Daily Market Review 22.06.2015

STOCKS 

Will Adidas Bounce Back: Since last year, it has been evident that Adidas (ADS) has struggled to hold on to its share of the sportswear market. This has come as a result of strong competition with the German company sending out profit warnings already last year. As a result, investors at the time started to lose faith and we saw a decline in the company’s share price. Things are turning around and since the beginning of 2015, Adidas stocks have recovered almost 40 percent of its loss from 2014. These gains have come about as a result of a market upswing in Europe while Adidas has worked hard to reposition its business. Despite these gains, Adidas is still trading 10% below their level a year ago. According to Kevin Kelly, chief investment officer of New York-based Recon Capital Partners, Adidas can be viewed as a great turnaround story with investors seeing great value in the company. For example, Southeastern Asset Management owns approximately 3 percent of the company. Added to this, Adidas, which is the second largest sportswear maker in the world after Nike (NKE), hired Perella Weinberg Partners in order to watch for hostile activity. In March this year, the company also shifted its focus to its U.S. presence after its market share in North America declined from 18% to 7 percent over the last 9 years. Also, with new startups coming into the market such as Under Armour (UA), which is now sitting in 2nd place in the U.S. market, Adidas has had to work aggressively to face this competition. Analysts are mixed regarding Adidas’s ability to make market share gains. On Friday, Adidas traded at €68.85 a share, down 1.8 percent on the week.

INDICES 

On Friday, U.S. stocks declined. This came in response to the Greek crisis which prompted investors to remain cautious heading into the weekend. According to analysts, this decline and late session selloff can also be attributed to something which is referred to as a ‘quadruple-witching day’ which occurs when stock indexes and options and futures for stocks expire simultaneously. At the close of trading, the S&P 500 index (SPX) dropped 0.5%, or 11.25 points, to 2,109.99. For the week, this main benchmark recorded a 0.8% gain. Also, the Nasdaq Composite index (COMP) declined 0.3%, or 15.95 points, to 5,117.00. This tech heavy index retreated from its record high reached on Thursday and also gained 1.3% over the week. Meanwhile, the Dow Jones Industrial Average (DJIA) also dropped 0.6%, or 101.56 points, to 18,014.28. For the week, the blue chip index posted a gain of 0.6 percent.

CURRENCIES 

In forex trading on Friday, the U.S. dollar trimmed gains in quiet trade. This came as investors took the time to digest the policy statement by the Federal Reserve on Wednesday while the Greece debt crisis continued to weigh on market sentiment. The EUR/USD traded at 1.1344, down 0.17% while the GBP/USD traded steady at 1.5888. Also, the New Zealand and Canadian dollars traded mixed against the greenback with NZD/USD down 0.36% to 0.6899 and with USD/CAD up 0.53% and trading at 1.2286. The USD/CHF held steady at 0.9219 while the USD/JPY traded at 122.64, down 0.25%. Also, the U.S. dollar index was at 94.35, up 0.15 percent.

COMMODITIES

On Monday, crude oil prices declined in early Asian trade. This came after a meeting took place over the weekend where proposals were swapped and it now seems that a deal appears possible on Greece's debt bailout package. On Monday, the European leaders will hold an emergency meeting in Brussels regarding the bailout agreement on Greece which is due to expire at the end of June. Also, the markets in China are closed today as a result of the Dragon Boat Festival holiday. WTI crude oil for delivery in August traded at $59.80 a barrel, down 0.28 percent, on the NYMEX. Meanwhile, Brent crude oil for delivery in August traded at $63.02 a barrel, on Friday, down 1.93%, or $1.24, on the ICE Futures Exchange in London. For the week, London-traded Brent futures lost 2.51 percent or $1.35.

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