The turmoil in the UK market and across Europe has not been replicated to the same extent on Wall Street, even if US stocks did touch their lowest levels since December 2020 on 26 September. The Bank of England's intervention in the gilt market helped calm investors' nerves but the risks of contagion from the ongoing crisis in the UK means sentiment remains pretty jittery.
There's little question about the main winner on the market over the past week though as bio-pharmaceutical firm Biogen (BIIB:NASDAQ) stormed higher, lifted by breakthrough trial results on an Alzheimer drug it is developing in partnership with Japanese partner Eisai (4523:TYO).
Shares in tobacco firm Philip Morris International (PMI:NYSE) came under pressure as nervousness built around its $14 billion acquisition of Swedish Match (SWMA:STO) given the deteriorating backdrop. In the face of hedge fund pressure chief executive Jacek Olczak reiterated his commitment to the deal in comments to Reuters.
AMAZON
It was a busy week for online retail leader Amazon (AMZN:NDQ) as it announced a new pay deal for workers and a host of new kit at its annual hardware event.
Both announcements seem to have been well received by the markets. Among the roster of new products unveiled by Amazon were a Kindle Scribe with stylus, Echo Dot speakers with new sensors and better audio performance, a sleep-tracking bedside light dubbed Halo Rise and two new high-end TVs.
Separately Amazon revealed that warehouse and transportation workers in the US will receive a average starting salary of more than $19 per hour, up from $18 per hour.
While the company acknowledged an associated cost over the next year of more than £1 billion investors may see that as a price worth paying to help it get the staff it needs to grow in a tight labour market. Amazon is expected to post its third quarter numbers at the end of October.
APPLE
A lot of people look at the oil or copper price to get an idea of the health of the global economy, but increasingly there are products which act as an economic bellwether. One of them is the iPhone, so when there is chatter that Apple has scrapped plans to increase production of its flagship product, you know something serious is afoot.
According to a report by Bloomberg, weaker than expected demand for the iPhone has prompted Apple to tell suppliers that it won't need as many components as thought. Originally it had been locking to increase production by as many as 6 million units in the second half of the year, but output levels will no longer be boosted. The news pulled down Apple's share price by nearly 6% to $142.78 over two days.
VF CORP
Shares in lately-unloved VF Corp (VFC:NYSE) fell a further 11.6% to $32.66 over the week after the American clothing and footwear company slashed (28 September) full year 2023 guidance, a downgrade which overshadowed the introduction of a new five year growth plan.
VF Corp, whose brands include Vans, The North Face, Timberland and Dickies, trimmed its second quarter earnings per share (EPS) guidance to a $0.70 to $0.75 range, below consensus of $1.01, and downgraded its full year 2023 outlook. Annual sales are now expected to be up ‘about’ 5% to 6%, versus previous guidance for growth of ‘at least’ 7%, with EPS guidance cut to a $2.60 to $2.70 range, below last year's $3.18 and the earlier $3.05 to $3.15 guidance, with margin targets lowered.
The Colorado-headquartered firm pinned the downgrade on disappointing second quarter results coupled with ‘ongoing uncertainty’ in the current environment, ‘weaker than anticipated back-to-school performance at Vans’ and rising inventories leading to ‘a more promotional environment in North America in the fall’. VF Corp also cautioned that its revised outlook assumes ‘no significant worsening in global inflation rates and consumer sentiment’.
