The past week handed investors the answer to the question that has dominated market talk for days, with the US Fed pushing ahead with its campaign of rate rises. Fed Chairman Jerome Powell increased rates by a quarter of a percentage point on 22 March, resisting the urge to pause hikes in the face of banking sector turmoil.
The central bank's rate rise took the federal funds rate range to 4.75% to 5.00% following a unanimous vote by the Federal Open Market Committee. In the policy statement, the Fed said, ‘some additional policy firming may be appropriate’.
The market interpreted that as more dovish than the Fed's previous guidance, where it said, ‘the committee anticipates that ongoing increases in the target range will be appropriate’.
Treasury yields fell again on bets that the Fed is likely to pause, and eventually pivot sooner rather than later as tighter lending conditions amid stresses in the banking system will help cool inflation.
In overnight trade on 23 March, First Republic Bank (FRC:NYSE) resumed its wobble, souring sentiment on broader financials as focus returned to the health of regional banks. Investors might note that Bank of America (BAC:NYSE), something of a US banking bellwether, closed Thursday's session at a 52-week low of $26.97.
Turmoil among banks dragged on wider US markets over the past week, although tech stock gains helped the Nasdaq Composite buck the weaker trend.
Meta Platforms (META:NASDAQ), Apple (AAPL:NASDAQ), Microsoft (MSFT:NASDAQ) and Google-owner Alphabet (GOOG:NASDAQ) retreated from session highs on 23 March but remained in the green.
Social media stocks were also in focus amid a potential ban of rival TikTok in the US. TikTok chief executive Shou Zi Chew is on Capitol Hill to deliver testimony before Congress as lawmakers mull whether to ban the app amid concerns about the app's data privacy, and possible connection to the Chinese Communist Party.
NIKE
The sportswear giant fell sharply over the past week after hopes for a strong rebound in China sales were dashed and higher markdowns to shift Nike's (NKE:NYSE) bloated inventory pressured margins.
That didn't stop Nike beating third quarter forecasts, where sales rose 14% year-on-year to $12.4 billion, helping EPS (earnings per share) of $0.79 breeze past estimates of $0.55. While Nike delivered double-digit sales growth in North America, as well as in the Europe, Middle East and Africa (EMEA) and Asia Pacific and Latin America (APLA) regions, the sneakers star turn reported an 8% drop in Greater China revenues to $1.99 billion despite the vast Asian nation's recent release from lockdown restrictions.
Nevertheless, based on these robust third quarter results, Oregon-based Nike now sees full year 2023 revenue growth in the high-single digit range, up from previous guidance of mid-single digit growth. Furthermore, finance director Matthew Friend said Nike has ‘made tremendous progress on inventory as we position Nike for sustainable and more profitable growth’.
GAMESTOP
Two years on from the meme stock frenzy that gripped retail investors and sent shockwaves through Wall Street, Gamestop's (GME:NYSE) shares have once again gone on a tear, with the company turning a surprise fourth quarter profit.
Gamestop's share price surged as much as 56% in after-hours trading on 21 March following an announcement that stunned investors and analysts. EPS of $0.16 was set against analyst consensus pitched at a $0.13 loss. Revenue of $2.23 billion also beat the Street estimate of $2.18 billion.
The post-earnings tear took them to their highest level this year, with the company posting increased sales in the collectibles category, an area it continues to prioritise for long-term growth.
COINBASE
The SEC issued cryptocurrency exchange Coinbase (COIN:NASDAQ) a Wells notice, a letter stating its belief that it violated investor protection laws.
Coinbase shares fell 14% after-hours following the news and dragged several celebrity backers into the furore, where the likes of Lindsay Lohan, Jake Paul and four others have also fallen foul of the regulator, having been fined a collective $400,000 for illegally promoting crypto assets TRX and BTT. Swiss crypto ETP provider 21Shares is shutting down six funds due to low demand.
Both Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal stated that the company is open to a legal process if an amicable resolution is not reached. A company blog read, ‘rest assured, Coinbase products and services continue to operate as usual - today's news does not require any changes to our current products or services.’
