Market Update : 30 July 2024

Ready, steady, hold… 

The European Central Bank (ECB) held rates steady after last month’s landmark cut, stating it needed more data before making the next move. ECB President Christine Lagarde said the Central Bank’s next interest-rate meeting is “wide open”, hinting that another cut is possible as officials will have significantly more information on inflation by then. 

Hang tight on tech 

It is likely premature to throw in the towel on tech stocks and start the rotation away from mega-caps as another strong earnings season could give these stocks a fresh boost. With six members of the Magnificent Seven (META, AMZN, GOOG, TSLA, MSFT, AAPL) reporting over the next two weeks from 23 July to 1 August – Nvidia (NVDA-NASQ) reports on 22 August – results will signal whether the nascent rotation into more speculative corners of the market has legs. 

Smoking hot 

The US Food and Drug Administration (FDA) authorised marketing of seven e-cigarette products in the country, granting orders to R.J. Reynolds Vapor Company for the Vuse Alto Power Unit and six Vuse Alto tobacco-flavoured pods, which are sealed, pre-filled, and non-refillable. The announcement was a boost to British American Tobacco (BTI-JSE), jumping as much as 2.6% in intraday trading on the news. Though British American Tobacco already leads the $7 billion e-cigarette market, the FDA’s decision to allow seven new products offers it the chance to boost the near-30% market share estimated by Circana. Increasing sales as the FDA bans illicit, imported products can aid US profitability when menthol cigarettes face increased regulatory pressure.  

No clucking about 

Bloomberg reports that Brazil is halting chicken exports to the European Union (EU) and Argentina after a virulent poultry disease was found on a commercial farm, disrupting shipments from the world’s largest exporter. A chicken farm in Rio Grande do Sul state was shut after the presence of the Newcastle virus was confirmed, according to the country’s agriculture ministry. The South American nation is suspending exports of chicken, eggs and other poultry-based products from the southern state to other countries including South Africa, according to a notice issued by the ministry, which could benefit local producers like Astral (ARL-JSE). Newcastle disease, which is highly transmissible among birds but doesn’t affect humans, typically prompts major importing countries to raise bans on imports of chicken from infected regions.