Tencent holdings second quarter revenue rose 8% YoY, mainly due to strength in its gaming segment driven by the success of its game Dungeon Fighters Online(DnF).

The game was released in May and became the most downloaded game in China after its release.

Tencent is the operator of the WeChat messaging service in China, but most people know it as a gaming company.

It earned $22.5 billion in the quarter, comfortably beating analyst estimates. But what caught investors’ attention was the 82% surge in profit year over year.

Gaming segments dominates sales

International games revenue was up 9% year over year on the back of the increased popularity of PUBG and Supercell’s games.

Domestic gaming revenue, also up 9% YoY, was boosted by the successful launch of DnF as well as the renewed interest in Valorant.

The resumption in the growth of local gaming revenue is a positive for Tencent investors.

CEO Ma Huateng praised the performance of the domestic team and was happy with the new launches in the quarter.

Our Domestic Games revenue resumed growth, and our International Games revenue accelerated growth, due to increased user engagement at several of our evergreen titles, and the successful launches of certain new games.

The company also reported a rise in audience numbers and subscribers thanks to the locally produced drama series based on Chinese literature.

Local competition is a threat

Despite all the improvements, the company’s stock was down 5% during trading.

Even though Tencent’s international gaming segment continues to dominate, its local gaming business faces serious threats from companies like NetEase and miHoYo.

Games like Eggy Party and Genishin Impact continue to highlight vulnerabilities in Tencent’s strategy to dominate the local industry.

These competitors also develop games in-house, which means they retain a larger share of revenue as profits.

The ability to play with better margins gives them an edge over Tencent. The CEO of Tencent has openly admitted to feeling pressured by the competition:

Competitors have continued to create new products, leaving us feeling we have achieved nothing

Apart from the gaming segment, the company reported a 2% increase in social network-related revenue.

This was offset by a decline in live-streaming revenues during the quarter.

Online advertising brought in a 19% surge in revenue while FinTech and Business Services also rose 4% YoY.

How should investors react to the earnings?

There is no doubt that the international gaming juggernaut continues to improve its performance across all segments.

The weakest link, the local gaming segment, also returned to winning ways in the quarter. This should give investors some confidence to keep holding the stock.

However, as the trading activity shows, the company still has a lot to achieve to consistently dominate the gaming scene.

This is why new investors would be better off waiting for consistency in revenue growth before taking a position in the stock.

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Chipotle Mexican Grill’s stock has plummeted nearly 14% in early trading today following the announcement that CEO Brian Niccol will step down to take the helm at Starbucks on September 9.

Niccol, who has led Chipotle since 2018, is credited with revitalizing the company after a significant E. coli outbreak and doubling its revenue from $4.5 billion to $9.9 billion.

Niccol’s departure leaves a void at Chipotle

The abrupt shift in leadership has raised concerns among investors.

Niccol’s departure leaves a void at the top of Chipotle, a company that recently reported strong quarterly earnings.

Despite this, Chipotle’s CFO, Jack Hartung, has agreed to take on the role of president of strategy, finance, and supply chain, extending his tenure beyond his planned retirement in 2025.

Scott Maw, Chipotle’s board chairman, remains optimistic about the company’s future.

He highlighted the company’s robust talent planning and deep bench strength, ensuring that the transition will be managed smoothly.

Maw expressed confidence that the incoming CEO will inherit a well-positioned business.

Chipotle’s recent earnings report showed a notable increase in revenue and earnings per share (EPS), alongside rising foot traffic and same-store sales.

The management’s swift response to the portion size controversy, including an apology and a new system to prevent future issues, has been well-received by customers.

Starbucks welcomes Brian Niccol

In contrast, Starbucks has seen a 21% increase in its stock price following the announcement of Niccol’s appointment.

This surge comes amid significant trading volume and seems to reflect optimism about Niccol’s potential impact on Starbucks.

Mellody Hobson, Starbucks’ board chair, praised Niccol’s track record of innovation and growth, emphasizing his ability to enhance the customer and partner experience.

