws in the US are only finalised once there is unanimity in the House, Senate and White House. It's highly unlikely that either the Republicans or Democrats will control all three.
History shows that the stock market performs well regardless of the US president's political party. No one doubts the central role that large corporations play in America. They truly are national champions, in the world's pre-eminent capitalist economy.
By Wednesday morning, assuming no recounts, we will know who has the most delegates to the Electoral College. I doubt the market will be volatile, even in the short-term. Both candidates are a known quantity.
The stock market tends to deliver below-average returns ahead of Election Day and pick up once the uncertainty ends. We've already had a strong year, and I would not be surprised if it ends even stronger.
Here's how sanguine I am feeling about it all. As an investor, I'm more interested in the Fed interest rate cut on Thursday than the election outcome.
Byron's beats
Nvidia (NASDAQ:NVDA) has been the early winner of the AI boom; there is no doubt about that. The big question is, who will be next? The most likely answer is the guys that have been buying all those chips, namely the big tech companies. There are various theories about returns per GPU purchased but let's be honest, these businesses do very different things and calculating an IRR on the capital invested is too generic.
What I am looking for is a tangible positive difference coming through from these company's numbers. And during the latest earnings season - so far, so good. Meta (NASDAQ:META) and Google (NASDAQ:GOOGL)'s advertising is more efficient and direct. Microsoft (NASDAQ:MSFT)'s Office tools are more useful with Copilot as an added feature. Amazon is managing its inventory and search results better for its online stores.
Of these 4 companies Google has increased their capex spend by 91% over the last year. Microsoft has increased their spending by 55%, Amazon by 53% and Meta by 33%.
I am confident that the next wave of AI profits is going to come from these big early spenders.
Bright's banter
Adidas (ETR:ADSGN) has achieved a notable recovery, with third-quarter profits up by 71% to EUR443 million on EUR6.4 billion of sales, outpacing market expectations. This momentum is largely due to strong footwear sales of popular models like the Samba, Spezial, and Gazelle, which saw a 14% jump in sales. Since Bjorn Gulden became CEO in 2023, the brand has leaned into faster decision-making and an athlete-driven strategy to connect with consumers.
The company has been navigating challenges, particularly after ending its Yeezy collaboration with Kanye West, which impacted North American sales by 8.3% in the quarter. Excluding Yeezy, however, North American revenue actually grew year-over-year. They have now settled their legal issues with Kanye West, marking a formal end to their past partnership.
Much of Adidas's revival is thanks to Bjorn Gulden's approach, particularly his focus on quality products and supportive wholesale relationships, a shift from prior leadership. Overall, the turnaround demonstrates how strategic shifts and a revitalised brand identity have positioned it for future growth in a competitive industry. Hopefully the Nike (NYSE:NKE) team are watching closely.
Signing off
Asian markets are trading mostly higher this morning. Benchmarks in Hong Kong, mainland China, South Korea, and Taiwan rose. Electric vehicle maker BYD started the final quarter with record monthly sales, maintaining its strong momentum during what's usually a high season for car sales in China.
In local company news, Sephaku, the building and construction materials group, expects a 72%-87% boost in headline earnings per share for the six months ending in September. This rise is driven by improved performance from Dangote Cement SA, while Metier's Mixed Concretes remained steady.
US equity futures edged up pre-market. The Rand is trading at around R17.51 to the US Dollar.
It is a busy week ahead. US earnings season continues, the election is tomorrow and a Fed interest rate decision comes on Thursday. Buckle up!