Amazon and Meta surge after results

Equities rebounded on Thursday after the previous day’s Fed-induced dip, with the S&P 500 rising 1.3% to 4,906.19, the Dow Jones Industrial Average gaining 1.0% to 38,519.84, and the Nasdaq Composite adding 1.3% to 15,361.64. Treasury yields fell sharply, with the 10-year note dropping over 10 basis points to 3.86%. Regional bank shares continued to struggle, while other sectors like retail and consumer discretionary showed strength. In Europe, the Stoxx 50 index closed 0.2% lower, driven by downbeat updates from banks and drugmakers. 

Summary for 02.02.2024 

• Asian markets mostly rose on Friday, led by gains in technology shares following positive cues from Wall Street. The Hang Seng and Kospi surged, supported by strong performances in tech stocks. Weakness persisted in Chinese shares, but Australia’s ASX 200 reached a record high, boosted by technology and gold shares. 
• European shares are poised to rebound as traders analyse upbeat earnings from US tech giants, while Meta and Amazon’s strong performance contrasts with Apple’s China sales decline in US equity futures. 
• There’s been volatility in oil prices this week amid reports of a potential Israel-Hamas ceasefire. Prices rose Friday on a softer dollar ahead of US nonfarm payrolls data, expected to influence interest rate expectations. Market focus also remains on Middle East tensions and weak demand signals from China. 
• The US ISM Manufacturing PMI for January 2024 improved to 49.1, the highest since October 2022, indicating a softer contraction in the sector. New orders and production rebounded, while inventories fell less. Supplier deliveries quickened, but employment declined slightly. Backlogs of orders decreased faster, and price pressures rose. 
• The Bank of England maintained the Bank Rate at 5.25% but noted a shift in inflation risks, acknowledging more balanced concerns. While services inflation and wage growth declined more than anticipated, indicators of inflation persistence remain high. GDP growth is expected to gradually improve, with CPI inflation projected to briefly hit the 2% target in Q2 2024 before rising again. 
• Apple beat Wall Street expectations in its fiscal first-quarter results, reporting earnings per share of $2.18 on revenue of $119.58 billion, surpassing estimates of $2.10 EPS and $118.06 billion revenue. However, iPhone sales fell short due to weakness in China. Apple shares fell almost 3% in after-hours trading following the report. 
• Meta Platforms issued its first dividend and reported impressive fourth-quarter results, with revenue of $40.1 billion (above expectations) and net income of $14 billion. Shares surged over 15% after hours, adding over $140 billion to its market valuation. The company’s focus on the metaverse and AI investments was highlighted. 
• Amazon beat fourth-quarter revenue expectations driven by strong growth in its cloud and ecommerce businesses, sending its shares up 7% in after-hours trading. Revenue rose 14% to $170 billion, with AWS posting $24.2 billion in revenue. Ad revenue also surged 27% to $14.65 billion. The company forecasted Q1 revenue above expectations. 
• Skechers USA reported weaker-than-expected sales for the first quarter, causing its stock to plummet by 9% in after-hours trading. While EPS slightly exceeded estimates at $0.56, revenue fell short at $1.96 billion. The company’s full-year EPS and revenue forecasts also missed expectations, citing challenges faced in 2023. 
• Royal Caribbean Group exceeded fourth-quarter earnings estimates with revenue rising 28% to $3.33 billion. The cruise operator projects 2024 profit above Wall Street expectations, driven by robust demand for cruise vacations and higher ticket prices. 
• Corteva’s shares surged over 18%, after the US agricultural chemical company reported fourth-quarter operating profit of 15 cents per share, surpassing analyst estimates of 6 cents per share. Strong seed prices drove performance, with sales volumes expected to grow in both seed and crop protection segments in 2024. The company plans a $1 billion share buyback. 
• Peloton Interactive reported better-than-expected second-quarter sales but issued a weak outlook for revenue and free cash flow. Despite revenue surpassing estimates, the forecasted third-quarter revenue and free cash flow fell short of expectations, leading to a sharp decline in the company’s shares. Peloton aims to reverse declining demand post-pandemic. 
• Ferrari reassured investors with optimistic forecasts, projecting revenue and core earnings growth for the year, buoyed by a robust order book extending to 2025. The announcement propelled shares up by 9.2%, nearing a record Eur70 billion market value. The company also aims to launch its first fully electric car in late 2025. 
• Sanofi’s fourth-quarter earnings report showed revenue below consensus estimates, despite beating EPS expectations. Vaccine sales surged, driven by Beyfortus uptake, but general medicines declined. Analysts note a slight miss on revenue and EPS, maintaining ratings with expectations of flat to slightly down shares due to FX impacts and guidance. 
• Shell reported a $28 billion profit for 2023, down 30% from the previous year, attributed to lower chemicals and refining margins. Strong LNG trading helped surpass Q4 earnings forecasts. CEO Sawan aims for higher-margin projects. Shell increased dividends and share repurchases amid staff reductions and reduced spending on renewables. 
• Deutsche Bank’s shares surged by 3.0% yesterday’s trading after reporting stronger-than-expected Q4 profit of 1.3 billion EUR, despite a 30% year-over-year decline. The bank announced increased shareholder returns, with a 50% rise in buybacks and dividends, alongside plans for 3,500 job cuts as part of an efficiency program. 
• BNP Paribas shares plummeted 9% in Paris yesterday, as the bank reported a 50% drop in Q4 net income, falling below analyst expectations. Sales marginally rose but missed estimates. The bank revised down its 2025 return on tangible equity and net income growth targets, prompting a negative market reaction. 
• Roche shares declined over 5% yesterday as investors reacted unfavourably to the company’s modest 2024 outlook. Despite a 1% rise in sales in 2023, adjusted operating profit slipped 1%. CEO Thomas Schinecker highlighted overcoming COVID-related sales declines but faces challenges from a strong Swiss franc and competition in key growth areas. 
• E.ON, Europe’s largest energy networks operator, surpassed its own outlook with adjusted core profit of €9.4 billion, driven by strong performance in its grids division and favourable operating effects. Shares rose 1.0% following the announcement. CEO Birnbaum recently urged Germany for an energy masterplan. Full 2023 results are due on 13^th March. 
• Wolfe Research initiated coverage on Stellantis NV with an Outperform rating, citing its impressive profitability and EBIT margins ahead of peers. Despite concerns about industry headwinds, Stellantis trades at low valuation multiples, with significant cash reserves and potential for value creation through buybacks and M&A. 
• CFRA Research downgraded Adidas to “Sell” from “Hold” with a reduced price target of EUR150, citing concerns over currency challenges and competitive pressures. Adidas reported a EUR1 billion revenue hit in 2023 due to unfavourable currency movements and anticipates mid-single-digit growth in 2024. Preliminary results for 2023 show a 5% revenue decline and a sharp drop in operating profit. 
• RBC Capital Markets downgraded PUMA SE, citing concerns over its revenue growth outlook and earnings downgrade cycle. The company faces strategic challenges and increased competition, leading to a reduced price target. Despite a strong dividend history and favourable balance sheet, PUMA’s share price performance has declined significantly, prompting caution among investors. 
• UBS analysts view the recent decline in Boeing shares as a buying opportunity, maintaining a Buy rating and lowering the price target to $275 from $325. They emphasise Boeing’s alignment with stakeholders and express confidence in its financial and operational prospects, despite market concerns.