The departure of Starbucks’ outgoing CEO, Laxman Narasimhan, who is also stepping down from the board, coincides with the arrival of Niccol.

This move follows pressure from Elliott Investment Management, which had taken a stake in Starbucks to influence management changes.

Is it a buying opportunity?

For investors, the drop in Chipotle’s stock price following the CEO transition could present a buying opportunity.

The 14% decline comes just two weeks after a strong earnings report, suggesting that the stock’s current dip might not accurately reflect the company’s solid financial health.

Over the past five years, Niccol’s leadership has driven a remarkable 240% return for Chipotle’s stock, significantly outperforming the S&P 500’s 85% gain.

With Chipotle’s strong financial base and recent performance, the current stock price dip could be an opportune moment for long-term investors to consider increasing their holdings.

The incoming CEO will have the benefit of inheriting a well-established and profitable company, making this an intriguing time to evaluate Chipotle’s investment potential.

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On August 13, 2024, Wolfe Research upgraded First Industrial Realty Trust (FR) from Peer Perform to Outperform, setting a year-end 2025 price target of $64.

This upgrade suggests a potential 19% upside from its current trading price of around $53.89.

The upgrade highlights an improved supply outlook, anticipated earnings growth, and favorable valuation, making FR an attractive investment.

FR’s revenue rose by 7.8% year-over-year in Q2

In the second quarter of 2024, First Industrial Realty Trust reported funds from operations (FFO) of $0.66 per share, surpassing estimates by $0.02.

The company’s revenue rose by 7.8% year-over-year to $164.14 million, exceeding expectations by $0.66 million.

However, diluted net income slightly decreased to $0.39 per share from $0.41 per share a year earlier.

The company’s leasing and development activities were particularly strong during the quarter.

FR secured 1.1 million square feet of new leases for speculative developments and a 212,000-square-foot partial build-to-suit lease.

Additionally, the company initiated two new developments in South Florida and Houston, totaling 683,000 square feet, with an estimated investment of $109 million.

The company also renewed its largest 2025 lease rollover of 1.3 million square feet, achieving a 45% cash rental rate increase on leases signed to date.

Growth driven by focus on high-demand markets

First Industrial Realty Trust’s portfolio consists of 428 properties, with a focus on supply-constrained markets.

The company’s in-service occupancy rate was 95.3% at the end of Q2 2024, slightly down from 95.5% in Q1 2024, reflecting challenges in the industrial property sector due to oversupply.

FR’s growth is driven by its strategic focus on high-demand markets and robust leasing activities.

The company’s significant cash rental rate increases and its investment in new developments position it well for continued growth.

Furthermore, the company has successfully pre-leased a substantial portion of its properties under development, indicating strong demand for its industrial spaces.

Fixed-rate-oriented debt structure

First Industrial Realty Trust maintains a strong financial position with a BBB credit rating and a fixed charge coverage ratio of 4.4x.

With no debt maturities until 2026, the company enjoys financial flexibility.

Its balance sheet is further strengthened by a solid fixed-rate-oriented debt structure, protecting it from interest rate fluctuations.

FR trades at a forward-looking P/FFO multiple of 20.9x, which is lower than many of its peers.

Given the company’s growth prospects and market position, analysts believe there is potential for valuation multiple expansion, possibly reaching the 22x-23x range, offering additional upside beyond earnings growth.

The company declared a quarterly dividend of $0.37 per share, offering a forward yield of 2.7%.

While the yield may seem modest, FR’s dividend has grown at a compound annual growth rate of 8.0% from 2019 to 2023.

Looking ahead, FR’s management has raised its 2024 FFO guidance to $2.57-$2.65 per share, reflecting confidence in continued growth.

Despite a positive outlook, FR faces challenges, including potential oversupply in certain markets and the impact of high interest rates.

Maintaining high occupancy rates and successfully executing its development plans will be crucial to sustaining its growth trajectory.

