US stocks mounted a decent comeback this past week as investors reacted to data showing a cooling jobs market amid hope it might cause the Federal Reserve to ease up on interest rate hikes.
However, while the dollar fell back sharply on Tuesday, it soon resumed its upward trend suggesting the rally might not be a lasting one. The other major event, and something which could help fuel inflationary pressures further, was the decision by OPEC+ to cut output by two million barrels of oil per day (5 October).
This is likely to drive up prices at the pump and was seen as a blow to US president Joe Biden who had tried to talk the Saudi Arabian controlled cartel out of the move.
Oil prices rose both ahead and in the wake of OPEC's decision in Vienna and this pulled shares in US energy producers and businesses which serve the industry higher.
Twitter (TWTR:NYSE) shareholders have been rejoicing after Elon Musk's shock change of heart over one of the most contentious acquisitions in recent memory. After months of trying to back out and just days before a trial over his reversal, the billionaire did another 180-degree flip and now says he's willing to buy the micro blogging business after all, and at the original $44 billion price tag.
That saw Twitter's share price enjoy is its second best day of trading on record, closing up 22% on 4 October. Hedge fund investors like Carl Icahn have cashed-in from the about face, having bought in at the mid-$30s when sentiment was at a low, according to MarketWatch.
While nothing can be taken for granted (especially where Musk is concerned) is does seem likely that most ordinary investors might also now get a decent return of investment following a nine-year stock market stint during which the social media platform has consistently struggled to make a profit from its 400 million-odd global users.
Musk's plans for Twitter's future involve creating a kind of multi-function app, hinting at the creation of something he called ‘X, the everything app’, which has widely been likened to WeChat, a messaging service that's hugely popular in China, and TikTok, the Chinese-owned video-sharing service that has taken off across the US.
PEPSICO
US food and beverage giant PepsiCo (PEP:NYSE) is due to update the market on its third quarter performance next Wednesday.
Analysts at investment bank Goldman Sachs (GS:NYSE) believe domestic demand for PepsiCo's products is likely to have been better than forecast and have therefore raised their organic sales growth and quarterly earnings estimate for the firm.
The bank, which has a $185 price target on PepsiCo shares, now sees like-for-like sales growing 10% against 9% previously driven by a sharp increase in north American revenues for the Frito-Lay snack division, while earnings per share are seen at $1.87 against a previous forecast of $1.84.
Goldman also raised its 2022 and 2023 full year earnings estimates on the basis it expects PepsiCo to increase its medium-term outlook.
One UK investor who will be paying particular attention is Terry Smith who counts PepsiCo as one of the top ten holdings in the Fundsmith Equity (B41YBW7) fund.
CONSTELLATION BRANDS
Shares in beer, wine and spirits producer Constellation Brands (STZ:NYSE) softened 2.4% to $230.3 despite the company behind Corona beer, Casa Noble tequila and premium wine brand Meiomi raising (6 October) the top end of its full year profit guidance after second quarter earnings beat forecasts.
Adjusted quarterly earnings came in at $3.17 per share, ahead of the $2.88 analysts were calling for, as sales fizzed up 12% to a forecast-beating $2.66 billion. Constellation Brands, which is selling part of its mainstream and premium wine portfolio to The Wine Group in a move aimed at reshaping it toward the high end of the market, is now guiding towards full year earnings of between 75 cents to $1.15 per share.
‘Our core beer brands, Modelo Especial and Corona Extra, continue to outshine the market,’ enthused CEO Bill Newlands, ‘and our next wave brands, Pacifico and Modelo Chelada, are achieving strong double-digit growth. The benefits of our Wine and Spirits strategy are taking hold, as our higher-end brands continue to resonate with the consumer.’
