Hindenburg Research has taken another shot at a major company, this time accusing Polish fashion retailer LPP S.A. of deceiving investors over its claimed divestment from Russia after the Ukraine invasion. Evidence suggests LPP used shell companies and altered barcodes to secretly maintain control of its former Russian operations. It may have violated sanctions by continuing Russian exports routed through front firms and increasing Kazakhstan shipments. Despite pledging an exit, the LPP appears driven to preserve its major Russian growth plans, regardless of the war's devastation. The report further alleges accounting irregularities and raises concerns over management's risky margin loans against LPP shares. If proven, Hindenburg's allegations could devastate LPP, exposing it to regulatory penalties, financing, and reputational ruin for secretly undermining sanctions against Russia.
EQUITY
The US stock market fell slightly after consumer and producer reports. Under Armour slipped on concerns over the return of founder Kevin Plank as CEO, and a downgrade ensued. EV maker Fisker followed suit on reports it hired advisors for potential bankruptcy, while United States Steel fell after President Biden voiced concerns over its ongoing acquisition by Nippon Steel. On the positive side, Adobe announced a new stock buyback programme in spite of lower guidance.
GOLD
Gold prices closed lower, seemingly in consolidation this week as U.S. inflation data reduced the likelihood of the Fed cutting interest rates soon. Traders scaled back bets on a rate cut at the Fed's June meeting and now see around three rate cuts in 2024, down from prior estimates. The stronger dollar and higher Treasury yields following producer inflation and consumer reports weighed on the bullion.
OIL
Crude oil prices exploded to four-month highs, with U.S. WTI crossing $80 and Brent topping $85 per barrel, fuelled by tighter supply forecasts. The International Energy Agency (IEA) revised its 2024 demand growth projections higher, citing Red Sea disruptions, aligning closer with OPEC+'s outlook after previously contradicting the group. Strong refining margins, lower supply, and the White House replenishing the Strategic Petroleum Reserve provide price support for now.
CURRENCY
The dollar index was boosted by higher producer inflation data, which heightened bets for the Fed to maintain a hawkish stance. The Japanese yen weakened as speculation abounds that the BoJ will shift away from its ultra-loose monetary policy at its upcoming meeting next week. Other Asian currencies, including the Australian dollar, Chinese yuan, South Korean won, and Singapore dollar, faced pressure from a stronger U.S. dollar and domestic economic factors.