However, with a strong focus on high-demand markets and effective management strategies, FR is well-positioned for future success.

Now, let’s analyze the stock’s price trajectory and see if technical indicators align with this optimistic outlook.

Fresh uptrend can lead to new highs

FR’s stock made a double top above $65 in early 2022 and has been in a downtrend since then.

However, it has broken above that long-term bearish trendline recently and has been taking support above $51.25.

Source: TradingView
Considering that breakout which suggests a change of trend, investors bullish on the stock can take a long position in the stock at current levels near $53 with a stop loss at $51.2. If the upward momentum persists, the stock can indeed reach Wolfe Research’s target near $64, where short-term bulls can take profits.

Traders who are bearish on the stock must refrain from shorting it at current levels because its 50-day moving average has recently crossed above its 100-day moving average. Fresh short positions must only be considered if the stock closes below its recent swing low at $51.26.

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Republican Representative Mark Green, who has served Tennessee’s 7th congressional district since 2019, has recently disclosed a lucrative stock trade involving NGL Energy Partners (NYSE: NGL). 

Green sold between $15,000 and $50,000 worth of NGL shares for $4.74, highlighting his strategic trading prowess and significant gains in a challenging market.

Mark Green’s engagement with NGL Energy Partners dates back several years, but his recent trading activity has drawn considerable attention. 

The journey began in early 2022

Over the past two and a half years, Green has adeptly managed to almost double his initial investment in this small-cap stock, showcasing a well-timed strategy.

The journey began in early 2022 when Green acquired NGL shares for $2.13, investing between $15,000 and $50,000. 

Over the following 18 months, he continued to accumulate shares at various price points. 

While the precise number of shares is not publicly disclosed, estimates suggest that the average purchase price during this period was around $3.25.

Since January 2024, Green has progressively sold off his shares. Notably, a significant portion of these transactions occurred at $5.85 per share, just 5.5% below the stock’s 52-week high. 

Despite spreading his sales across the first half of the year, Green managed to achieve an average selling price close to $5.70.

This savvy trading approach has resulted in a remarkable return of over 75% on his total holding. 

In comparison, the S&P 500 index has returned only 25.85% over the same period, underscoring Green’s impressive investment acumen.

A visual representation of his buy and sell ranges illustrates the effectiveness of Green’s strategy.

Source: TradingView

However, it’s important to consider the broader context of NGL Energy Partners’ financial performance. 

NGL Energy Partners’ $3.1 billion debt

The company has faced substantial revenue declines over the past year, with the quarter ending March 2024 marking its worst EPS performance since late 2020.

Despite these financial struggles, Green’s decision to sell his shares at favorable prices suggests a well-calibrated exit strategy. 

NGL Energy Partners is currently burdened with $3.1 billion in debt and only $5 million in cash reserves. 

The company’s management is focusing on debt repayment and eliminating preferred distributions, with hopes of improving returns for common shareholders in the future.

Nevertheless, potential investors should be cautious. The stock faces risks, including a possible slowdown in drilling activity, especially in the Delaware Basin, and vulnerability to fluctuating oil prices. 

Currently, with oil prices surging, any geopolitical stabilization could lead to a sharp decline in oil prices and, consequently, NGL’s stock value.

Given Green’s position on the Foreign Affairs Committee, it’s plausible that he may have insights into global geopolitical issues that could influence market conditions. 

The stock is currently trading 33% below its 52-week high, reflecting the volatility and uncertainty surrounding the energy sector.

As NGL Energy Partners navigates these challenges, Green’s strategic trading underscores the potential for significant gains even in a volatile market. 

Investors looking to follow in his footsteps should remain aware of the inherent risks and closely monitor the company’s evolving financial landscape.

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Home Depot Inc (NYSE: HD) has recently reported its Q2 earnings, and while its guidance may appear cautious, it is consistent with market expectations. 

Michael Baker, a senior retail analyst at D.A. Davidson, believes that despite the muted outlook, Home Depot is poised for future growth.

