SHARE PRICES AND MARKET ANALYSIS

A snapshot of bike and ATV industry share performance across key manufacturers and major global markets at the trading week closure on Friday 10 June 2022. BDN financial editor Roger Willis reports.

USA — DOUBLE WHAMMY FOR GLOBAL STOCKS

Confidence continued to deteriorate for a second consecutive week on both sides of the Atlantic, undermined by lack of decisive action from central bankers versus the spectre of inflation. Initially, American investors dithered and there were no big surprises. But then signs of knee-jerk bullshitting from the ECB in Europe and US revelations of an unexpected inflationary surge in May really upset the apple cart.

Confounding economists’ forecasts of a levelling off or slight improvement, the US government monthly CPI report issued on Thursday showed annualised inflation had risen to 8.6%, from 8.3% in April.

Shocked equity markets promptly dived into sell-off mode on Friday. Wall Street’s blue-chip S&P 500 and the Dow Jones Industrial Average ended with respective 5.1% and 4.6% net weekly plunges. S&P’s MidCap 400 closed 4.7% down.

HOGOMETER

Harley-Davidson shares pretty much tracked this path of circumspection and eventual doom. Monday’s 1.1% rise translated into a 0.7% loss on Tuesday. And Wednesday’s slight 0.4% recovery was followed by a 0.6% reversal on Thursday. Then fertiliser hit the fan on Friday, as the price plummeted by 6.9%.

News that the company had resumed production and bike shipments, after a fortnight-long hiatus caused by defective component issues, had no impact whatsoever.

EUROPE — FUTILE GESTURE

European Central Bank maîtresse Christine Lagarde finally twanged her knicker elastic on Thursday, to announce in an abjectly tentative monetary policy statement that the ECB would “raise” its eurozone base interest rate from minus 0.5% to minus 0.25% in July. And she added that an unspecified but potentially much larger adjustment was under consideration for September.

Both European (and American) investors were deeply unimpressed by such feeble anti-inflationary measures. In Germany, Frankfurt’s Xetra Dax benchmark plunged, closing 4.8% down. The Borsa Italiana MIB index in Milan fell more sharply by 6.7%. All four eurozone biker-related stocks declined, albeit by smaller degrees.

JAPAN — IN A CLEFT STICK

Divergent opinions afflicted Japanese sentiment, hinging on benefits or otherwise of the dramatically weakening yen — having now sunk to its lowest point since 1998. In response, Tokyo’s Nikkei 225 stock index shed most recent gains to close a mere 0.2% up.

The official government perspective is deleterious, in as much as ongoing loss of currency value will damage Japan’s economy, particularly given rapidly rising costs of imported energy upon which it is almost totally dependent. Exporters think otherwise, because their wares have currently become cheaper and therefore more desirable. Motorcycle manufacturers sit on that side of the fence and are being rewarded with remorselessly rising share prices.

INDIA — GO WITH THE FLOW

A similar conflict of interests is evident in the Indian business firmament. India’s energy costs are accelerating exponentially, despite heavily discounted supplies from Russia. Already the world’s third-largest oil consumer, demand jumped by 23.8% year-on-year during May — to some 18.27 million tonnes of the stuff.

Refined pump petrol sales volume was 51.5% higher, shrugging off increased retail prices. The country’s vast populace is apparently avoiding public transportation post-Covid, and private vehicle use — predominantly motorcycles and scooters — has gone crackers.

So investors fearful of economic consequences ducked for cover in the past week, pushing Mumbai’s BSE Sensex stock index 2.6% down. Motorcycle manufacturers, sublimely exempt from such concerns as bountiful beneficiaries, bucked this trend comprehensively.

CHINA — ADJUSTED REALITY

Most of Shanghai and its surrounding industrial hinterland has now escaped from Covid lockdown internment and China is largely back in business. But a debate continues to rage on the severity of long-term damage to vital export markets. The Beijing government is spinning like a wooden top to cover up any embarrassing consequences. This is, after all, a country where truth is an entirely moveable feast.

For a second week, equity investors toed the party line. Shanghai’s SSE Composite all-share index and the blue-chip CSI 300 gained once more, respectively climbing by 2.8% and 3.7%. Only three of the eleven listed Chinese motorcycle producers were negative. Benelli parent Qianjiang, which is still on the cards to start churning out cheap Harley-Davidson singles, saw no interruption to an impressive recovery, its share price now riding almost 60% higher over the past month.