Market scorecard
US markets saw a broad decline, dragging down the S&P 500 and Nasdaq. The selloff impacted more than just tech shares, with 10 out of 11 sectors in the S&P 500 closing lower. Only three of the 30 stocks in the Dow industrials finished higher. The small-cap Russell 2000 index, which had reached a multiyear high earlier this week, fell by 1.8%. However, the S&P 500 is still up 16.9% year-to-date, while the tech-heavy Nasdaq is up 21% so far this year.
Netflix (NASDAQ:NFLX) reported market-beating numbers after the market close. The share price initially dropped but is now sitting flat. More on those numbers on Monday.
In company news, Broadcom (NASDAQ:AVGO) was up nearly 3% on Thursday following a report by the Information that the company is in talks to develop an artificial intelligence chip for OpenAI. Elsewhere, Domino's Pizza shares dropped 14% after the world's largest pizza chain announced it would open significantly fewer new locations this year than initially expected.
In short, the JSE All-share closed down 0.15%, the S&P 500 fell 0.78%, and the Nasdaq was 0.70% lower.
Byron's beats
I am a strong believer that good things happen to good companies. In other words, if a company improves society in some way or another, then naturally they are going to get extra support from both the government and the private sector.
A recent example of this is CrowdStrike (NASDAQ:CRWD). They protect companies from cyber attacks - a crucial service in our day and age of connectivity and data. Recently, regulators in the US require corporates and government institutions to report on their security information. Naturally, CrowdStrike already has all this data and is packaging and sending the data straight to the regulators on behalf of their clients.
This is a great add-on service for the client and an extra revenue stream for CrowdStrike. Society needs companies like CrowdStrike to succeed. That is a massive tailwind.
Michael's musings
When it rains it pours. For Boeing (NYSE:BA), that is definitely the case. The company seems to be stumbling from one problem to the next - doors blowing off aircraft, allegations of known design flaws, multiple delays to take off of its rocket, then leaving astronauts stranded at the international space station, and now, there is a chance of strike action by 30 000 employees. The union is demanding a 40% pay increase over the next three years.
Boeing used to be known for its engineering prowess and attention to detail. Now, Boeing is known for corner-cutting and substandard workmanship. It will take years to reverse their poor reputation, assuming that it can ever be fixed. It has been over five years since the two fatal crashes of the 737 Max planes, and the Boeing share price is still more than half of what it was back then.
Many people attribute Boeing's failures to their merger with McDonnell Douglas in 1997, where Boeing's culture of engineering excellence was replaced with McDonnell Douglas's bean counter focus on costs. Here is a long, but interesting piece on the respective companies - The 1997 merger that paved the way for the Boeing 737 Max crisis.
The whole saga is a reminder that culture and reputation are crucial for business success.
Bright's banter
On started with a unique edge when co-founder Olivier Bernhard cut up pieces of a rubber garden hose to form the springy sole of their prototype running shoe. This led to the creation of the Swiss brand's proprietary CloudTec technology, giving their shoes a different look and feel. Now, On unveiled its most transformative technological breakthrough since CloudTec, called LightSpray.
LightSpray is a new "spray-on" manufacturing technique that allows for the creation of ultralight, one-piece shoe uppers using a robotic arm that can produce one shoe in just three minutes.
The seamless, lace-free design has already been a hit among On's athletes, including Kenyan long-distance runner Hellen Obiri, who won the Boston Marathon wearing the Cloudboom Strike LS. This shoe, weighing just 170 grams, 100 grams lighter than other leading shoes, will be available this October for $330.
Innovations like LightSpray are crucial for sneaker brands to keep customers excited. On's foundational appeal has been the CloudTec midsole, but they need to keep innovating in the competitive running footwear market. The LightSpray technology, inspired by a glue gun designed for Halloween fake spiderwebs and costumes, allows On to produce shoes faster and more sustainably, generating 75% less carbon emissions than their other lines, and taking just six minutes to produce each shoe.
On plans to showcase this technology during the Paris Olympics with live manufacturing demonstrations. The brand is also developing running spike footwear using LightSpray and aims to apply the technology to other performance footwear models and lifestyle silhouettes.
On's growth continues as they expand into lifestyle categories and cultural partnerships. They reported record quarterly net sales of CHF 508.2 million ($560.9 million) in the first quarter, up 21% year-over-year, with direct-to-consumer business revenue up 39%. Net income increased by 106% to CHF 91.4 million ($100.1 million).
Signing off
Asian markets are mostly down this morning with the MSCI Asia-Pacific index seeing its largest weekly drop in three months. Benchmarks in mainland China rose, while those in Hong Kong, India, Japan, South Korea, and Taiwan dropped. Samsung Electronics (KS:005930) has agreed to resume negotiations with the union that has been organising strikes across its chipmaking plants.
In local company news, Amplats (JO:AMSJ) anticipates reporting a decline in headline earnings of 15%-25% for the first half of the year, attributing the drop to weaker prices for metals like palladium and rhodium.
As expected, the South African Reserve Bank kept our interest rates unchanged yesterday. The market is forecasting a Fed rate cut on September 18, and the SARB to follow at their meeting on September 19. That sounds good to us.
US equity futures are in the green pre-market. The Rand is currently at around R18.28 to the US Dollar.
TGIF!