Home Depot’s updated forecast for 2024 projects a decline in comparable sales of 3.0% to 4.0%, compared to its earlier forecast of a 1.0% decline. 

Despite this adjustment, Baker remains bullish on the stock, highlighting that the current market sentiment had already factored in a downward revision. 

The stock’s positive movement following the announcement is seen as a “bullish sign,” according to Baker’s interview with CNBC.

Rate cuts by Federal Reserve: an opportunity?

Baker’s optimism stems from the expectation of forthcoming rate cuts by the Federal Reserve.

The analyst points out that once interest rates are reduced, Home Depot stands to benefit from pent-up demand, potentially driving up comparable sales from negative to low single digits.

The Federal Reserve has already indicated a likely rate cut in September, which could catalyze improved performance in the home improvement sector.

Home Depot’s current dividend yield of 2.56% adds another layer of appeal for investors looking for steady returns amidst market fluctuations.

Baker’s recommendation is to maintain exposure to Home Depot, as lower rates could significantly boost the company’s financial performance.

Price target and recovery potential

D.A. Davidson has set a “buy” rating for Home Depot with a price target of $395, suggesting a potential upside of 13% from current levels.

Baker attributes recent weakness in the company’s earnings to rate-sensitive categories, which are expected to rebound as rates decrease.

This rebound could lead to substantial gains for Home Depot’s stock.

Although Baker acknowledges that it may take a few quarters for rate-sensitive categories to regain their strength, he believes that Home Depot’s share price will anticipate this recovery and rise more rapidly.

The company’s conservative guidance in its Q2 earnings report, which beat analysts’ forecasts of $4.49 per share and $43.06 billion in revenue by reporting $4.60 per share and $43.18 billion in revenue, further supports Baker’s positive outlook.

Home Depot’s cautious guidance for 2024 reflects current economic uncertainties, but the stock remains a solid pick for investors anticipating a shift in interest rate policy.

With a potential price target of $395 and a robust dividend yield, Home Depot is well-positioned for future gains.

As the Federal Reserve’s rate cuts take effect, the company is likely to see an uptick in performance, making it a compelling choice for long-term investment.

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A prominent Solana whale has intensified their massive selloff, adding a recent $2.8 million transaction to the staggering $86 million in SOL tokens sold since January.

This ongoing divestment has drawn significant market attention as investors scrutinize the whale’s strategy amid notable developments within the Solana ecosystem.

Whale intensifies selloff: $2.8 million in SOL tokens sold

The whale’s selloff began on January 15, with the latest move involving the sale of 20,000 SOL tokens worth $2.8 million.

This transaction raises the total amount sold to approximately $86 million, continuing a trend of weekly selloffs that have marked the year.

On-chain analytics firm LookOnChain reports that since the selloff commenced, around 594,000 SOL tokens have been transferred to major exchanges like Coinbase, Binance, and OKX.

With SOL’s current price hovering around $145.07, these transactions may reflect a strategic approach, possibly aimed at dollar-cost averaging.

US and Brazilian Solana ETFs

The whale’s substantial selloff coincides with increasing interest in the Solana ecosystem, particularly regarding the potential launch of Solana-based exchange-traded funds (ETFs).

In the United States, asset managers VanEck and 21Shares have applied for a spot Solana ETF, with the Securities and Exchange Commission (SEC) expected to decide by March 2025.

The optimism surrounding Solana ETFs follows the approval of Bitcoin and Ethereum ETFs, though market experts remain cautiously optimistic.

In Brazil, the Brazilian Securities and Exchange Commission (CVM) recently approved a Solana ETF on August 7, a landmark development for the asset.

The Brazilian ETF is still awaiting further approval from the Brazilian stock exchange, B3. If successful, it would become one of the first Solana-based exchange-traded products (ETPs) globally, offering investors a new avenue for exposure to Solana.

Despite these promising developments, the whale’s continued selloff indicates a potential level of uncertainty or profit-taking that could influence Solana’s short-term price movements.

