Regulatory burden eases for Wells Fargo

Thursday witnessed a robust resurgence in the US equities market, exemplified by the S&P 500’s attainment of a fresh all-time high. Despite lacklustre retail sales figures, investors maintained optimism, directing attention towards forthcoming PPI data to gauge inflationary trends. Mega-cap firms such as Meta Platforms and Tesla bolstered the market, while bank and energy equities surged. Notably, the Russell 2000 index surged to its highest level since December, signalling broader market strength. The Eurozone’s Stoxx 50 index rose 0.7%, nearing multi-decade highs, led by gains from Stellantis and Safran, while Airbus dipped despite announcing a special dividend. 

Summary for 16.02.2024 

• Most Asian equities rose this morning, mirroring Wall Street’s positive momentum. Japan’s Nikkei 225 approached a record high, benefiting from strong gains in technology and chipmaking shares, fuelled by increased excitement over artificial intelligence. Broader Topix index gains were supported by expectations of delayed interest rate hikes by the Bank of Japan. Overall, Asian markets, including Hong Kong’s Hang Seng and South Korea’s Kospi, saw gains, with tech-heavy sectors leading the way. 
• European shares are expected to rise as investors focus on corporate results. France reports CPI inflation, and the UK unveils retail sales figures. Eni, Sika, and Swiss Re report earnings. In the US, equity futures hold steady after gains, with Trade Desk and Applied Materials surging and DoorDash declining in extended trading. 
• Oil prices dipped in Asian trade due to concerns over slowing global demand, particularly emphasised by the International Energy Agency’s (IEA) report. The IEA highlighted a loss of momentum in global oil demand, notably in China, revising down its 2024 demand forecast from 1.24 million barrels per day to 1.22 million barrels. Additionally, the IEA predicted a supply increase of 1.7 million barrels per day for the year, exceeding its previous estimate of 1.5 million barrels. 
• The US January retail sales report reveals a slowdown in household spending, marked by a 0.8% decline, largely influenced by reduced gasoline station sales and weak automobile purchases. Excluding select items, spending dropped 0.4%, indicating subdued consumer contribution to US GDP growth. Despite this, softer spending supports expectations of downward inflation trends and potential Fed rate cuts starting in summer. 
• US unemployment benefit claims dropped by 8,000 to 212,000, beating expectations, indicating a strong labour market. However, the four-week moving average increased slightly. Continuing claims rose by 30,000 to 1,895,000, suggesting challenges for job seekers. These figures maintain the Federal Reserve’s hawkish stance amid tight labour market conditions. 
• In Q4 2023, the British economy contracted by 0.3%, deeper than expected, marking a recession due to declines in services, industrial production, and construction. Exports and household spending also fell, though partially offset by increased capital formation. For the full year 2023, UK GDP saw a modest 0.1% increase. 
• Raphael Bostic, Atlanta Fed President, emphasized the importance of patience regarding interest rate adjustments, noting the robustness of the US labor market and economy. He highlighted the need for certainty in inflation’s trajectory towards the Fed’s 2% goal. Conversely, ECB’s Edward Scicluna expressed willingness to consider a rate cut in March. 
• Wells Fargo announced the termination of a 2016 punishment by the US Office of the Comptroller of the Currency related to sales practices, marking progress in resolving regulatory issues. CEO Charlie Scharf highlighted the bank’s ongoing efforts to implement improved risk and control frameworks. Shares rose over 7% following the news. 
• Applied Materials reported better-than-expected earnings and revenue for FQ1 2024, driving a 12% surge in after-hours trading. With an EPS of $2.13 and revenue of $6.71 billion, the company exceeded analysts’ estimates. Strong performance is attributed to leadership in semiconductor technologies crucial for AI and IoT. 
• DoorDash projected a lower-than-expected quarterly profitability metric due to increased labour costs, causing its shares to drop over 6% in extended trading. Despite a surge in delivery orders, the firm reported a wider-than-anticipated loss for Q4. DoorDash plans aggressive spending on marketing and expansion into grocery and alcohol delivery. 
• Coinbase reported Q4 earnings surpassing Wall Street estimates, driven by increased cryptocurrency trading activity fuelled by the launch of a spot-Bitcoin exchange traded fund. Revenue reached $953.8 million, with EPS of $1.04, beating expectations. Total transaction revenue rose 64%, while operating expenses decreased. Shares surged over 14% in after-hours trading. 
• Roku reported Q4 revenue slightly above expectations at $984.4 million but posted a loss per share of $0.55. Despite achieving milestones like surpassing 100 billion streaming hours and 80 million active accounts in 2023, the share price plummeted 15%. Guidance for Q1 projects revenue of $850 million, above analysts’ consensus. 
