Weekly Roundup 2022-07-29

Lunar Capital Weekly Roundup

Index / Fund / Rate Start of Year Last week This Week % change YTD
JSE ALSI 73 723 68 070 68 934 -6.50%
NASDAQ Composite 15 833 11 834 12 391 -21.74%
S&P 500 4 797 3 961 4 130 -13.90%
Prime Lending Rate 7.25% 9% 9.00% 24.14%
Lunar BCI WW Flexible Fund 165.68 148.08 145.24 -12.34%
USD/ZAR 15.96 16.85 16.53 3.57%
EUR/ZAR 17.95 17.21 17.00 -5.29%
Brent Crude 77.86 103.71 103.59 33.05%

Source: iress

Company and Market News

Last week, many of the big US companies released their quarterly results for the period. Overall, the companies released positive results compared to what the market was expecting. This resulted in the Nasdaq and the S&P 500 increasing by over 4% during the week. The major companies that released their results were: Alphabet, Amazon, Apple, Meta, Microsoft and Qualcomm.

Earnings this quarter were better than expected given the inflation and recessionary outlook. However, at Lunar Capital, we think that the next quarter’s earnings season will be more significant indicator with regards to the outlook of the economy. The economy would have been through a longer period of increased interest rates. Consumers would then be paying higher interest on their mortgages, for example, for a longer period; and thus, would have less discretionary spending. This arguably would be felt in the economy as a whole, potentially reducing the earnings of companies.

Below is a table showing some of the financial indicators of companies that released their results.

Company Market Cap @ 29 July 2022 ($bn) 12m Earnings Change (%) PE Ratio @ 29 July 2022 ROCE
Alphabet 1 519 14.44% 21.72 24.41%
Amazon 1 375 -60.57% 121.52 4.17%
Apple 2 630 14.78% 23.05 48.26%
Meta 428 15.79% 13.19 30.57%
Microsoft 2 095 18.72% 29.09 26.96%
Qualcomm 163 39.72% 12.86 36.55%

 

Disclosure: Alphabet, Amazon, Microsoft, Qualcomm, and Berkshire Hathaway (which has a significant holding in Apple) is held in the Lunar BCI Worldwide Flexible Fund.

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The Lunar BCI Worldwide Flexible Fund Fact Sheet together with our Disclaimers can be read here.

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