Ethereum whales display mixed signals

While Solana garners attention, Ethereum whales are displaying mixed signals with their trading strategies. Some Ethereum whales are reducing their holdings, while others are increasing their positions, reflecting divergent views on the asset’s future trajectory.

One Ethereum whale, associated with the asset’s initial coin offering (ICO), has been actively selling off tokens since July 8. On August 12, this whale transferred $13.2 million worth of Ether to OKX, bringing their total selloff to $154 million at an average price of $3,176.

Conversely, another Ethereum whale made a notable purchase on the same day, acquiring 5,000 ETH for approximately $12.8 million. This whale has previously employed a successful buy-the-dip strategy, purchasing Ether at $2,100 before it rebounded to $3,100.

This disparity in Ethereum whale activity underscores the prevailing market uncertainty, as investors navigate a volatile environment and weigh their strategies in response to shifting market dynamics.

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Japanese stocks have staged a strong comeback after tumbling hard earlier this month. The Nikkei 225 index rose to a high of ¥36,240 on Wednesday as traders waited for Thursday’s Japan GDP data. It has risen by over 16% from its lowest point last week. 

Japanese yen has retreated

The Nikkei 225 index comeback happened as the country’s currency, the yen, retreated against the US dollar, Australian dollar, euro, sterling, and other currencies. The USD/JPY exchange rate rose to 146.88, up by over 3.6% from its lowest point this month.

Similarly, the AUD/JPY pair jumped to 98 from last week’s low of 90.2 while the GBP/JPY pair moved to 188.78. 

Japanese stocks do well in a weaker yen environment because most companies in the country mostly deal with exports. This includes motoring giants like Honda, Toyota, and Subaru. A weaker yen also makes these stocks more affordable to foreign investors, including Warren Buffett, who has invested in five trading houses. 

For example, the Nikkei 225 and Topix indices soared to a multi-decade high earlier this year as the Japanese yen fell to 161.5 against the US dollar, its lowest point since the 1980s.

The main catalyst for the recent Nikkei 225 sell-off was the unwinding of the Japanese yen carry trade, which has existed for decades. In this, investors borrowed heavily to invest in both local and international companies. 

Japan had negative interest rates for a long time until it exited them earlier this year. When rates were in the negative zone, it was common for people to borrow cheaply and then invest in the stock market. If everything went perfectly, the stock market return was enough to pay for the small interest.

The weaker Japanese yen also made it an attractive country to tourists. Recent data shows that the country attracted over 17 million visitors in the first half of the year, a record.

Now, the Japanese central bank has started hiking interest rates. Earlier this month, it caught the market by surprise as it hiked interest rates by 0.25%, its biggest increase in decades. Officials have also warned that more hikes may be coming. 

Japan GDP data ahead

The next important Nikkei 225 news will be the upcoming Japan GDP data, which will come out on Thursday. Economists polled by Reuters expect the preliminary report to reveal that the economy expanded by 2.1% in Q2 after retreating by 1.8% in the previous quarter. 

The QoQ GDP figure is expected to come in at 0.6%, a big increase from the 0.5% contraction it made in Q1. This recovery will be because of a 0.5% increase in private consumption and a 0.9% increase in capital expenditure. It will be offset by a 0.1% decline in external demand. 

If the economic numbers are this strong, they will increase the chance of another BoJ interest rate hike in the next meeting on September 20th. 

US inflation data ahead

The next important Nikkei 225 news will be the upcoming US inflation report, on Wednesday. Economists expect the data to show that the headline and core inflation rose slightly in July. 

Precisely, the headline Consumer Price Index (CPI) is expected to come in at 3% while the core CPI eased slightly from 3.3% to 3.2%. Still, there are chances that the figures will come out lower than expected. Just on Tuesday, the latest Producer Price Index (PPI) retreated to 2.2% and 2.4%, respectively.

US inflation numbers are important to global stocks because they mean that the Federal Reserve may start cutting interest rates as soon as in September. This explains why the Dow Jones and the Nasdaq 100 indices rose by 408 and 407 points on Tuesday.

