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Disney Hits New 52 Week High On Analyst Upgrade

Shares of entertainment giant Disney gained 2.8% on Monday following an upgrade from Barclay’s based on the belief that the company’s turnaround plan is taking shape.

Barclay’s analyst Kannan Venkateshwar upgraded Disney to Overweight from Equal Weight while also increasing his price target on the stock substantially to $135 from $95. With shares currently trading around the $120 level, that implies a roughly 15% upside from current levels.

In his note Venkateshwar recommended the stock based on a number of factors that have increased investor confidence over the past several months. Those include better than expected earnings guidance and free cash flow from the company, the consolidation of Hulu and other cost cutting measures, along with some outside events such as the strike in Hollywood.

He also notes that Disney is already outpacing the markets this year, thanks to the propensity for media investors to be long Disney shares. Since the start of 2024 Disney shares have handily outpaced the S&P 500 and Dow Industrials, rising by 31.8% versus gains of 9.5% and 4.3% respectively for the indices.

With shares hitting a new 52-week high on Monday it’s been a significant turnaround for the stock, which was trading at multiyear lows during 2023.

Disney has been struggling with losses from its streaming services, a decline in traditional television viewership and the associated ads revenue, and slower growth at its theme parks.

However, Venkateshwar believes that the second half of 2024 could be more impactful for Disney’s financials as a number of the turnaround elements are still works in progress. He specifically mentioned the possibility of profitability for Disney’s streaming service, which he believes would be bullish for Disney’s stock price.

Asian Daily Market Review

Asian markets were largely higher on Wednesday following another record setting session overnight on Wall Street. Investors were also looking ahead to the U.S. Federal Reserve monetary policy decision just a day after Japan hiked its own interest rates and ended its negative interest rate policy. It’s expected for the Fed to keep interest rates unchanged at this meeting, but that didn’t stop the Yen from sinking to its lowest level against the U.S. dollar since 1990.

Japan’s markets remained closed for a public holiday, so we’ll have to wait to see investor reactions there as the Yen tests multi-decade lows versus the U.S. dollar.

In Australia the S&P/ASX 200 slipped 0.1% lower after the Bank of Australia left interest rates at a 12-year high, while also signaling that they are done with rate increases. The big four banks helped contribute to the broad market weakness, with ANZ losing 0.4%, NAB and Commonwealth Bank ending slightly lower by 0.1%, and Westpac declining by 0.3%. The major miners helped to offset losses from the banks, with BHP adding 0.5% and Rio Tinto gaining 0.8%.

Mainland Chinese markets ended with gains as the benchmark Shanghai Composite tacked on 0.6% and the smaller cap Shenzhen Composite advanced 0.2% higher. Over in Hong Kong the Hang Seng underperformed the mainland, but still managed a slight 0.1% increase for the day.

In South Korea the Kospi shot higher by 1.3% to lead gains for the region, and in Taiwan the Taiex sank by 0.4%.

Southeast Asian markets were a mixed bag, with Singapore’s Straits Times Index inching higher by 0.1%, while Malaysia’s KLCI suffered a 0.6% loss.

European Daily Market Review

European markets were mixed and little changed for the most part as investors took a pause ahead of the Federal Reserve’s monetary policy decision in the U.S., due out later today.

By the end of the session the pan-European Stoxx Europe 600, the broadest measure of European equities, was nearly unchanged with a slight gain of just 0.02%. Germany’s DAX ended the day 0.2% higher but the CAC 40 in France underperformed as it declined by 0.5%. In Italy the FTSE MiB added 0.1%, and in Spain the IBEX 35 outperformed as it rose by 0.5%.

Chemical manufacturers were in the spotlight in Germany with the best performers in Germany’s DAX being chemical manufacturers BASF with a gain of 2.5% and Covestro with a 2.2% advance. At the other end of the index adhesive and consumer goods firm Henkel saw its shares drop by 2.2%, while integrated arms manufacturer Rheinmetall suffered a 2.1% loss.

Over on the CAC 40 in France the best performance of the day came from management consulting firm Teleperformance, with shares finishing 2.7% higher. Materials and tire manufacturer Michelin also outperformed with a gain of 1.8%. Luxury goods manufacturer Kering saw its shares tumble 11.9% lower after warning of sharply lower revenue from its Gucci brand due to declining sales in Asia.

London’s FTSE finished nearly unchanged as it edged lower by a scant 0.01%. That came after U.K. inflation unexpectedly declined more than expected, hitting its lowest rate since 2021. At the top of the index was financial services provider St. James Place PLC with a gain of 4.5%. That gain was evenly offset by the 4.5% loss from the worst performer in the index, which was multinational insurance provider Prudential PLC.

