Surging Jobs Trigger Rate Hike Anxiety, Social Media Battles Escalate

According to the ADP jobs report, private businesses in the US added 497,000 jobs in June. This figure surpasses the downwardly revised gain of 267,000 jobs in May. Annual pay also rose by 6.4% year-on-year, indicating inflationary pressure. The job surge was primarily driven by consumer-facing industries, notably the Travel and Leisure sector, which alone created 232,000 jobs during the month.

The surprising rise in payrolls has subdued market sentiment, as a strong job market may incentivize the US Federal Reserve to persist with interest rate hikes.

Federal Reserve Meeting Highlights Rate Maintenance

The US Federal Reserve published the minutes from its June meeting. The minutes indicated that the majority of participants were in favor of keeping the federal funds rate within the target range of 5% to 5.25%. However, a few members expressed a preference for a 25 basis points increase. These members argued for a hike due to the tight job market and the slow inflation rate, advocating for tighter monetary conditions. Most officials agreed that there is a likelihood of implementing further rate increases. Federal Reserve officials believe that the substantial rate hikes implemented since early last year have given them more flexibility to assess the impact of tightening measures on the US economy.

Meta Platforms Inc (NSDQ: META)

Meta, the parent company of Instagram, has officially launched Threads, a text-based platform that aims to rival Twitter. The app became available on Apple and Android app stores in over 100 countries on Wednesday, although its release in Europe has been postponed due to data privacy concerns. Despite this delay, Threads accumulated over 30 million sign-ups within 18 hours of its launch, presenting the first significant challenge to Twitter, owned by Elon Musk.

The introduction of Meta’s new product arrives at a time when Musk’s tumultuous ownership of Twitter has raised doubts about the future of the social media platform. Threads is built upon Instagram’s infrastructure, leveraging its existing user base of over 2 billion people, eliminating the need to start from scratch. By being Meta’s first app designed to be compatible with an open social networking protocol, Threads aims to facilitate the discovery of communities for users across various applications. Meta expressed its hope that Threads will contribute to the growth of an interconnected ecosystem of interoperable services.

MultiChoice Group (JSE: MCG)

MultiChoice, a company operating in the pay-TV and streaming industry, experienced a 12% drop in its shares. J.P. Morgan downgraded the company’s rating, citing their belief that MultiChoice intends to allocate more money to Showmax than the market initially anticipated. Casparus Treurnicht, a representative from J.P. Morgan, expressed this viewpoint. MultiChoice faces stiff competition from global players like Netflix, Disney+, and Amazon Prime Video. To strengthen its market position, MultiChoice has already invested billions in Showmax. However, Netflix and Amazon Prime Video have been heavily investing in producing local original content, which has become a crucial strategy for Showmax. The increased investment in Showmax played a role in MultiChoice reporting a loss of R2.9 billion for the financial year that ended in March 2023. As a result, the company has decided to withhold dividend payments to its shareholders.

The declining share price of MultiChoice, combined with J.P. Morgan’s downgrade, underscores the company’s challenges in competing within the dynamic pay-TV and streaming industry.

Sources: Bloomberg, Financial Times, enCA, The Moneyweb

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