Many Japanese companies have bounced back in the past few days. Fujikura stock has risen by 31% in the past five days while Sapporo Holdings, Trend Micro, Resonac Holdings, and Mitsui Mining have risen by over 10%. 

On the other hand, the top laggards in the Nikkei 225 index were SUMCO, Shiseido, and Meiji Holdings.

Nikkei 225 index forecast

Nikkei 225 chart by TradingView

The weekly chart shows that the Nikkei 225 index peaked at ¥42,435 in July and then suffered a harsh reversal and reached a low of ¥31,163 on Monday last week. 

The index has then bounced back and moved to ¥36,273. It formed what looks like a dragonfly doji or a hammer pattern, which is characterised by a long lower shadow. In most cases, this pattern leads to more upside, a move that has been confirmed by the fact that it has formed a bullish candle this week.

The Nikkei 225 index is approaching the key resistance point at ¥36,772, its lowest point in April, and the neckline of the double top pattern at ¥41,000. Therefore, the index will likely continue rising as buyers target the key resistance point at ¥38,000.

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In a bold move, the US Department of Justice is contemplating a rare bid to break up Alphabet Inc.’s Google following a landmark court ruling that declared the company had monopolized the online search market, according to a report by Bloomberg.

This potential action marks the first significant push by Washington to dismantle a major corporation for illegal monopolization since the attempts to break up Microsoft Corp. two decades ago.

Alphabet shares fell as much as 2.5% to $160.11 in after-hours trading before erasing some losses. 

A separate trial scheduled for September 4 will determine the penalties or remedies that Google will face. 

Loss of antitrust case against the US precursor to the discussions

Earlier this month, Google lost a landmark antitrust case against the DoJ after federal judge Amit Mehta ruled that the tech giant had built an “illegal monopoly” over the online search and advertising industry. 

It specifically found that Google broke antitrust laws by striking exclusive agreements with device makers like Apple and Samsung, in which Google would pay billions of dollars ($26 billion in 2021 alone) to ensure that its product was the default search engine on their phones and tablets. 

Judge Amit Mehta’s August 5 ruling has intensified the Justice Department’s discussions, highlighting Google’s illegal dominance in online search and search text ads. 

Google has said it will appeal that decision, but Mehta has ordered both sides to begin plans for the second phase of the case, which will involve the government’s proposals for restoring competition, including a possible breakup request.

Divestiture plans on the table

Potential divestitures being considered include the Android operating system and Google’s web browser, Chrome, Bloomberg said.

Judge Mehta found that Google requires device makers to sign agreements to access its apps, such as Gmail and the Google Play Store, which in turn mandates the installation of Google’s search widget and Chrome browser in a non-deletable manner.

This effectively stifles competition from other search engines.

Officials are also looking at trying to force a possible sale of AdWords, the platform the company uses to sell text advertising, to mitigate its dominance in the sphere, sources told the news agency. 

AdWords contributed to over $100 billion in revenue in 2020.

Less severe plans include sharing data with competitors 

Less severe measures include mandating Google to share more data with its competitors, Bloomberg said.

Judge Mehta’s ruling highlighted that Google’s contracts secure the majority of user data, 16 times more than its closest competitor, which stifles rivals from improving their search algorithms. 

Requiring Google to make its data available to rivals like Microsoft’s Bing or DuckDuckGo could enhance competition and innovation in the search market. 

A similar approach was taken in the 1956 antitrust case against AT&T, which required the company to provide royalty-free licenses to its patents, and the 2001 case against Microsoft, which mandated making some APIs available to third parties for free.

Concerns with Google’s AI play

Concerns over Google’s dominance extend to the development of artificial intelligence (AI) technology. 

The Justice Department has raised alarms that Google’s control over online search provides an unfair advantage in AI development. 

Websites have historically allowed Google’s web crawler to index their content to appear in search results. However, this data is also utilized to train Google’s AI models.