U.S. Daily Market Review

U.S. markets held steady near unchanged levels for most of the session as investors waited to hear the latest from the Federal Reserve. When the report was released at 2pm EST markets headed steadily higher, with the Fed holding interest rates unchanged as expected, while also indicating that there will be three rate cuts by the end of 2024. The rally puts markets back into record territory after some weakness ahead of the Fed decision this week.

Heading into the final hour of trading in New York the S&P 500 is holding a 0.6% gain, the Nasdaq is 0.9% higher, the Dow Industrials are up by 0.8%, and the small cap Russell 2000 is also enjoying a 0.8% advance.

On a per sector basis nearly all eleven of the S&P subsectors are trading in positive territory, with only the healthcare sector showing a loss of 0.5%.

Leading the charge higher today is the consumer discretionary sector, which trades 1.4% higher on expectations for lower interest rates to provide some relief to consumer’s wallets. Communications services and industrials are also performing well, trading 1.1% higher. Next up is the financials, which are trading 1% higher, even though lower interest rates lower their revenue potential.

Rounding things out we have the materials sector with a 0.9% gain, technology trading 0.8% higher, real estate rising by 0.3%, and the consumer staples and energy sectors edging higher by a slight 0.1%.

Gold is also enjoying a 1.1% advance today as lower interest rates are largely positive for the yield-less precious metal. Elsewhere oil is falling off a five-month high, losing 2% on Wednesday as a stronger U.S. dollar is weighing on the dollar denominated commodity.

Cryptocurrency Daily Market Review

Crypto markets looked as if they were headed for a third consecutive losing session, with Bitcoin falling below the $65,000 level early in the session. However, the latest news from the Federal Reserve, in which the central bank kept interest rates on hold in the U.S. while forecasting three upcoming rate cuts by the end of 2024, reversed course for the market. By late afternoon in the U.S. the market was back in the green for the day, although the weekly picture still shows losses for many of the top cryptocurrencies.

Within the top cryptocurrencies Bitcoin (BTC) was able to reverse its early losses to trade 2% higher for the day, although it is still holding a 10% weekly loss. Ethereum (ETH), the second largest cryptocurrency by market capitalization, is up 1.7% for the day, while trading down by 15% for the week. The rest of the top ten cryptocurrencies also had gains, although there were some pockets of weakness.

Solana (SOL), which recently leapfrogged into the fourth position was 1.1% higher and has a 13% gain over the past week. Binance Coin (BNB) was enjoying a 1.8% increase for the day, although it remains down by 9% for the week. Ripple (XRP) was flat on the day, trading nearly unchanged and with an 11% loss for the past week.

Cardano advanced by 2.8%, though it is also trading 15% lower over the past seven days. Dogecoin (DOGE) was the best performer in the top ten altcoins, gaining an impressive 8.5% for the day, though remaining 13% lower for the week. Finally, Avalanche (AVAX) was the lone loser in the top ten altcoins, falling by 5.4%, although it is the only weekly winner with a 2.5% weekly advance, so Wednesday’s loss was likely at least partially due to profit taking.

Japanese Yen Hits Lowest Level Of 2024

The Japanese Yen weakened to its worst level of 2024 against the U.S. dollar on Tuesday, climbing above the 150 level and approaching 151 by the end of the normal trading day in the U.S. The drop in the Yen occurred after the Bank of Japan delivered a historic rate hike overnight that ended the world’s last negative interest rate policy. The move also boosted Japanese bonds and equities overnight.

The Yen has lost more than 1% of its value against the U.S. dollar over the past 24 hours, reaching a low of 150.96 mid-afternoon in New York before pulling back slightly from the 151.00 level. Notably, Bank of Japan Governor Kazuo Ueda said that while it’s important to keep rates low to support the Japanese economy, it is possible that more rate hikes could be coming if inflation accelerates.

Markets were largely expecting this move away from negative interest rates, with 90% of central bank watchers calling for the central bank to end its negative interest rate policy. Adding to the likelihood of the rate hike was the recent larger than expected wage hike in Japan’s largest union during negotiations.

The drop in the Yen despite a rate hike was attributed to the fact that a rate hike was largely priced in already, combined with a dovish tone from the BoJ and the remaining large gap in rates between Japan and the U.S. The Yen was already slipping in the week leading up to the rate decision as traders are also seeing a decreased chance of rate cuts in the U.S.

The weaker Yen has also driven Japanese equities higher, with the Nikkei hitting its highest level ever, breaking a record that’s stood since 1989.