Morning Toast 25th July
Highlights
The Nasdaq 100 is undergoing a rebalancing process today before the market opens. Nasdaq is adjusting the weighting of its Nasdaq 100 index to reduce the dominance of the largest tech companies. Tech giants such as Microsoft, Apple, and Nvidia have experienced significant growth in market caps, leading to a situation where "the Nasdaq" essentially refers to only a few companies that wield substantial influence. Even after the rebalancing, Apple and Microsoft will still make up 22% of the index's weighting. However, it is anticipated that this rebalancing will not have a significant impact on stock prices.
Stock Spotlight
The luxury goods market is set to grow by 6% from 2022 to 2026, driven by increasing middle-class populations in emerging markets, particularly in Asia, and the influence of younger generations like Millennials, Generation Z, and Generation Alpha.
French company Hermès saw an impressive 23% revenue growth in Q1 2023, reaching €3,380 million, with robust expansion across all regions through new store openings, extensions, and online sales. Since July 25th, 2022, Hermès' share price surged over 56%, peaking at an all-time high in April 2023 above €2,000 per share. However, recent weeks have shown a slowdown in the share price's upward momentum, with prices unable to establish new highs and dipping below the Ichimoku cloud, the RSI below its moving average, and the 50-level.
Stock Spotlight
Elon Musk is removing Twitter's bird logo, planning to replace it with an "X," possibly as early as today. This move signals his intention to establish an "everything app" through a new company called X Corp. Despite the logo change, Twitter continues to face significant financial challenges, evident when Cathie Wood's ARK Investment Management recently reduced its stake in the company by 47%.
Sustainable News
Amidst the scorching heat of summer, many US cities are bustling with the hum of air conditioners. However, the power grids in the hottest states are surprisingly holding up well, showing little sign of buckling, as reported by the WSJ.
For instance, California's utility company, Pacific Gas and Electric Company, reassures that it can meet the heightened electricity demand this summer. Even Texas, known for its unreliable power grid, has not asked residents to conserve electricity since last month, despite reaching a new record in power demand last week.
This current stability is a remarkable turnaround from the dangerous blackouts experienced in recent extreme weather events. The reasons behind the resilience of power grids during the 2023 summer heat waves are noteworthy:
California benefited from a record snowpack in winter, significantly boosting hydropower. In May, hydropower generated more electricity than any month in the past three years, according to California's grid operator.
Texas, a renewable energy powerhouse, has more than doubled its solar capacity compared to the previous year.
Both California and Texas have recently expanded battery storage, providing an emergency lifeline during times of strain on the power grid.
The success story extends to Europe as well, where power grids continue to perform well 4. despite the relentless heat.
Quote of the Day
EU Taxonomy will undoubtedly uncover the true nature of each business, driving ESG-conscious capital to where it actually belongs." — Jose Manuel Entrecanales Domeq, Chairman and CEO, ACCIONA
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