Recently, Google introduced a tool allowing websites to block data scraping specifically for AI, yet this opt-out doesn’t apply to all data used for AI development. 

Google’s AI Overviews, narrative responses to search queries, draw from search results and present summarized information.

These overviews, which are integrated into the search feature, cannot be opted out of by website publishers, posing further concerns about Google’s leverage over web content.

The way forward and implications

If the Justice Department decides to pursue a breakup, the plan will need approval from Judge Mehta, who will then direct Google to comply. 

The Justice Department’s attorneys have been consulting with companies affected by Google’s practices to assess the full scope of the monopolistic impact and potential remedies.

Regardless of the specific course of action, the government’s focus remains on restoring competitive balance in the tech industry.

This may involve banning exclusive contracts that stifle competition and ensuring that Google does not unfairly dominate emerging markets like AI.

The outcome of this historic antitrust case against Google could set a significant precedent, influencing how digital markets are regulated and ensuring that competition and innovation thrive in the rapidly evolving tech industry.

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Lloyds and Barclays share prices have held steady in the past few days as investors focus on the British economy. Barclays (BARC) stock was trading at 220p on Wednesday, 12% higher than this month’s low of 196.30p. It has risen by over 44% this year, making it one of the best banking stocks globally. 

Similarly, Lloyds Bank has jumped by over 24% this year and is hovering near its highest point since 2020. Its surge has brought its total market cap to over $44 billion. 

The UK economy is doing well

The British economy is doing well if the recent macro numbers are to go by. On Wednesday, a report by the Office of National Statistics (ONS) showed that the country’s inflation rose slightly in July.

The headline Consumer Price Index (CPI) rose from 2.0% in June to 2.2% in July. On the positive side, the headline CPI retreated by 0.2% on a month-on-month basis while the core CPI dropped to 0.1% and 3.3%, respectively.

Another report released on Tuesday showed that the unemployment rate dropped to 4.2% in June while the average earnings dropped from 5.8% to 5.4%, higher than the expected 4.6%. 

Banks like Lloyds and Barclays are highly exposed to the British economy. Lloyds, in particular, is more exposed because it serves over 26 million customers and has no business outside the country.

Barclays has a huge presence in the UK as well. Just recently, it spent millions of pounds buying Tesco Bank, a large company that was previously owned by Tesco, the retail giant. It also acquired Kensington Mortgages in 2023.

Why Lloyds and Barclays are doing well

The two banks have done well this year for various reasons. Lloyds’ share price has jumped because of its strategy to cut costs. Some of the measures it is taking is to close branches as more people embrace online banking and layoffs. Earlier this year, it announced that it would lay off over 1,600 workers. 

Lloyds has also committed to reducing its capital reserves, and is targeting a CET1 ratio of 13% by 2026. It is using these funds to reward its shareholders through dividends and share buybacks. Earlier this year, the company started repurchasing stocks worth about £2 billion. 

In its most recent results, Lloyds Bank said that its net interest income for the first half of the year came in at £6 billion while the other income jumped by 59% to £12 billion. In total, its profit for the year dropped by 15% to £2.4 billion. 

Like Lloyds, Barclays Bank is doing well for several reasons. First, its recent financial results were better than expected. Its second-quarter income stood at £6.3 billion, bringing its first-half of the year income to £13.3 billion. Its profit before tax was £1.9 billion and £4.2 billion, respectively. 

Also, the company is returning excess capital to investors. It returned £1.2 billion to investors in the first half. Most of these funds were through dividends (£750 million) while the rest were through dividends. 

Second, the company’s troubled investment banking division has started to bounce back. Its revenue rose by 10%, helped by the global markets and higher fees. This division was offset by a drop in its Fixed Income Commodity and Currency (FICC business. 

Barclays is set to benefit when rates start falling because of the expected increase in M&A activity in Europe and the US.