• TripAdvisor shares surged 9.2% during Thursday’s trading session following the announcement of iQ4 earnings, which surpassed analyst expectations. With adjusted EPS at $0.38 and revenue reaching $390 million, the company demonstrated a 10% revenue increase YoY, driven by a robust recovery trajectory and a strategic shift towards experiences, which now account for over 40% of revenue.   
• Ingersoll Rand exceeded Q4 estimates driven by robust demand for its air compressors, pumps, and power tools, with shares rising 1.4% in extended trading. Strong demand in the US non-residential construction market fuelled by the US Inflation Reduction Act contributed to increased investment and inventory rebuilding. IR reported $1.67 billion in orders and expects adjusted EPS of $3.14-$3.24 for the full year, surpassing market expectations. 
• Trade Desk anticipates Q1 revenue to surpass market expectations, driven by a robust ad market. Strong demand for digital advertising services propelled shares up 19% in extended trading. Despite earlier concerns over weak ad spending, Trade Desk’s positive outlook is bolstered by resilient consumer spending and favourable quarterly results. 
• Schneider Electric’s shares surged 1.5% as it reported better-than-expected organic revenue growth for Q4 2024 and provided an optimistic outlook for 2024. Despite falling short on adjusted EPS for fiscal 2023, the company’s adjusted EBITA and margin exceeded expectations. However, analysts found the guidance slightly underwhelming, leading to cautious sentiment. 
• Stellantis NV exceeded earnings expectations for the second half of the year and introduced a €3 billion share repurchase initiative. Despite challenges like labour strikes affecting North American operations, the carmaker maintains a positive outlook for 2024, anticipating growth driven by reduced constraints and expanded product offerings. 
• Renault’s 2023 results highlighted enhanced margins and revenues, alongside a substantial dividend increase to €1.85 from €0.25 in 2022. Despite a slightly below-forecasted net profit, shares surged by 6.5% during Thursday’s session, showcasing strong investor confidence amidst industry challenges. Analysts are keen for details on Renault’s Nissan share sale plan and its outlook, particularly regarding European pricing dynamics. 
• Airbus announced a special dividend and discussed production plans despite a €200 million charge at its Space business. Core adjusted profit rose to €5.8 billion in 2023, with revenue climbing 11%. Airbus forecasts 800 jet deliveries for 2024 and remains confident in reaching 75 single-aisle jets per month by 2026. 
• Loop Capital initiated coverage on Nvidia Corporation with a Buy rating and a price target of $1,200. They foresee a 63% potential appreciation in share value, driven by anticipated outperformance in 2024/2025 and 2025/2026. Loop Capital highlights Nvidia’s dominant position in GPU compute and AI, projecting strong investor returns. 
• Macquarie Equity Research downgraded Sony to Neutral from Outperform, citing the equity’s proximity to their JPY 15,000 price target and concerns over headwinds impacting the company, particularly in the games business. The firm notes lacklustre FY3/25 guidance and recommends caution due to high market expectations and potential risks to image sensor profitability. However, they express optimism about the planned spin-off of Financial Services and deconsolidation in 2025. 
• Super Micro Computer receives a Buy rating from Bank of America Global Research with a $1,040 price target, causing a 14% surge in regular market trading and another 3% gain in afterhours. Analysts anticipate SMCI to benefit from AI-driven demand growth, particularly in AI servers, and expect its revenue and EPS to surpass Street estimates. 
• Redburn-Atlantic downgraded Comcast Corp from Buy to Neutral and lowered the price target to $44 from $50, citing concerns about its broadband segment and market growth challenges. Despite anticipating a decline in earnings multiple, potential growth drivers include Peacock’s performance improvement and the upcoming Epic Universal park launch. 
• Apple is close to finalising an AI tool tailored for developers, aiming to compete with Microsoft’s GitHub Copilot. This tool expedites code creation and is slated for release to external parties within the year, according to insiders. Separately, Google unveiled plans to enhance online security through AI tools and investments. 
• Mercedes-Benz Group completed the sale of its stake in Russia’s Kamaz, the largest truckmaker, marking its exit from the Russian market. The move follows Western companies’ withdrawal post-Russia’s 2022 invasion of Ukraine. Daimler Truck’s 15% stake was sold off, aligning with Daimler’s freeze on business activities in Russia. Kamaz remains under US and EU sanctions. 
• Nike plans to cut about 2% of its workforce, totaling over 1,600 jobs, in a cost-saving initiative. The layoffs, set to begin imminently, won’t affect store, distribution centre, or innovation team employees. CEO John Donahoe highlighted increased investment in running, women’s apparel, and the Jordan brand amid a $2 billion cost-saving plan.