Third, Barclays is also cutting costs by closing branches and laying off workers. The bank slashed about 5,000 workers in 2023 and has continued doing that this year. Just recently, it fired 100 dealmaking jobs in its investment bank. 

Altogether, Barclays and Lloyds are good banks with strong dividends. Barclays has a dividend yield of about 3.7% while Lloyds yields about 5.07%.

Lloyds share price analysis

The daily chart reveals that the LLOY share price has been in a strong bull run as it jumped from 37.40p in November last year to a high of 60.65p in July. It recently made a strong bearish breakout as most assets crashed because of the unwinding of the Japanese yen carry trade. 

It has now bounced back in line with other companies and moved above the 50-day and 100-day moving averages. The risk, however, is that the stock remains below the lower side of the rising wedge pattern. In most cases, this pattern leads to a major bearish breakout.

Therefore, there is a risk that the stock will resume the downtrend now that it has formed a break and retest pattern. The key point to watch will be at 55p.

Barclays stock price analysis

Meanwhile, the Barclays stock price peaked at 241.7p in August and then retreated to a low of 196.15p. Like Lloyds, it has bounced back and moved above the 50-day and 100-day moving averages while the Relative Strength Index (RSI) has tilted upwards. 

Therefore, while there are risks in the market, there is a likelihood that the stock could retest the year-to-date high of 241.7p. What is clear, however, is that there could be more volatility in the coming weeks.

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Intel has sold its 1.18 million share stake in British chip designer Arm Holdings, raising nearly $147 million.

This move is part of a broader restructuring strategy as the company grapples with financial challenges and intensified competition in the semiconductor industry.

Why did Intel divest its stake in Arm?

Intel’s decision to divest from Arm comes during a challenging period for the company. With cash and cash equivalents at $11.3 billion and liabilities around $32 billion by the end of June, the sale represents an effort to shore up its balance sheet.

The divestment is a component of CEO Pat Gelsinger’s ambitious restructuring plan, described as “the most substantial restructuring of Intel since the memory microprocessor transition four decades ago.”

At the beginning of August, Intel announced a $10 billion cost-reduction initiative that includes cutting approximately 15,000 jobs, eliminating its fiscal fourth-quarter dividend, and slashing capital expenditures.

This comes in the wake of disappointing quarterly results and a light forecast for the current period, which led to the steepest single-day drop in Intel’s stock price in 50 years, falling by 26%.

Intel’s challenges in the AI-driven market

Intel’s difficulties have been exacerbated by its attempts to accelerate the production of Core Ultra PC chips designed to manage AI workloads.

The AI boom has heightened competition within the semiconductor industry, with rivals like AMD and Qualcomm racing to launch AI-focused chips, following Nvidia’s significant success in this sector.

Despite these efforts, Intel has struggled to keep pace with other semiconductor giants.

The company is also attempting to revitalise its foundry business to recapture market share lost to Taiwan’s TSMC and South Korea’s Samsung, which dominate the global chip manufacturing market.

Arm’s strong performance

Arm Holdings, in which Japan’s SoftBank Group holds a majority stake, has seen its shares perform strongly since its initial public offering (IPO) last September.

Arm’s shares have risen by nearly 65% year to date, benefiting SoftBank and contributing to the Japanese conglomerate’s overall portfolio value.

In contrast, Intel’s stock has plummeted by nearly 60% this year, reflecting the company’s ongoing struggles.

However, Intel shares saw a slight uptick in after-hours trading following the news of the sale, according to data from LSEG.

Way forward for Intel

Intel’s sale of its stake in Arm signifies a shift in focus as the company seeks to navigate through a period of significant financial pressure and restructuring.

The move may provide some relief to Intel’s balance sheet, but the company still faces considerable challenges ahead as it competes with rapidly advancing rivals in the AI-driven semiconductor market.

The divestment from Arm is just one of several strategic decisions Intel has made recently, all aimed at positioning itself more favourably in an increasingly competitive industry.

The effectiveness of these efforts, however, remains to be seen as Intel continues to grapple with both internal and external pressures.

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